This paper is intended to conduct financial management analysis, evaluation and comment on Coca-Cola Company’s financial reports in comparison with its competitor PepsiCo Inc. Its scope is limited to provide financial information to investor and other users by applying theories, concepts, calculation and principles of financial management. The method used for financial management analysis includes vertical analysis of selected income statement items (operating revenue, EBITDA, EBIT, EBT and net income.)by assigning revenue as base and vertical analysis of selected balance sheet accounts (total asset, current asset, plant asset, total liability and stock holders equity, current liability, long term liability and common stock holders equity.)by assigning total asset as a base for asset items (CA and PA)and by assigning total liability and stock holders’ equity as a base for liability and equity items(current liability, long term liability and stock holders equity),financial ratio analysis (profitability ratio),beta coefficient, bond rating and WACC. For this purpose, a three year (2009-20011) Coca-Cola company and PepsiCo Inc’s annual financial report are used. These companies are competitive because both have been operating their business in soft drink production for many years. Additionally, certain information out of the company’s annual financial reports are taken from yahoo finance and other references that are listed in the reference section.
Over view of Coca-Cola company
In May, 1886 Coca-Cola was invented by doctor john pemberton a pharmacist from Atlanta, Georgia. Coca-Cola Company is a non alcoholic beverage company any produces a verity of products over worldwide and have about 136,000 employees. Vertical analysis of income statement
In order to compare Coca-Cola company with PepsiCo inc a three year, annual relative percentage change, of five selected income statements elements are computed in an excel spreadsheet using the companies 2009-20011 annual financial statement reports. To perform the relative percentage change of these selected income statement items we have made operating revenue as a base. So all the figures presented below are computed in relative terms. By using this vertical analysis we can compare each selected item of income statement with each other, trough time and across company. For example net income in relative with revenue is calculated by dividing net income to operating revenue, which is 8572/46542=18.42% for 2011.
Vertical, relative percentage change analysis income statement (Coca-Cola company from 2009-2011)
2009 2010 2011 Amount percentage amount percentage amount percentage R 30990 100% 35119 100% 46542 100% EBITDA 11088 35.78% 22426 63.86% 28326 60.86% EBIT 8231 26.56% 8449 24.06% 10154 21.82% EBT 8946 28.87% 14243 40.56% 11439 24.56% NI 6824 22.02% 11809 33.63% 8572
Vertical, relative percentage change analysis of income statement (PepsiCo Inc from 2009-2011)
2009 2010 2011 Amount percentage amount percentage amount percentage R 43232 100% 57838 100% 66504 100% EBITDA 8107 18.75 8449 14.61% 9766 14.68% EBIT 8049 18.62% 8332 14.41% 9663 14.53% EBT 8079 18.69% 8232 14.23% 8834 13.28% NI 5946 13.75% 6320 10.92 6443 9.69%...
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