Financial Analysis of PepsiCo and Coca Cola

PepsiCo and Coca pinhead atomic number 18 both major companies that manufacture beverages. They compete to be the number on manufacturer and distributor of beverages in the world. These two companies are very recognizable in this market and you know them as PepsiCo and Coca Cola. These two companies leave undoubtedly dominated the markets worldwide that they both receive universal credit for their contrasting products. Although, there are many other manufacturers and distributors of beverages these two are the major competitors.Not merely do they declare soda drinks, they also produce flavored water, spring water, and some energy drinks. PepsiCo, best known for Pepsi and Coca Cola best known for cytosine form great marketing anddue to this they are able to target all income brackets. Their marketing and reasonable prices make iteasy for the state to buy their products in all income brackets. I will be examining both follows income statements and balance sheets to discl ose the pecuniary condition of these companies in proportion ane to another.I will also perform vertical andhorizontal abstract from their annual report of pecuniary data. There are a vast centre of manufacturers and distributors in this market, but Pepsi and Coca-Cola come managed to stay in the number iodine spot for a couple of decades. These two companies have not only dominated the market domestically they have dominated the worldwide market. They followed a plan that kept them above and beyond the market of soft drinks. They have overcome obstacles that allowed them to manufacture and distribute globally. (The Coca Cola Company, two hundred9).These companies compete with angiotensin-converting enzyme another for the same customers. When one company comes up with a product the other company comes out with something very similar to it this is called the follow up strategy, and while doing so they live the other companies behind dazed and confused, wonder what just hap pened. (www. PepsiCo. com, 2009). Being successful does not come without a price, both of this companies has had to deal with legal issues, precedents, and politics. These two companies are the best examples on how leadership is the power of influence.They design their product geared towards a certain experiment and to appeal to a certain population and make look as though they are subjected to certain ethical and moral practices. Their influence in this market is so powerful that they drive out and shut downward(a) any other competitor in this market. I would like for you to march on 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 5,000 it is in the billions. We will start with a vertical analysis of these companies. The vertical analysis comes from each companys financial statements.The sum pluss for each company will be the starting question of this analysis. Coca Colas summate as sets in 2004 were $31,441 and its 2005 marrow assets were $29,427. PepsiCos gibe assets for 2004 were $27,987 and its aggregate assets for 2005 were $31,727. (Weygandt, Kimmel, & Kieso, 2008). The total asset of each of the figures relates to items from each companys balance sheet. The cost of sales for PepsiCo during 2004 was $12,674 manageable a proportion constituent of 45. 3% of total assets and for 2005 the cost of sales was $14,167 yielding a proportionality destiny of 44. 7% of total assets.Coca-Colas cost of sales in 2004 was $7,674 yielding a ratio ploughshare of 24. 4% of total assets and in 2005it was $8,195 yielding a ratio percentage of 27. 8% of total assets. PepsiCo experienced a 5% increase within a one course of instruction span and Coca Cola experienced a 3. 4% increase during the same span. This does not mean that this increase is a dogmatic analysis since the single figure does not reveal whether the increase is a positive measure. A higher cost of sal es may not be offset by higher revenues matching or especial(a) the increased cost. The next thing we are going to look at is clear income.Pepsi had in 2004 a net income of $4,212 and this yielded a ratio percentage of 15. 1% of total assets and in 2005 their net income was $4,078 yielding a ratio percentage of 13. 2% of their total assets. This is a 1. 9% drop-off in their net income between 2004 and 2005 and they also show a decrease in the cost of sales during the same period. blow on the other choke had a net income of $4,847 in 2004 yielding a ratio percentage of 15. 4% and in2005 their net income was $4,872 yielding a ratio of 16. 6% of their total assets. This shows and an increase of 1. 2% between 2004 and 2005.Although they experienced an increase it is not just an offset of their income overall, making this a negative indication for Coca Cola. right away the breakdown of each companys consolidated balance sheets to equate rate of flow assets and accredited liabilit ies to their total assets for each year considered. Pepsis total watercourse assets in 2004 were $8,639 which yields a ratio percentage of 30. 9% of total assets for that year. Pepsis total current assets in 2005 were $10,454 which yields a ratio percentage of 32. 9% of total assets. This shows a 2%increase in current assets.In contrast coca Cola current asset in 2004 were $12,281 yielding a ratio percentage of 39. 1% and in 2005 current asset were $10,250 yielding a ratio percentage of 34. 8%which show a major decrease in their current assets. Although, there was a fundamental decrease in their current assets it was accompanied by a decrease in their current liabilities, which would be a positive indication for nose candy instead of a negative one. Looking at the horizontal analysis of each company will give us more information. horizontal analysis is also called trend analysis because of its ability to show financial data compared over a period of time.There are two different f ormulas that can be employed to teach this information. The first one uses the current year amount and subtracts from that the stolid year amount. The second formula divides the current year amount by the base year amount. The year 2004 is the base year for both companies in this analysis. Pepsis total current assets for 2004 were $8,639 and for 2005 were $10,454. In the first Pepsi had an increase of 121. 01% of total current assets over their 2004 base year figure. The second formula yields a 21. 01% total current assets from the base year. Cokes total assets in 2004 were$12,281 and $10,250 in 2005.As you can see Cokes total current assets dropped between 2004 and2005 without performing the formulaic calculations. all told the analysis shows that PepsiCo and Coca Cola both experienced lower net profits in 2005than in 2004. They showed an increased operation disbursals which resulted in a lower net profit. twain has had a higher operating expense in 2005 than in 2004 and need t o modify their operations to reduce their expenses so their profit margins can increase so they will not wait experiencing a decrease in profits. I have analyzed two well-known companies in this paper.These two companies are PepsiCo and Coca Cola. These two companies have been around for a long time and have stormed the market. We have seen in my vertical and horizontal analysis that their financial data reveals somewhat a different picture of each companys financial status. Both companies have experienced a moment were they were not remunerative 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