Higher operating leverage

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Reference no: EM13723012

In its 2009 annual report, The Coca-Cola Company reported sales of $30.99 billion for fiscal year 2009 and $31.94 billion for fiscal year 2008. The company also reported operating income (roughly equivalent to EBIT) of $8.23 billion in 2009 and $8.45 billion in 2008. Meanwhile, arch rival PepsiCo, Inc., reported sales of $43.25 billion in 2008. PepsiCo’s operating income was $8.04 billion in 2009 and $6.96 billion in 2008. Based on these figures, which company had higher operating leverage?

Operating leverage = (?EBIT ÷ EBIT) ÷ (?SALES ÷ SALES) ? Denotes “Change in” (Recent year – Prior year)

Reference no: EM13723012

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