Capstone Project

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Capstone Project
Financial Analysis:
To make a proper financial analysis of a specific company, you must compare 2 years of financial data, with a good competitor in the same industry. For instance when doing research on the PepsiCo. Inc. company, research must also be done with its well-known competition, Coca-Cola. The examples provided in this paper will show that Coca-Cola as it turns out is better speculation option. All financial data is from Appendices A & B of McGraw Hill Financial Accounting textbook used in XACC 280.
Liquidity, profitability, and solvency are the three man subjects used to determine a company’s success. These three subjects will tell how to financially stable business is. Simple financial statements will not show this information because they do not go as in extent, and do not show a trend over time. Looking at a trend over time, a company’s ratio of vertical analysis and horizontal analysis can be determined. A ratio analysis is used form the liquidity, profitability, and solvency through looking into this data. By taking a look at the whole picture, a person can see how the company is really doing over a very long period of time; and be able to make more precise depictions of the company’s future financial situation. This is very useful when looking for somewhere to invest money.
In order to understand a company’s successes of failures, one must first understand each of the characteristics used when looking at its financial documents. Liquidity, profitability, and solvency are all added up by using ratio analysis. Ratio Analyses involve dividing two numbers to get a number or percentage, which can then be compared to other companies in the same industry.
Liquidity is the measure for a company’s ability to pay the debts that are due. It is usually expressed as a ratio or percentage of current liabilities. Liquidity can be calculated into ration by separating the current cash by current liabilities. Liquidity ratio is sometimes referred to as the

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