Analyzing financial statements: Coca-Cola vs Pepsi

Résumé du document

Coca-Cola and PepsiCo have been world leaders of the soft drinks market for more than 100 years. Coca-Cola brand has been created by John Pemberton in 1886 in Atlanta. The Pepsi-Cola brand has been created in 1898 by Caleb D. Bradham. Thanks to their strong reputation and the infatuation of their customers, their sales have dramatically increased and lead them to be at the forefront of the scene. Since their creation, these two giants of the industry are involved in a constant business war. They have made their presence felt in the whole world, thanks to a strategy adapted to different cultures. Enabled by an increase in sponsorships and several horizontal acquisitions, they have acquired a major place into their consumer's habits. Coca Cola Company is the first supplier of carbonated soft drink without alcohol in the world and it is also one of the biggest companies in the world. The firm currently employs 90,500 persons and has 71,000 associates all around the world.

Extraits

[...] Since the beginning of the year 2008, both companies have observed the same financial evolution. In the current situation, PepsiCo has opted a strategy based on horizontal acquisitions and research and development of their products. The group has recently officially announced the acquisition of Spitz International, a Canadian company supposed to enhance the healthy snacks unit. This decision seems to be a little bit risky because of the credit crisis and the reluctance from banks to lend money. Ratio analysis If we want to easily understand the financial situation of the Pepsi-Cola company, we will provide a general financial data of the company over 5 years as following: Part of each division in the net revenue over five years We can see that, thanks to this table, the structure of the PepsiCo revenue has changed when compared to Coca-cola, which comes from the demand and the strategy adopted by the group. [...]

[...] Concerning the group PepsiCo, it has less image recognition in comparison with Coca-Cola. Thus, in order to survive in this very competitive industry, the group has adopted a specific strategy. In fact, the group through its advertising, promotes a younger, fashion oriented brand (concerning beverage). In fact, PepsiCo in the developed countries, uses famous athletes and urban people to promote its beverage. This strategy, has for an objective, to reach the targeted population. The group also adopts a worldwide strategy. [...]

[...] Analyzing financial statements: Coca-Cola vs Pepsi Table of contents Introduction I. Coca-Cola Corporate Company's overview Data and financial analysis Ratios analysis Comments about ratios and strategies adopted II. Pepsi-Cola Corporate Company's overview Data and financial analysis Ratios analysis Comments about ratios and strategies adopted III. Comparative strategic analysis Strengths and weaknesses about both companies IV. Recommendations As an investor As a bank Conclusion Appendices Coca-Cola financial statements and ratios' calculation Pepsi-Cola financial statements and ratio's calculation Other informations about both companies Bibliography Introduction Coca-Cola and PepsiCo have been the world leaders in the ‘soft drinks' market for more than 100 years. [...]

[...] These analyses allow us to understand the financial statement of the two giants in the beverage business. These two companies know that the main difference comes from their ability to adapt their products in new markets, in new countries. The Asian and the African markets represent a big potential for consumers, and it is precisely these markets that PepsiCo and Coca-Cola must flood. Research, development and innovation are the key to success, but after that they have to adapt their products to the taste and culture of each country. [...]

[...] Profitability Concerning profitability, there exists a big difference between the Coca- Cola Company and PepsiCo. Coca-Cola Company has a gross margin of 64% and a profit margin of 21 over the five years whereas PepsiCo has margins of and 54%. In fact, Coca-Cola has a bigger profit and gross margin than Pepsi-Cola. Coca-Cola is the more profitable company which could be a good indicator for investors and bankers. Liquidity Concerning the liquidity ratio used, we can say that PepsiCo has more facility than the Coca-Cola Company to cover its short-term debt. [...]