Xacc280 Week 9 Final

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  • Topic: Balance sheet, Generally Accepted Accounting Principles, Inventory
  • Pages : 10 (2678 words )
  • Download(s) : 129
  • Published : August 27, 2010
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In order for a company to be financially healthy, it is of most importance that the company must analyze, interpret, and review the business’s annual financial reports. The financial analyses of the annual reports provide insights and information regarding the performances of the business. In this paper, I will be disclosing financial evaluations and comparisons between Coca-Coca and PepsiCo Incorporation. The visualizations used in this paper were designed to provide the analyses performed utilizing three financial analyses methods: vertical analysis, horizontal analysis, and ratios analysis. There will also be recommendations made on how Coke and Pepsi could improve their financial status. Vertical Analysis-Pepsi and Coke

The vertical analysis of the financial statements compares financial data including assets, liabilities, and equity on a yearly basis. A vertical analysis is used most frequently to monitor annual changes. One of the biggest benefits of a vertical analysis is if gives a company the ability to evaluate the comparison between the total net sales and the cost of goods sold. Illustration 1 shows vertical analyses for 2004 and 2005 (select financial data) for Coca-Cola and PepsiCo, Inc. performances. Illustration 1-Vertical Analyses of Coca-Cola and PepsiCo, Inc. for 2004 and 2005 Coca-Cola Consolidated Balance Sheets

2005Percent 2004Percent
Current Assets 10,250 34.83% 12,281 39.06% Inventory 1,424 4.84% 1,420 4.52% Accounts Receivable 2,281 7.75% 2,244 7.14% Non-current Assets 15,517 52.73% 15,496 49.29% Total Assets 29,427 100.00% 31,441 100.00% Current Liabilities 9,836 33.43% 11,133 35.41% Non-current Liabilities 3,236 11.00% 4,373 13.91% Total Liabilities 13,072 44.42% 15,506 49.32% Total Stockholders' Equity 16,355 55.58% 15,935 50.68% Total Liabilities & Stockholders' Equity 29,427 100.00% 31,441 100.00%

PepsiCo, Inc. Consolidated Balance Sheets 2005Percent2004Percent
Current Assets 10,454 32.95% 8,639 30.87% Inventory 1,693 5.34% 1,541 5.51% Accounts Receivable 3,261 10.28% 2,999 10.72% Non-current Assets 16,319 51.44% 14,808 52.91% Total Assets 31,727 100.00% 27,987 100.00% Current Liabilities 9,406 29.65% 6,752 24.13% Non-current Liabilities 8,070 25.44% 7,712 27.56% Total Liabilities 17,476 55.08% 14,464 51.68% Total Stockholders' Equity 14,320 45.14% 13,572 48.49% Total Liabilities & Stockholders' Equity 31,727 100.00% 27,987 100.00%

Coca-Cola Consolidated Income statements 2005Percent2004Percent
Sales 23,104 100.00% 21,742 100.00%
Cost of Goods Sold 8,195 35.47% 7,674 35.30% Operating Income 6,085 26.34% 5,698 26.21% Interest 1,085 4.70% 916 4.21% Net Income 4,872 21.09% 4,847 22.29%

PepsiCo, Inc.Consolidated Income Statements
2005Percent2004Percent
Sales 32,562 100.00% 29,261 100.00%
Cost of Goods Sold 14,176 43.54% 12,674 43.31% Operating Income 5,922 18.19% 5,259 17.97% Interest 460 1.41% 287 0.98% Net Income 4,078 12.52% 4,212 14.39%

Horizontal analyses for Coca-Cola and PepsiCo.
If there are significant changes in a company over a given time period, the changes can be determined...
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