This action might not be possible to undo. Are you sure you want to continue?
Financial Analysis of PepsiCo and Coca Cola Lacey Roberts XACC 280 Axia College of University of Phoenix
I will also perform vertical and horizontal analysis from their annual report of financial data. there are many other manufacturers and distributors of beverages these two are the major competitors. These two companies have undoubtedly dominated the markets worldwide that they both receive universal recognition for their different products. These companies compete with one another for the same customers. Although. this is called the “follow up strategy. These two companies have not only dominated the market domestically they have dominated the worldwide market. Not only do they produce soda drinks. These two companies are the best examples on how leadership is . precedents. Their marketing and reasonable prices make it easy for the people to buy their products in all income brackets. They have overcome obstacles that allowed them to manufacture and distribute globally.PepsiCo.Financial Analysis 2 PepsiCo and Coca Cola are two major companies that manufacture beverages. spring water. best known for Pepsi and Coca Cola best known for Coke have great marketing and due to this they are able to target all income brackets.com. They compete to be the number on manufacturer and distributor of beverages in the world. they also produce flavored water. wondering what just happened.” and while doing so they live the other companies behind dazed and confused. These two companies are very identifiable in this market and you know them as PepsiCo and Coca Cola. There are a vast amount of manufacturers and distributors in this market. and some energy drinks. PepsiCo. I will be examining both company’s income statements and balance sheets to disclose the financial condition of these companies in relation one to another. (The Coca Cola Company. 2009). Being successful does not come without a price. 2009). They followed a plan that kept them above and beyond the market of soft drinks. (www. but Pepsi and Coca Cola have managed to stay in the number one spot for a couple of decades. both of this companies has had to deal with legal issues. When one company comes up with a product the other company comes out with something very similar to it. and politics.
. The next thing we are going to look at is net income.167 yielding a ratio percentage of 44.000 it is in the billions.9% decrease in their net income between 2004 and 2005 and they also show a decrease in the cost of sales during the same period.8% of total assets. PepsiCo’s total assets for 2004 were $27. (Weygandt. The total asset of each of the figures relates to items from each company’s balance sheet. Coca Cola’s total assets in 2004 were $31.1% of total assets and in 2005 their net income was $4.727. A higher cost of sales may not be offset by higher revenues matching or exceeding the increased cost.195 yielding a ratio percentage of 27. Coca Cola’s cost of sales in 2004 was $7.4% increase during the same span.4% of total assets and in 2005 it was $8. Their influence in this market is so powerful that they drive out and shut down any other competitor in this market.212 and this yielded a ratio percentage of 15. I would like for you to keep in mind that all financial data of these companies are shown in millions so if you see a figure of 200 that means 200 million and if you see 5.3% of total assets and for 2005 the cost of sales was $14. Pepsi had in 2004 a net income of $4. 2008).427. Kimmel.674 yielding a ratio percentage of 24. The cost of sales for PepsiCo during 2004 was $12.2% of their total assets.Financial Analysis the power of influence.078 yielding a ratio percentage of 13. This does not mean that this increase is a positive analysis since the single figure does not reveal whether the increase is a positive measure.987 and its total assets for 2005 were $31. PepsiCo experienced a 5% increase within a one year span and Coca Cola experienced a 3.7% of total assets.441 and its 2005 total assets were $$29. & Kieso.674 yielding a ratio percentage of 45. The vertical analysis comes from each company’s financial statements. 3 We will start with a vertical analysis of these companies. They design their product geared towards a certain taste and to appeal to a certain population and make look as though they are subjected to certain ethical and moral practices. The total assets for each company will be the starting point of this analysis. This is a 1.
which would be a positive indication for Coke instead of a negative one. . Looking at the horizontal analysis of each company will give us more information.454 which yields a ratio percentage of 32.847 in 2004 yielding a ratio percentage of 15.250 yielding a ratio percentage of 34. Now the breakdown of each company’s consolidated balance sheets to compare current assets and current liabilities to their total assets for each year considered.Financial Analysis 4 Coke on the other hand had a net income of $4. The second formula yields a 21.281 yielding a ratio percentage of 39. Te first one uses the current year amount and subtracts from that the base year amount. Although they experienced a increase it is not entirely an offset of their income overall. making this a negative indication for Coca Cola. there was a significant decrease in their current assets it was accompanied by a decrease in their current liabilities. In contrast coca Cola current asset in 2004 were $12.01% of total current assets.2% between 2004 and 2005.01% total current assets from the base year.281 and $10. Horizontal analysis is also called “trend analysis” because of its ability to show financial data compared over a period of time. Pepsi’s total current assets in 2005 were $10.639 and for 2005 were $10. The second formula divides the current year amount by the base year amount.872 yielding a ratio of 16.1% and in 2005 current asset were $10. The year 2004 is the base year for both companies in this analysis. over their 2004 base year figure. Coke’s total assets in 2004 were $12. As you can see Coke’s total current assets dropped between 2004 and 2005 without performing the formulaic calculations. Although. Pepsi’s total current assets in 2004 were $8. In the first Pepsi had an increase of 121. There are two different formulas that can be employed to teach this information. This shows a 2% increase in current assets.454. which show a major decrease in their current assets.6% of their total assets.8%.9% of total assets for that year. This shows and an increase of 1.4% and in 2005 their net income was $4.639 which yields a ratio percentage of 30.9% of total assets. Pepsi’s total current assets for 2004 were $8.250 in 2005.
Both companies have experienced a moment were they were not profitable and a moment when they were profitable. During this exercise made me realize that although these companies appear to be profitable the analyses showed that these two companies performance were very different from one another in the years 2004 and 2005. .Financial Analysis All the analysis shows that PepsiCo and Coca Cola both experienced lower net profits in 2005 5 than in 2004. I have analyzed two well known companies in this paper. They showed an increased operation expenses which resulted in a lower net profit. We have seen in my vertical and horizontal analysis that their financial data reveals somewhat a different picture of each company’s financial status. These two companies are PepsiCo and Coca Cola. These two companies have been around for a long time and have stormed the market. Both has had a higher operating expense in 2005 than in 2004 and need to modify their operations to reduce their expenses so their profit margins can increase so they will not keep experiencing a decrease in profits.
www.com .pepsico.com/index.Kiesco. Weygandt.com/ www.swf PepsiCo.Financial Analysis References: 6 Principal of Financial Accounting 6th Edition. Kimmel The Coca Cola Company.html#/flash/pepsico_slide.thecoca-colacompany.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.