...Pepsi & Coke Analysis Financial Analysis of Pepsi and Coke Abstract In this report the analysis for the year 2005 and 2004 of financial position of Pepsi Inc and Coca Cola have been stated below. Techniques which are used for the analysis are ratios, horizontal and vertical analysis. How the company can improve its financial position and better its performance is given in this analysis. .Analysis of PEPSI |Ratio Analysis |27-Jun | |26-Jun | | |Current Ratio |1.11 | |1.28 |x | |Quick Ratio |0.87 | |0.95 |x | |Net profit Margin |12.52% | |14.39% | | |Return on Assets |12.85% | |15.05% | | |Account Receivable Turnover |9.99 | |9.76 |x | |Inventory turnover |8.37 | |8.22 |x | |Total assets turnover |1.03 | |1.05 |x | |Interest times earned ratio |23.13 | |31.49 |x | |Debt to Equity ratio |1.23 | |1.07 |x | |Debt to total assets ratio ...
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...Pepsi's ROE of 35% is higher than Coke's ROE of 28%. The number of shares outstanding for coke is higher than pepsi. The asset turnover for Pepsi is roughly 1.6 times that of Coke. The asset turnover of Coke is lower than pepsi resulting in a lower ROE. Coke has to increase their sales or sell assets. The impact of this is reflecting in the higher ROE. The impact of this also is reflecting in the higher ROE. The operating costs are also high in the case of Coke. In regard to the valuations of Coke and Pepsi, Pepsi is undervalued as compared to Coke as the P/E ratio is 15.6; if we consider Coke P/E ratio of 18.4 the expected market price of Pepsi should be ~$70. The acquisition of CCE requires Coke to assume more debt resulting in higher leverage for Coke and higher operating expenses from a bottling company will result in a lower EPS. It will increase interest expense and affect the ROE adversely. Estimating the rate of interest using the interest expense paid in 2009's for the long term debt on the books, the ROE is expected to reduce to 25%. The acquisition of the bottling company will require that Coke shows the consolidated figures of the bottling company in its financials. The assets of Coke will increase however, there is not enough information for us to evaluate. We believe that after the acquisition of the bottling company the comparison between Coke and Pepsi will be worse. -----------------------...
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...Financial Analysis XACC/280 March 25, 2011 Abstract Accounting is the process of communicating, recording, and identifies the economic events of a company to interested parties. In order to communicate these economic events, an individual has to know how to analyze and interpret the information that is reported in financial reports such as balance sheets, statement of cash flow, income statement, and retained earnings statement. Every item, in a financial statement whether asset or liability, has a significance part. Generally accepted accounting principles (GAAP) is a set of standards developed by the accounting professionals for companies to follow when reporting economic events. The basic accounting equation is assets equal liabilities plus the stockholder’s equity. Purpose of Paper The purpose of the following financial analysis between PepsiCo and Coca Cola is to show how the annual numbers are important to stockholders and other individuals that may be interested in buying stocks with a company. Based on the percentages and figures that I come up with, I will decide on which company I would choose to invest in and why. It is important for investors to dig deep in a company’s financial statements and analyze all the numbers. I will discuss three recommendations for each company on how to improve the increase or decrease the current financial situation. Breakdown of Different Ratio’s Within the financial analysis...
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...Financial Statements Final Project Financial Analysis This activity is based on an overall objective which is to help executives determine decisions about financing their specific aims are: Understand the elements of the Analysis- Describe some steps to consider for making decisions and help in planning the direction of investments. .-Use common reasons for testing the activity of liquidity and accounts payable .. - Analyze the relationship between debt -Evaluate the profitability of the company for its sales . - Determine the status of the company in the competitive market . -Provide employees with information on the status of such effects on the business. - Financial interpretation is supported by various methods such as comparative breakeven, graphic calculators which significant purpose or financial reasons, which are ultimately the rationale for any accounting information arising The financial analysis has two tools to interpret and analyze financial statements referred to horizontal and vertical analysis, which is to determine the proportional weight (in percent) that each account used within the financial statement. This allows determining the composition and structure of states financials. The vertical analysis is of great importance when determining whether a company has an equitable distribution of assets and according to the financial and operational needs. The objective analysis of vertical analysis...
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...| Coca-Cola Versus Pepsi | The Coke Wars Financial Analysis | | Accounting 557: Financial Accounting Sumadi, Mohammad | | 12/15/2012 | | Possibly one of the biggest rivals in Corporate America today, the battle between Coca-Cola (KO) and PepsiCo (PEP) continues to baffle not only consumers but investors as well in determining which product is a better buy. While both companies have had recent problems in emerging nations such as India by having their products be condemned for improper ingredients, a shakeup like this might be necessary to promote future growth for possibly undersold equities. Coca-Cola Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with world headquarters in Atlanta, Georgia. In May, 1886, Coca Cola was invented by Doctor John Pemberton a pharmacist from Atlanta, Georgia. John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta on May 8, 1886.About nine servings of the soft drink were sold each day. Sales for that first year added up to a total of about $50. The funny thing was that it cost John Pemberton over $70 in expanses, so the first year of sales were a loss...
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...Financial Analysis of Coca-Cola and PepsiCo, Inc. Kyla D. Smith XACC/280 Financial Accounting Axia College Financial Analysis Two of the major competing companies that manufacture drinks are Coca-Cola, and Pepsi. They both produce regular water, flavored water, and soft drinks of many kinds. While this essay will explain what vertical and horizontal analysis is, it will also explain each company’s vertical and horizontal analyses. Also the ratios for each company will be given, and several examples as to how each company can improve in their financial status. The financial analysis of both companies is very important so both businesses can understand how they are being managed. It is very important for a company to keep up to date financial documents, audits, taxes, and other financial statements. This is the information needed to show what a company is doing with their finances and what they have done in the past. This information is also very useful for management to use and know what to do differently in future months or years. Information like this allows a company to grow, and have healthy production going forward. Having this data also helps management, investors, and creditors know if there are any issues that have come up in the past that need to be worked on. While in competition, these two companies have continued to grow in size, market value, and profit sales. Since the beginning of their competition, both companies have ventured into new areas of sales...
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...Financial Analysis of Coca Cola versus PepsiCo, Inc. Axia College of University of Phoenix Financial Analysis of Coca Cola versus PepsiCo, Inc. There are two major competing companies that manufacture beverages. They compete for the number one manufacturer and distributor spot for beverages worldwide. Both companies are immediately identifiable almost anywhere. They are PepsiCo and Coca-Cola. They have so thoroughly saturated the markets around the world that they enjoy universal recognition for their company and for their products. Historically, these are the major competitors in the “Cola wars”. They both produce flavored water, regular water, and soft soda drinks. Coca-Cola (Coke) and PepsiCo, Inc. (Pepsi) target all income brackets across the globe due to their ability to produce products which they have convinced millions of people are attractive and reasonably priced. This makes people buy them regardless of their income level. We will review these companies’ income statements and balance sheets to reveal the financial condition of the companies in relation to one another. After an introductory discussion of the companies, we will perform vertical and horizontal analyses from their annual report financial data and then will provide recommendations on each company. There are a wide variety of distributors in these markets, but Coke and Pepsi have stayed number one and two for decades. They have reached far beyond their...
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...Wars Continue: Coke and Pepsi in 2010 Instructions - Read the case study and complete a full analysis by answering the questions below. Be sure to conduct a situational analysis by looking at both the external and internal environments when formulating your answers. Also consider other management disciplines and impacts (i.e. Human Resource Management, Marketing, and Finance). Some key considerations: 1. This is not a summary of the Case. Students are expected to apply relevant management principles, critical and analytical thinking when completing the case study 2. Output must be thorough, grammatically accurate and well written using APA format. 3. There is 10% penalty for late submission. Note: All responses will be used as part of the college’s assessment process for the masters’ program. Case Questions 1. Current Day Human Resources Analysis a) As Coke and Pepsi move forward from this point, are there any important human resource issues that should be considered as part of their corporate and business strategies? Fully Explain answer i. Current Day Competition Analysis, Discussion, Trends, including references. ii. Current Day Compensation Analysis, Discussion, Trends, including references. iii. Current Day Legislation Analysis, Discussion, Trends, including references. iv. Current Day Employee Relations Analysis, Discussion, Trends, including references. 2. Strategy Analysis a) Conduct...
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...ASSIGNEMENT 5 financial perspective of pepsico and coca cola business 508: THE BUSINESS ENTERPRISE strayer university by 12/05/10 Coke and Pepsi are the two major soft drink companies in the whole world; both companies have an international footprint. However, they also face substantial competition, as the market for non-alcoholic drinks is highly fragmented. In order to understand the investment characteristics of these two companies, it is worthwhile to take a look at these companies from the financial perspective, comparing their different financial ratios. Some of the important ratios that should be analyzed are the liquidity ratios, profitability ratios, cash flow indicators and investment valuation ratios. By analyzing the financial ratios this paper will help determine which of these two companies the better investment is. Ratios computation and analysis 1) Using the current ratio, discuss what conclusions you can make about each company’s ability to pay current liabilities (debt). A common liquidity ratio is the current ratio. This is calculated as the current assets / current liabilities. The current ratio reflects the ability of the company to meets its financial obligations for the next year. The current assets reflect assets that can be liquidated quickly, for example cash, inventories and receivables. The current ratio for Pepsi is $12,571 / $8756 = 1.44. The current ratio for Coca-Cola is $17,551 / $13,721 = 1.28....
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...Table of Contents 1 Overview 2 General environmental analysis 3 Industry Analysis 3.1 Industry Structure - U.S. soft drink market share of concentrate producers - Suppliers within the carbonated soft drink industry 3.2 Market Structure - U.S. Liquid Consumption Trend (gallons/capita) - U.S. non-alcoholic refreshment beverage volume 2009 - U.S. soft drink market share – soft drink brands 3.3 Marketing Channels 3.4 Porter’s five forces 4 5 4 2 2 2 2 4 Competitive / corporate strategies of Coke and Pepsi 5 SWOT Analysis 6 Questions 6.1 How has the competition between Coke and Pepsi affected the industry’s profit? 6.2 If it has been such a profitable industry, why have so few firms successfully entered this business over the last century? What are the barriers? Why have Coke and been so successful in launching their products? 6.3 Why, historically, has the soft drink industry been so profitable? 6.4 Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? 6.5 How can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs? 7 9 11 Exam Case Study Cola Wars Continue: Coke and Pepsi in 2010 1 Overview (Power Point Page (PPP) 2) For more than a century, Coke and Pepsi compete for market share within the world’s beverage market. The most intense battles were fought over the $74 billion carbonated soft drink (CSD) industry in the United States...
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...Pepsi Project Table of Contents Executive Summary Pepsi (PEP) Background Statement of Cash Flows Analysis of ‘Cash Flow to Net Income’ Analysis of ‘Cash Flow Adequacy Ratio’ Analysis of ‘Free Cash Flow / Operating Cash Flow’ Competition Marketing Campaign Innovation References Pepsi (PEP) Background PepsiCo, Inc. is a global food, snack and beverage company. The Company's brands include Quaker Oats, Tropicana, Gatorade, Lay's, Pepsi, Walkers, Gamesa and Sabritas. Pepsico Inc. is registered on NYSE using the ticker symbol of ‘PEP’. Using the available data from 1978 till now, the PEP ticker symbol has seen the stock price increase of approximate 4400% , which is comparable to its closest competitor Coca-Cola’s (Ticker : KO) growth of 4500% in the same time period. Pepsico’s current Market Cap is approximately 98.83B with a P/E ratio of 15.90. A high P/E ratio suggests investor's confidence in the future growth prospects of the company and Pepsico has the highest P/E ratio as compared to its major competitors in the sparkling soda industry including Coca-Cola and Dr. Pepper. Even though it can be interpreted that PEP has lagged behind Coca-Cola over the years in US market but it is very important to understand that the majority of PepsiCo's revenues do not come from carbonated soft drinks.In fact, beverages account for less than 50% of total revenue. Additionally, over 60% of PepsiCo's beverage sales come from its key non-carbonated brands like Gatorade...
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...Coke Zero SWOT Analysis Monessa Catuncan Trident University International SLP 1- Segmentation and Targeting Product/Brand Analyzed/Corporate Background- Since Coke Zero was first introduced to the US market in 2005, the soda drink has brought numerous accolades and profits to its parent company, Coca Cola. Coke Zero is a low-calorie variation of Coca Cola made to have the “real Coke flavor” without any of the adverse ingredients (The Coca-Cola Company.com, n.d.). While Coke Zero had a rough beginning, the product has since boomed into one of the most successful beverages out of the Coke brands. Coke Zero currently markets under the Coca Cola Enterprises NYSE symbol (CCE) and the product is sold in 130 countries around the world with its strongest markets currently being North America and Europe. The beverage’s sales numbers have increased by double-digits every year since 2006 with no signs of slowing (McWilliams, 2010). According to the last two Coca Cola Company Form 10Ks, Coke Zero saw continued success with its sales increasing by 15 percent in 2010 and 11 percent in 2011. The company’s profit margin and market share has also increased through its newest soda beverage. Since 2005, Coca Cola Enterprise’s profit margin has held around sixty-percent, and its market share averaged about $3.00 per share with a spike above $5.00 in 2010. CCE’s cost structure primarily focuses on variable products such as syrup, artificial sweeteners, and metal for its cans...
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...Cola Wars Continue: Coke and Pepsi in 2010 Table of Contents 1 Overview 2 General environmental analysis 3 Industry Analysis 3.1 Industry Structure - U.S. soft drink market share of concentrate producers - Suppliers within the carbonated soft drink industry 3.2 Market Structure - U.S. Liquid Consumption Trend (gallons/capita) - U.S. non-alcoholic refreshment beverage volume 2009 - U.S. soft drink market share – soft drink brands 3.3 Marketing Channels 3.4 Porter’s five forces 4 5 4 2 2 2 2 4 Competitive / corporate strategies of Coke and Pepsi 5 SWOT Analysis 6 Questions 6.1 How has the competition between Coke and Pepsi affected the industry’s profit? 6.2 If it has been such a profitable industry, why have so few firms successfully entered this business over the last century? What are the barriers? Why have Coke and been so successful in launching their products? 6.3 Why, historically, has the soft drink industry been so profitable? 6.4 Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? 6.5 How can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs? 7 9 11 Exam Case Study Cola Wars Continue: Coke and Pepsi in 2010 1 Overview (Power Point Page (PPP) 2) For more than a century, Coke and Pepsi compete for market share within the world’s beverage market. The most intense battles were fought over the $74 billion carbonated soft drink (CSD)...
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...Financial Analysis: Coke vs Pepsi Computed 2009 Ratios and Commentaries (see table) Coke has higher operating and profit margin compared to Pepsi. The share price of Coke reflects a higher Price to Earnings ratio 18.4x compared to Pepsi 14.2x. This is likely due to the equity market having more confidence in the continuation and sustainability of Coke’s earnings than Pepsi. However, the equity market had priced a discount on Coke’s market capital structure compared to Pepsi. This can be seen from the market to book ratio where investors value Pepsi's balance sheet structure more than Coke. Pepsi is priced 5.5x of equity value compared to Coke which is priced only at 5x. Having a higher operating and profit margin, Coke is more likely to be able to sustain any shocks in the market (eg. from lower sales). The sustainability of Coke’s earnings are also helped by more efficient tax structure seen from lower effective tax rate compared to Pepsi. Its Selling General Administration expenses are also within the industry norm (compared to Pepsi). Coke’s has room to further improve its efficiency by improving its balance sheet structure. This includes a more efficient use working capital (eg. reducing receivables and inventory days), using higher leverage to attain higher return on equity and optimizing/sweating the assets more to generate higher asset turnover. Coke’s acquisition is substantially cashless. It exchanged $3.4bn of equity investment it had in CCE and...
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...Wars Case Analysis July 31, 2010 Executive Summary Coca-Cola was invented and marketed in 1886 by a pharmacist named Dr. John Pemberton he named Coca-Cola after the coca leaves and kola nuts he used in order to create the product. Twelve years later in 1898 Caleb Bradham created Pepsi Cola for the beneficial effects it claimed to have on upset stomachs and indigestion. The enmity between the two soda companies are known as the “Cola Wars”. The war began in the 1960’s when Coca-Cola’s supremacy ruled the market as the beverage of choice above Pepsi Cola. Due to the competition between the two rival cola companies actions became extreme and forced both companies to implement strategic methods in order to keep the competitive edge over the other. Coca Cola Wars Case Analysis I. Current Situation: Coca-Cola's and Pepsi Cola’s marketing strategies has been as impossible to tell apart as the products themselves, both companies rely on vibrant colors, catch phrases, attractive people, and famous entertainers to grab consumer’s attention and to entice them into purchasing their products. In 1941 Coca-Cola officially renamed their product to “Coke” as an official trademark with a series of advertisements informing consumers that “Coke” means Coca-Cola (Coca-Cola, 2011). Pepsi was first introduced as " Drink" in 1898 by Caleb Bradham its inventor who created Pepsi at his home, it was later that Bradham changed the name and officially named the beverage Pepsi Cola (Pepsico...
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