Xacc 280 Final

Topics: Balance sheet, Asset, Investment Pages: 4 (1225 words) Published: March 20, 2013
Financial Analysis
Coca-Cola and PepsiCo XACC/280

Financial Analysis

An official financial analysis for a specific company needs two years of financial data from the company and from a competitor in the same industry. This financial analysis is between PepsiCo, Inc. and Coca-Cola. Pepsi and Coca-Cola dominate the beverage market worldwide. In addition to sodas, they also distribute a variety of water and energy drinks. Based on the analysis, the investor will be able to make a better investment choice. Liquidity, solvency, and profitability are the three characteristics that will be used to see a company’s success. A simple financial statement will not demonstrate the company’s power because it is a general idea of the company’s position and does not display business developments. The company’s business developments are vital for potential investors because they determine vertical and horizontal analysis. These characteristics are also used to define the ratio analysis. Ratio analysis is dividing two numbers to get a number of percentages that can be used to compare companies in the same industry. Examining the entire company’s financial trends for a set period of time, an investor will see a factual description of the company’s financial condition. This is the financial analysis an investor desires to review prior to spending money. Liquidity measures a company’s ability to pay their debts when they are due. It is identified as a ratio or percentage of the current liabilities and calculated by dividing the current cash by the current liabilities. It is a fast way to understand if the company’s future is appealing to the investor. If the company is not turning a profit quick enough, it may be a sign of liquidity problems. This is the primary reason why an investor should compare two competitors while looking at the liquidity ratio.

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