Comparison of Financial Conditions Between Coca-Cola and Pepsi Co

Topics: Revenue, Coca-Cola, Balance sheet Pages: 27 (6724 words) Published: January 2, 2011
Comparison of financial conditions between Coca-Cola and Pepsi Co.

Statement of the issue
This report will focus on the comparison of financial conditions, especially their profits statements between Coca-Cola and Pepsi Co. for their stakeholders, like consumers, shareholders, manager, investors, and employees, creditors and lenders.

Objectives of the project
Two objectives are built to be achieved before 30th, December 2007. The major one is to help the stakeholders to know why these two companies are so successful in the past three years (2004-2006) by analyzing their financial conditions. The other one is to find these two companies’ own advantages and disadvantages by comparison.

To fulfill the above two objectives, the following sub-objectives have to be done through the whole process. • To well understand their annual reports completely from the year 2004 to the year 2006. Their annual reports, from 2004 to 2006 were loaded on 20th, September 2007. During the whole process, before finishing this report, the annual reports will be read again and again. • To interview Coca-Cola China and PepsiCo China finance managers. To know about these two companies’ way of financing, I will interview their finance managers at the beginning of December, and try my best to keep in touch with them until the report finish. • To know more evaluations about these two companies from others. To analyze Coca-Cola and PepsiCo more objectively, some scholars’ opinions are needed. For this, I did relative research from 22nd, September 2007 to 27th, September 2007, and lend two books in terms of finance analysis, which are corporate finance and finance analysis. Information in terms of these two companies will be up dated and filled in the developing stage. Reasons for the choice of issue

It is known that the status of profits and finance are the two major lines in the management of a successful company. They are the foundations for analyzing an organization. To assess the performance of a company, analyzing the final accounts is the common way. In order to analyze the accounts, a technique, known as the ratio analysis will be used. The whole report will mainly focus on comparing each company’s absolute numerical data, and evaluating the ratios of both two companies’ profitability, liquidity, use of debt and return on equity.

Justification for the choice of business
Reasons for choosing these two companies are quite clear. They are all doing the beverage business, and the company size is similar, most importantly, they are almost seizing the major beverage market, which means the number of their loyal customer is taking the largest part.

The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. It is assessed as the most valuable brand in the world that owns or licenses more than 400 brands, and its products are sold in more than 200 countries. However, PepsiCo, as one of Coca-Cola’s competitor, is also very competitive in the nonalcoholic beverage market. It is the second-largest food and beverage company in the world. Over the last five years, the company has led the industry with over 8% top line growth, double-digit EPS growth and approximately $26 billion in operating cash flow, and it has returned approximately $20 billion to its stakeholders during this period.

Sources of information and Methods in use
To better accomplish this project, primary and secondary research will be used based on their following advantages.

• Primary research: the results obtained from it will fill the information gap. The best way to get the primary data is to enter into the inner part of an organization, and do some practical work, like the interview, surveys and direct observation.

·Interview these two companies’ finance managers.
The direct contact and communication with their finance department will get some inner information in terms of their...
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