Xacc280 Financial Analysis

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Financial Analysis
XACC 280
Nov 18th, 2012
Jennifer Parker,
Axia College

Financial Analysis

In this paper, after reviewing and analyzing Appendix A Specimen Financial Statement for PepsiCo and Appendix B Specimen Financial Statement for the Coca Cola Company, I would be providing a financial comparison between the two most known beverages company in the world PepsiCo and Coca-Cola. I will be supporting my financial analysis by showing vertical, horizontal, and ratio financial analysis for both companies. To provide explanation as to what to find in each financial analysis; vertical analysis refers to assets, liabilities and equities as a percentage as a whole. It is a method where each entry for each of the categories in a balance sheet is represented as a proportion of the total account. Horizontal analysis is a method which is used for evaluating financial statements data over a specific period of time. It shows if the company’s performance is improving or decreasing and it can be expressed in numeric amounts or percentage amounts. Finally, the Ratio analysis is the calculation and comparison of ratios which are shown in the company’s financial statements. It determines or states if the company is worth investing in or not. In order to determine which company has the capability to offer more to its investors and stockholders, it is essential to study each financial set of numbers from several views. For instance; the vertical and horizontal analysis, profits, solvency, and liquidity ratios. Both PepsiCo and Coca-Cola had to overcome a series of major obstacles through the years in order to get where they are now, both companies has had to deal with legal issues, precedents, and politics. But surpassing those obstacles only made them stronger, and now they are also a good example of how leadership is the power of influence. Both companies came up with a specific main product, their trademark, created a certain taste, invented an appeal for any type of population and the complete package and advertisement attract all type of consumers and any time of the year with any type of meal. Coca-Cola and Pepsi Co are the most notorious soft drinks in the world, while they may look similar, the taste, the logos, the missions are completely different. They have always had a great taste but most to their favor a great marketing team which has made it possible for Coca-cola and Pepsi to reach customers around the world, no matter their social status or age. Even though new soft drinks companies have been created from different countries, with different flavors, Coca-Cola and Pepsi has always been number one. These two companies are their main competitor for each other worldwide, due to the fact that they reach the same type of customers from around the world. And it is known that when one company creates a new product or drink then its competitor will create a similar kind of product, this process is called ( follow up strategy), and it’s how Coca-Cola and Pepsi have been able to stay in business and remain the major companies and major competitors for each other. Coca-cola and Pepsi have been very profitable companies. To start comparing both companies, we will start with a vertical analysis of these companies. The vertical analysis comes from each company’s financial statements. The total assets for each company will be the starting point of this analysis. Coca Cola’s total assets in 2004 were $31,441 and its 2005 total assets were $$29,427 while Pepsi total assets for 2004 were $27,987 and for 2005 it was $ 31,727. The cost of sales for Pepsi for 2004 was $12,674 which yield a ratio percentage 45% of total assets and for 2005 the total sales was $ 14,167 yielding a ratio percentage of 44.7% of total assets. Now for Coca-cola the cost in sales for 2004 was $7,674 yielding a ratio percentage of 24.4% total assets and for 2005 it was $8,195 yielding a ratio percentage of 27.8% of total assets. By this result we can...
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