In this paper we will compare to famous corporation from the Soft drinks Industry: Pepsi Co Inc. and The Coca Cola Company. These two companies that have been into a tough competition for years are the leader of this industry. But the soft drinks industry progressively change and trends shows a shift toward health consciousness of consumers in western countries while new markets are emerging in continents such as Asia and South America. As a result we will try to watch through the financialstatements of both companies if one more than another could better overcome those changes in the industry.
Sommaire de l'analyse financière
I- The Soft Drinks Industry
II- The Coca Cola Company
III- PepsiCo Inc.
IV- Financial Analysis
1- Income Statements
2- Coca Cola and Pepsi Key Ratios
3- Analysis of the Return on Equity
Extraits de l'analyse financière
[...] The higher this ratio is, the most profitable is the investment for stockholders . ROE Ratio = (Net Income Preferred Dividends) / Average Common Shareholders Equity Here for the Average Common Shareholders Equity we will use the average between 2008 and Pepsi: . ROE Ratio = (5,946 41) / ((16,763 + 12,203) / = 0.41 Coca: . ROE Ratio = (6,824 / ((24,799 + 20,472) / = Pepsi has the greatest ROE Coca Cola ROE is fair enough with 30% but far from the profitability Pepsi is able to offers to its investor. [...]
[...] Debt to Assets Ratio = 23,044 / 39,848 = 0.59 Coca 2009: Debt to Assets Ratio = 23,872 / 48,671 = Pepsi?s assets are financed at 59% with debts whereas Coca Cola's assets are financed at 49% with debts. Pepsi here clearly hold a riskier financial position . However looks to be still reasonable for a large corporation such as Pepsi . Time Interest Earned Ratio The Time Interest Earned ratio measures the company's ability to fulfill its interest payment obligation when they come. If the rate fall under it means that the company no longer produce enough income to meet its obligation and it is a critical situation . [...]
[...] Price Earning Ratio = Market Price per Common Share / Earning Per Share . Pepsi 2009: Price Earnings Ratio = 60.80 / 3.73 = 16.3 Coca 2009: . Price Earnings Ratio = 57 / 2.95 = With the Price Earnings Ratio we can notice that Pepsi per in profit) and Coca Cola 19.39 per in profit) are not too far from each other. If we follow the trend that says that lower ratio is for riskier firm, we can assume that Pepsi Cola is an investment slightly riskier than Coca Cola. [...]
[...] Alexandre CARCIENTE Analyzing Financial Statements Due on December Pepsi co / Coca Cola 4186 Words . INTRODUCTION . In this paper, we are going to perform a financial analysis of the two big American? based beverage companies: Coca Cola and Pepsi Cola. In this document, we will explain the relative strengths and weaknesses of the two companies by using the companies' latest annual reports (2009) . In the first part, we will talk about the beverage industry and more precisely, the soft drinks industry. [...]
[...] III) The Coca Cola Company John Stith Pemberton created the Coca Cola beverage in 1886. Pemberton was a pharmacist located in Georgia. John Pemberton rapidly sold his business to another pharmacist from Atlanta, Asa Griggs Candler. The business was sold along with all the exclusivity rights concerning the Coca Cola formula. This is thus Asa Griggs Candler who really developed Coca Cola as a brand. As the product met an increasing success, he decided to refocus his activity on Coca Cola. [...]