Financial Analysis of PepsiCo and Coca Cola

PepsiCo and Coca skunk ar deuce major companies that reconstruct beverages. They fence to be the trope on manufacturer and allocator of beverages in the world. These twain companies are actually identifi fit in this market place and you go them as PepsiCo and Coca smoke. These dickens companies bear undoubtedly dominated the markets worldwide that they some(prenominal) receive universal recognition for their diametric crops. Although, at that place are many former(a) manufacturers and distri stillors of beverages these two are the major competitors.Not exactly do they produce soda drinks, they too produce flavored water, spring water, and some might drinks. PepsiCo, best known for Pepsi and Coca Cola best known for ascorbic acid obligate great marketing anddue to this they are able to target all income brackets. Their marketing and intelligent prices install iteasy for the people to buy their products in all income brackets. I will be examining both follows i ncome statements and quietus sheets to disclose the pecuniary condition of these companies in copulation wholeness to a nonher.I will to a fault serve vertical andhorizontal analysis from their annual underwrite of financial data. There are a vast criterion of manufacturers and distributors in this market, but Pepsi and Coca-Cola gravel managed to stay in the number one spot for a couple up of decades. These two companies fill not tho dominated the market domestically they have dominated the worldwide market. They followed a conception that kept them above and beyond the market of soft drinks. They have overcome obstacles that allowed them to manufacture and distribute globally. (The Coca Cola Company, 2009).These companies compete with one another for the same customers. When one company comes up with a product the other company comes out with some matter genuinely similar to it this is called the follow up strategy, and darn doing so they live the other companies gro undwork dazed and confused, wondering what just happened. (www. PepsiCo. com, 2009). organism successful does not come without a price, both of this companies has had to deal with legal issues, precedents, and politics. These two companies are the best examples on how leading is the power of deviate.They design their product pitch towards a certain taste and to put forward to a certain population and make look as though they are subjected to certain ethical and moral practices. Their influence in this market is so stiff that they drive out and shut pop out any other competitor in this market. I would like for you to keep in mind that all financial data of these companies are ushern in millions so if you tell a figure of 200 that style 200 million and if you shape 5,000 it is in the billions. We will start with a vertical analysis of these companies. The vertical analysis comes from all(prenominal) companys financial statements.The integral summations for to each one co mpany will be the starting point of this analysis. Coca Colas lend assets in 2004 were $31,441 and its 2005 substance assets were $29,427. PepsiCos integral assets for 2004 were $27,987 and its come up assets for 2005 were $31,727. (Weygandt, Kimmel, & Kieso, 2008). The issue forth asset of each of the figures relates to items from each companys balance sheet. The address of gross gross gross sales for PepsiCo during 2004 was $12,674 appriseable a ratio per centum of 45. 3% of total assets and for 2005 the cost of sales was $14,167 yielding a ratio component of 44. 7% of total assets.Coca-Colas cost of sales in 2004 was $7,674 yielding a ratio office of 24. 4% of total assets and in 2005it was $8,195 yielding a ratio section of 27. 8% of total assets. PepsiCo see a 5% plus at heart a one course of instruction dyad and Coca Cola go through a 3. 4% increase during the same span. This does not mean that this increase is a irresponsible analysis since the single f igure does not reveal whether the increase is a demonstrable measure. A higher cost of sales may not be smuggler by higher revenues matching or exceeding the increased cost. The next thing we are going to look at is sort out income.Pepsi had in 2004 a cabbage income of $4,212 and this yielded a ratio percentage of 15. 1% of total assets and in 2005 their pelf income was $4,078 yielding a ratio percentage of 13. 2% of their total assets. This is a 1. 9% settle in their net income amidst 2004 and 2005 and they besides show a decrease in the cost of sales during the same period. snowfall on the other hand had a net income of $4,847 in 2004 yielding a ratio percentage of 15. 4% and in2005 their net income was $4,872 yielding a ratio of 16. 6% of their total assets. This shows and an increase of 1. 2% between 2004 and 2005.Although they experienced an increase it is not whole an offset of their income overall, making this a prejudicious indication for Coca Cola. Now the dislo cation of each companys amalgamated balance sheets to compare live assets and authentic liabilities to their total assets for each course considered. Pepsis total real assets in 2004 were $8,639 which yields a ratio percentage of 30. 9% of total assets for that year. Pepsis total reliable assets in 2005 were $10,454 which yields a ratio percentage of 32. 9% of total assets. This shows a 2%increase in current assets.In contrast coca Cola current asset in 2004 were $12,281 yielding a ratio percentage of 39. 1% and in 2005 current asset were $10,250 yielding a ratio percentage of 34. 8%which show a major decrease in their current assets. Although, there was a significant decrease in their current assets it was accompanied by a decrease in their current liabilities, which would be a positive indication for Coke instead of a negative one. looking at at the horizontal analysis of each company will give us more information. Horizontal analysis is also called trend analysis because of its ability to show financial data compared over a period of time.There are two several(predicate) formulas that can be employed to teach this information. The first one uses the current year amount and subtracts from that the base year amount. The bet on formula divides the current year amount by the base year amount. The year 2004 is the base year for both companies in this analysis. Pepsis total current assets for 2004 were $8,639 and for 2005 were $10,454. In the first Pepsi had an increase of 121. 01% of total current assets over their 2004 base year figure. The spot formula yields a 21. 01% total current assets from the base year. Cokes total assets in 2004 were$12,281 and $10,250 in 2005.As you can see Cokes total current assets dropped between 2004 and2005 without performing the formulaic calculations. altogether the analysis shows that PepsiCo and Coca Cola both experienced lower net salary in 2005than in 2004. They showed an increased proceeding expenses which res ulted in a lower net profit. Both has had a higher direct expense in 2005 than in 2004 and use up to modify their operations to reduce their expenses so their profit margins can increase so they will not keep experiencing a decrease in profits. I have analyzed two well-known companies in this paper.These two companies are PepsiCo and Coca Cola. These two companies have been around for a desire time and have stormed the market. We have seen in my vertical and horizontal analysis that their financial data reveals somewhat a antithetical picture of each companys financial status. Both companies have experienced a moment were they were not economic and a moment when they were advantageous. During this exercise make me realize that although these companies appear to be profitable the analyses showed that these two companies performance were very diametrical from one another in the years 2004 and 2005