...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. The current ratio illustrates that Pepsi is more liquid. Both companies have healthy current ratios...
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...Financial Research Report: The Coca - Cola Company FIN 534 – Assignment #1 07 December 2014 Coca Cola Introduction: Coca Cola Company is an American, multinational company that is infamous for its beverage products. The company is commonly referred to as coca cola. Invented and patented in 1886 and 1887, respectively, by an American pharmacist named John Pemberton. Pemberton sold the company in 1889 to Griggs Candler who incorporated it in 1892. For more than 70 years, coca cola had been the sole beverage of the company. Although international expansion was tested in 1928, expansion of the company in the United States did not start until late 1955 (World of Coca-Cola, 2014). This expansion into other beverage flavors as well as diet and caffeine free choices has allowed the company to become a market leader in the beverage industry. The Company has found success in appealing to the needs and desires of a broad consumer base. Their customers derive from various backgrounds, lifestyles, demographics and age ranges. Currently, the Coca Cola brand expands in the integrated form of more than 500 brands of beverages across more than 200 nations worldwide. As markets changed and competition grew, Coca Cola decided to introduce Diet Coke and later followed with several others to include, but not limited to, Coca-Cola Zero, Coca-Cola Cherry, Sprite, and Schweppes. As of today, it is estimated that the Coca Cola Corporation has more than 3500 beverages spread across a...
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...Comparison of Pepsi and Coca Cola Financials Introduction Coca-Cola and Pepsi are the two most popular and widely recognized beverage brands in the world. They have been competing in the soft drink sector for over a century and both companies enjoy a high degree of brand consciousness globally. Both companies try to market as part of a lifestyle. Coca-Cola uses phrases such as “Coke side of life” in their website, while Pepsi uses phrases such as “Hot stuff” in their web, to promote the idea that Pepsi is “in sync” with the cool side of life. Ironically, both Pepsi and Coke have similar beginnings: both were created in the 19th century and both were the results of the experimental work of innovative pharmacists. Coke was created in 1886 by Atlanta pharmacist John Pemberton while Pepsi was developed in 1898 by North Carolina pharmacist and drugstore owner, Caleb Bradham. The primary purpose of this report is to identify and analyze the two dominant companies in the soft drink industry and determine the strongest performer as an investment opportunity. Ability to pay current liabilities The current ratio is mainly used to give an idea of the company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due...
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...snacks, foods, and beverages, with revenues of more than $39 billion and over 185,000 employees. PepsiCo owns some of the world's most popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). Their brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). I’ve selected PepsiCo as my investment and Value Line report was the key factor in my decision. EQUITY ANALYSIS Equity analysis includes analysis of traditional and value-based metrics. Traditional metrics include expected growth rates, price multiples, projected ROE, fundamental stock return and residual income. Expected growth rates and price multiples combined with relative valuation measures based on accounting and market data are used by equity analysts and are very important to me, as an investor, and these measures help to determine the attractiveness of the stock. Growth measures that are included in my analysis and will be described include: • Revenue growth • Cash Flow(CF) growth • Earnings Per Share(EPS)...
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...Stock Valuation Worksheet Names _____________________________________________________________________ 1. A firm has the balance sheet accounts common stock and paid-in capital in excess of par, with values of $40,000 and $500,000, respectively. The firm has 40,000 common shares outstanding. If the firm had a par value of $1, how much did the stock originally sell for? 2. A firm has an issue of preferred stock outstanding that has a par value of $100 and a 4% dividend. If the current market price of the preferred stock is $50, the current yield on the preferred stock is ________. 3. Julian is considering purchasing the stock of Pepsi Cola because he really loves the taste of Pepsi. What should Julian be willing to pay for Pepsi today if it is expected to pay a $2 dividend in one year and he expects dividends to grow at 5 percent indefinitely? Julian requires a 12 percent return to make this investment. 4. Jia's Fashions recently paid a $2 annual dividend. The company is projecting that its dividends will grow by 20 percent next year, 12 percent annually for the two years after that, and then at 6 percent annually thereafter. Based on this information, how much should Jia's Fashions common stock sell for today if her required return is 10.5%? 5. At year end, Tangshan China Company balance sheet showed 1,000,000 shares of common stock outstanding. Next year, Tangshan is projecting that it will have net income of $1.5 million. If the average PE multiple...
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...Coca-Cola vs. Pepsi Co 2 1. Using the current ratio, discuss what conclusions you can make about each company’s ability to pay current liabilities (debt). The current ratio measures the company’s ability to pay its short term obligations with its short term assets. Between Coca Cola and PepsiCo, PepsiCo has a higher current ratio implying that is more capable of paying its obligations. The debt management policies of Coca-Cola in conjunction with share repurchase program and investment activity resulted in current liabilities exceeding current assets. From the ratio Pepsi Co suddenly had to pay all its short-term creditors, it would be able to do so and have a surplus of 44% of current assets. If Coca-Cola had to pay all its short-term obligations, it would have only 13% surplus of current assets after fully repaying all short term obligations. Therefore, it can be said that PepsiCo is more liquid than Coca Cola based on its current ratio. | Coca-Cola | Pepsi Co. | Current Ratio | 1.13 | 1.44 | 2. Using the profitability ratios, discuss what conclusions you can make about each company’s profits over the past three years. The return on assets ratio is an indicator of how profitable a company is relative to its total assets. Pepsi Co’s return on assets ratio is 14.92, slightly higher than the industry’s Coca-Cola vs. Pepsi Co ...
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...Assignment #5: Financial Management Coca-Cola Company vs. PepsiCo. Rodséy E. Smith Daniel Sersland BUS 508: The Business Enterprise December 9, 2010 Abstract In the late 1800’s two of today’s largest and most recognizable food and beverage companies, PepsiCo and Coca-Cola Company began their quest to dominate the industry. Even today after over a hundred and twenty years, PepsiCo and Coca-Cola Company continue their efforts to compete against each other in order to gain additional market share. The purpose of this paper is to explore the two competing companies from a financial perspective, rather than a product preference. The paper will draw from information given in the 2009 year-end financial report for each of the two companies. From this information, several financial ratios will be computed and an analysis will be given to determine which company is more financially profitable. After a financial analysis is made, the paper will conclude by presenting what non-financial criteria could be considered when choosing which company is the better investment options. Using the current ratio, discuss what conclusions can be made about each company’s ability to pay current liabilities. The current ratio is a popular financial calculating tool used by financial analysts to determine a company’s liquidity, also known as the company’s working capital position. The ratio is determined by deriving the proportion of current assets available to cover the current liabilities...
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...You are an Analyst Coca Cola vs Pepsi | | | | | | | | | | | | | | | | | | | ...
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...manufacturer and distributor of non-alcoholic beverage concentrates and syrups in the world. Additionally, the company has ownership interests in numerous bottling and canning operations. Furthermore, Coca-Cola groups its products into eight business divisions including: Africa, Eurasia, European Union, Latin America, North America, Pacific, Bottling Investments, and Corporate. Finished beverage products are sold in more than 200 countries worldwide. Coca-Cola's major products are comprised of: Coca-Cola, Crush, Sprite, Fanta, Diet Coke, POWERade, Fruitopia, Minute Maid juices, Dasani water and various coffees and teas. The next important area reviewed is stock price and revenues. Please refer to Figure 1 as we examine Coca-Cola's stock price in the five-year range. In 2003, Coca-Cola's stock was trading at an average valuation of approximately $45.00 dollars per share, approaching $50.00 dollars (i.e., an all-time high). As of April 25, 2008,...
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...Company Background Pepsi is founded by Caleb Bradham in Bern North Carolina on a hot summer day. Pepsi is a carbonated soft drink. It was created by a pharmacist as an incentive, as a way to get customers into his pharmacy in 1898. Caleb decided in 1902 to start the Pepsi Company and received its official patent in June of 1903. Pepsi was slowly on the rise with advertisement and in 1965 merged with Frito-lay Snack Company and Donald M. Kendall became founder of the new merged company PepsiCo. During the 1970’s Pepsi was becoming recognized as an aggressive company and was now in competition with the other leading soft drink company Coca-Cola. Coca-Cola was founded before Pepsi soft drink in 1886, also by a pharmacist named John Pemberton. After the invention of the beverage, portions of the company were sold around and much was sold to Asa Candler, a businessman from Atlanta. There were imitators of Coca Cola and so the business decided to market a new Bottle shape that would make it distinct from all the others beverages. To continue to make Coca Cola a success, in the 1970’s Coca Cola was advertised as a relation with happiness a fun time. Muhtar Kent is Chairman of the Board and Chief Executive Officer of The Coca-Cola Company. Mr. Kent joined The Coca-Cola Company in Atlanta in 1978 and has held a variety of marketing and operations roles throughout his career. In 1985, he was appointed General Manager of Coca-Cola Turkey and Central Asia. From 1989 to 1995, he served...
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...Running head: COCA-COLA VS. PEPSI Financial Management The Business Enterprise – BUS508 Abstract Coca-Cola and Pepsi are very popular and widely recognized beverage brands in the world. This document will discuss each company’s current ratio and profitability ratio and make conclusions for the company’s profits over the past three years. The document will also discuss based on research which company is more likely to satisfy it stockholders. I will provide rational for determining which company is a better investment from a financial and a non-financial base. Financial Management PepsiCo and Coca-Cola have been long time competitors in the soft drink industry. Both are fortune 500 companies that have expanded to a broader range of food and beverage brands. Coca-Cola was created in 1886 by Atlanta GA. Pharmacist John Pemberton. Coca-Cola was originally intended as a patent medicine. Coca-Cola was bough by businessman Asa Griggs Candler whose perceptive business tactics led Coca-Cola to dominance throughout the 20th century. Pepsi was created in 1898 by Newbern, NC Pharmacist and industrialist, Caleb Bradham. As Pepsi grew in popularity, the Pepsi-Cola company was formed in 1902 and incorporated in the state of Delaware in 1919. 1.) Using the current ratio, discuss what conclusions you can make about each company’s ability to pay current liabilities. PepsiCo and Coca-Cola are forced to search for alternative sources of revenue to...
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...FIN 6416 Case 1: Valuing Coca Cola stock Executive Summary The case that has been presented is a valuation of Coca Cola, its current stock price, and whether Coca Cola has the potential to be a good recommendation for clients to add to their portfolios. The analysis herein takes into account historical Coca Cola financial information, and uses the information to ascertain whether or not Coca Cola, at its current stock price of $58.00 a share, is a viable security for investors to add to their portfolios. Methodologies The completed analysis of Coca Cola’s investment potential required the use of a few calculations to gather enough information regarding the selling price of its stock. The first of these calculations used is the Capital Asset Pricing Model (Exhibit 1). This model was used to calculate the required rate of return for an investor in Coca Cola. In this calculation, Beta was set at 1.24, and the risk free rate was set at the 30-year government bond rate of 6.22%. The market risk premium was set at the stated 6.00% rate, resulting in a required rate of return of 13.66%. Once this required rate of return was calculated, the Dividend Discount Model (Exhibit 2) was used to calculate a forecasted 1997 stock price for Coca Cola. Using the required rate of return of 13.66%, a forecasted dividend of $0.62, and the expected constant dividend growth rate of 12% for this calculation, the model has forecasted a 1997 stock price of $37.35. For this analysis, a...
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...This report will focus on the comparison of financial conditions, especially their profits statements between Coca-Cola and Pepsi Co. for their stakeholders, like consumers, shareholders, managers, investors, and employees, creditors and lenders. The two soft-drink giants have been battling for bigger shares of the globe's thirst for more than a century. "Coke or Pepsi" has been debated endlessly, with ads such as the Pepsi Challenge campaign in the 1970s fueling the rivalry. And both sides in this epic consumer battle have had hits (Diet Coke and Pepsi One) and misses (New Coke and Crystal Pepsi) The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. It is assessed as the most valuable brand in the world that owns or licenses more than 400 brands, and its products are sold in more than 200 countries. However, PepsiCo, as one of Coca-Cola’s toughest competitors, is also very competitive in the nonalcoholic beverage market. It is the second-largest food and beverage company in the world. This is quite evident of PepsiCo’s gross profit margin of 57.5% and sales for 2010 of $43.23 billion in 2010, compared to Coco-cola’s gross profit margin of 68.4%.and sales of $30.99 billion. (Investing in Coco-cola or Pepsi for Stock Gains) Based on your analysis, determine which company is better able to pay current liabilities (debt). Explain your rationale. The current ratio measures the company’s...
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...AQUAFINA Introduction: • Aquafina is a brand of bottled water. It was first distributed in Wichita, Kansas in 1994, Aquafina is sold in 12-fluid ounce, 500-milliliter (16.9 fl oz), 20-ounce, 24-ounce, 1 liter, and 1.5-liter bottles. • Aquafina was first launched in USA in the year 1994 and with its unique purification system and great taste, Aquafina soon became the best selling brand in the country. • In India, Aquafina’s journey began with the Bombay launch in 1999 and it was rolled out nationally by the year 2000. On the strength of its brand appeal and distribution, Aquafina has become one of India's leading brands of bottled water in a relatively short span. • The growth of aquafina is increasing day by day. In 2004 it was only 11 % as now in 2008 it has been reached at 22 % and in 2010 its been 26%. • Aquafina is an official sponsor of Olympus Fashion Week, Sundance Film Festival, Tribeca Film Festival, Carolina Panthers, and the PGA. • Aquafina is a brand of bottled water and skincare products manufactured by PepsiCo, Inc. pepsiCo produces several other products under the Aquafina label: Aquafina Aquafina FlavorSplash - Grape Aquafina FlavorSplash - Peach Mango Aquafina FlavorSplash - Raspberry Aquafina FlavorSplash - Strawberry Kiwi Aquafina FlavorSplash - Wild Berry Aquafina Sparkling - Berry Burst Aquafina Sparkling - Citrus Twist HISTORY OF AQUAFINA: TYPE ...
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...false working capital, which can show as a positive, when this reading is of assets that have not been liquidated yet. If a company cannot liquidate its assets into cash, they will not be able to pay their debts or issue dividends to stock holders. It is always good to have some cash on hand and not tied up in inventories and investments. Keeping this concept in mind will give you the capability to pay payrolls, debts, and daily expenses needed to run the company. Action 2 Using the profitability ratios of the last two years shows that both Pepsi and Coke Cola had a decrease in profits between the 2008 and 2009. Pepsi had better sales profit then Coke Cola in both years. With this information Pepsi’s management is doing a better job at employing the company’s total assets to make profit (Loth, Financial Ratios:). Action 3 Due to that I can’t seem to get my numbers to calculate correctly, I am going to do estimation from what information that I can find. Having a good cash flow, show that you can pay your debts without barrowing money, you have had good investment choices and that you can pay out to you stockholders. Pepsi has shown that they have had cash readily available to pay their debts and stockholders. Action 4 Pepsi seems to be making a profit each year and the debt ratio is a little more than half the debt ratio of Coke Cola. A low percentage means that the company is less dependent on leverage (money...
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