Benchmarking Analysis of Pepsico
Benchmarking Analysis of PepsicoBenchmarking Analysis of PepsiCo
December 3, 2012
Benchmarking Analysis of PepsiCo
It is hard to tell what company to invest in until a person starts calculating their financial ratios. A company may have high revenues; however, that does not mean that they are fiscally responsible for those revenues. I was surprised to notice that just because the company may do good on the current ratio or earnings ratios that does not necessarily mean that they are financially stable. A person cannot look at one or even a few ratios to determine if a company is financially sound. Many ratios have are pulled to determine the financial stability of the company.
I used a variety of ratios to use for analysis. I pulled a Current Ratio, Acid Ratio, Debt Ratio, Return on Sales, Return on Equity, Inventory Ratio, Cash Conversion Cycle and Net Income Per Share on the companies of Pepsi Co, Coca Cola, Dr. Pepper Snapple Group and Mondelez International. Because the company I had selected to analyze was PepsiCo, I know that I needed to diversify the companies I selected between food and beverage because the company covers both markets. Coca Cola is the top beverage distributor in the world, Pepsi Co is second and Dr. Pepper Snapple Group is the third. Mondelez International is a food company that is a recent spin-off from Kraft Foods. It has some familiar name brands of Nabisco, Oreo, Trident gum, and Cadbury chocolates to name a few and is one of PepsiCo’s major competitors in the snack market.
What surprised me is that the Coca Cola Company looked good when it came to current, acid test, debt, and return on sales ratios. They struggled with their Cash Conversion Cycle with cost of goods sold per day and the amount of time it takes them to pay back their suppliers. Their inventory ratio was also the lowest out of the four companies, and in a...