September 4th 2011
Charmaine Arjoon- Ramjattan, Ph.D
Coca-Cola VS. PepsiCo
When determining which company has the most to offer it is necessary to look at each set of numbers from several different views. For instance this paper will cover vertical and horizontal analysis, profitability, solvency, and liquidity ratios. I will be explaining how each set of results play into the decision making of which company would be best to invest in, by comparing both companies numbers in able to collect the necessary data to make a calculated decision. Coca-Cola and PepsiCo have been in competition since day one, each have a very profitable company. When running the number through and performing a horizontal analysis the numbers show Coca-Cola as being the company that is more financially sound. Not only are Coca-Cola’s current assets at $10,250.00 compared to PepsiCo’s $4,882 current assets, but their liabilities are lower and continued to decrease during the last year. Coca-Cola’s total liabilities in 2004 were $15,104.00, in 2005 their liabilities decreased by $4114.00, compared to PepsiCo’s, whose liabilities in 2004 were $14,464.00 and only continued to increase during the year by $3012.00 bringing their 2005 liabilities to $17,476.00.The rate at which Coca-Cola decreased from 2004 to 2005 was 27.2% compared to PepsiCo’s 20.8% decrease; the speed at which their liabilities decreased brought Coca-Cola to a more financially sound position. Horizontal analysis is a good tool to use when identifying changes in common statements in able to identify a pattern with the percentages, analyzing the increases and decreases of the same item over multiple accounting periods. After performing the vertical analysis of both companies PepsiCo’s net revenue was $32,562.00 compared to Coca-Cola’s $23,104.00. The cost of sales increased at the same rate for each company, PepsiCo ended 2004 at 43.3% cost of goods sold; compared to...