Financial Analysis, Final Project
Based upon my knowledge learned on financial reporting, I had compared to companies reporting statistics. The two companies in comparison are PepsiCo Incorperated and The Coca-Cola Company in which both have reported annual statistics for 2004 and 2005. During my comparison of net incomes, gross expenses, stock statistics, and assets accumulations, I have suggested some strategies for each business to take into consideration for better future results. As an accountant in training, I will be giving specific details of my analysis and recommendations, as these are my opinions for financial success. As an investor both of these companies are up for consideration according to increasing revenue numbers. On the inside, this evaluation will give a determination of my opinion on rather to invest in either company and in what manners one outweighs the other and reasoning for my opinion. Investing one’s hard-earned money into a company is a risky decision to make, but in return, every investor hopes for the best possible outcome in risk taken. Given financial information to evaluate before decision-making this is the best possible plan to making a positive call on an investment. Word of mouth is not enough for me to want to trust a company with my investments. Still being new at this type of research analysis and I still feel very confident in my judgments and determinations to decide if a company will be successful in return. Keeping in mind that no business is of any guarantee, anything can happen at any given time. Prior to investing regardless of prior statistics, it is important not to move forward with too many expectations in mind. Investing is gambling.
Beginning with PepsiCo I have calculated some ratios gathered form financial statements provided by my XACC-280 class Axia College. Further examination and evaluation of these ratios then led to the support of my suggestions given for future financial success. Comparing both companies are current ratio in which equals assets divided by liabilities. Vertical analysis is the current totals divided by the total equaling the percentage of sustainability. Furthermore, the horizontal analysis comparison increases or decreases from year to year.
Current Ratio = Current Assets ÷ Current Liabilities
31,727= 1.82:1 27,987 = 1.93:1
Vertical Analysis Horizontal Analysis
2005 2004 Assets 2005 2004 10,454 = .33%8,639 = .31% 10,454 – 8,639 ÷ 8,639 .21% 31,72727,987
Liabilities 2005 2004
9,406 -- 6,752 ÷ 6,752 = .39%
Current ratio explains that assets divided by liabilities meaning in 2005 current assets are 1.82 times the liability obligation, and in 2004, 1.93 times the liability owed. Statistics is the current assets are more than liability owed and the liability has lowered as of prior year. This is a positive trend. Vertical Analysis is current physical assets divided by total assets attained per physical year. Determination is in 2005 the current physical assets are 33% of total assets and in 2004 31% of the total assets is obtained. This is a positive outcome to have a higher percentage of physical assets. Horizontal Analysis is the percentage difference in compared...