Pepsico vs Coca-Cola

Topics: Generally Accepted Accounting Principles, Balance sheet, Revenue Pages: 5 (2034 words) Published: October 17, 2010
Coca Cola and PepsiCo, Inc are both universally recognized companies. Introducing these companies is not a necessity as everybody in the world knows about them and their products. These companies have been producing soft drinks, drinking water and flavored waters for centuries and have been competing in the same market for ages. We have come to know about this rivalry as “Cola War” which has its own celebrated history. In this market, there are many players, some are regional companies and some are multinational companies but main competitor of PepsiCo, Inc is Coca Cola and vice versa. The operations of the companies are beyond the national boundaries. Coca Cola and PepsiCo, Inc targets all income segments of customers in the entire world as their products are attractive and likeable. Both companies produce parallel products and services (Coca Cola Company, 2009). It is a known factor that when a company goes beyond the national boundaries, the distribution channel and production becomes main concern. Both companies own manufacturing plant in most of the countries around the globe. Coca Cola and PepsiCo, Inc adopts follow up strategies. It means when Coca Cola launches new product and a new promotion strategy, PepsiCo, Inc follows its fierce competitor Coca Cola with its own version or vice-versa. The distribution channels of these two companies are divided into three stages and there is no franchise system in companies (PepsiCo Inc, 2009). As we discussed, both companies are multinational and as they enter new market, they consider many issues such as legal risk, political risk, business risk etc. because of the fact that in past these companies had to leave the market due to above mentioned reasons. The companies are very conscious towards taste preferences of the targeted customers. Both companies work on ethics and moral values. They both have public relation department which serves as a chain between consumers and the company. Apart from the business activities, both companies actively participate in social activities and welfare programs. Objective of paper

Every written paper has own purpose and objective. Without objective, paper is worthless and does not create a good impression on the readers. The main objective of this paper is to show financial comparison between Coca Cola and PepsiCo, Inc. In this paper, the vertical and horizontal analyses of both companies are analyzed. The main concerns of paper is to disintegrate how both companies are financial different from each other. Horizontal Analysis

Consolidated Income Statements
The total revenue of PepsiCo, Inc in 2005 and 2004 were $32562 and $29261 respectively. Company had significant amount of net revenue in 2005 than that in 2004. The base year of analysis is 2004. The net revenue of the company was 111.11% in 2005. It experienced 11.11% growth over 2004's revenue. The total revenue of Coca Cola in 2005 and 2004 were $23104 and $21742 respectively. The revenues of both years of the company were less than that of PepsiCo, Inc. The net revenue of the company in 2005 was 106.26% over 2004. The net revenue of 2005 was 6.26% more than that in 2004. The growth rate of revenue for Coca Cola is less as compared to PepsiCo, Inc. The growth rate of revenue for both PepsiCo and Coca Cola was 11.11% and 6.26% respectively. The cost of goods sold for PepsiCo, Inc was $11031 and $12314 in 2004 and 2005 respectively. The cost of goods sold increased due to increase in sales. The cost of goods sold was 111.63% as compared to that of 2004's. The cost of goods sold of Coca Cola was $7674 and $ 8195 respectively. In percentage term, the total cost of goods sold for Coca Cola was 106.79% over 2004. There was 6.79% increment in cost of goods sold for Coca Cola in 2005 than that in 2004. In general, selling and administration expenses of PepsiCo, Inc were $12674 and $14176, respectively. The operating expenses was 111.85% in 2005, so the operating expenses were 11.85%...
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