Analyzing financial statements: Pepsi and Coca-Cola (2011)

Résumé du document

In this final assignment we are going to analyze the financial statement of two historic competitors on the drinks market. The case will be organized as followed: at first before each calculation we are going to define the ratio and then see the general formula we used during the course. Then we will have the case of each company Pepsi Co and Coca Cola Co with a little conclusion for each firm and then the comparison of the two firms.

Working capital, definition: working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying.

Inventory turnover ratio :
Definition: this ratio is showing how many times a company's inventory is sold and replaced over a period.

Extraits

[...] When we are comparing the two companies, we have analyzed that the time to collect money for Pepsi Co is shorter than the time for Coca Cola Co. Cash turnover Definition: this is the number of cash cycles completed in one year. The case of Pepsi Co 2009: 2010: The case of Coca Cola Co 2009: 2010: II) Solvency ratios Debt to equity ratio Definition: this ratio is a financial one which is indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. [...]

[...] IV) Market measure Price earnings ratio Definition: this is a valuation ratio of a company's current share price compared to its per-share earnings. For this calculation, I prefer to be honest and say I didn't find the information to do it. Dividend yield ratio Definition: this is a ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. [...]

[...] The case of Coca Cola Co 2009: 2010: When we are considering the case of Coca Cola Co, we can say that there was some bonus at the end of each year. If an investor gave at the beginning of the year, he would get $ 1.24 at the end of the year 2009 and $ 1.42 at the end of the year 2010. In my opinion each firm has a good ROE. What I would say is that Pepsi Co is maybe more regular than Coca Co. That shows us that the firm is able to control years to years. [...]

[...] In 2010 we have found 41.15 that means Pepsi reduce the time between the production and the sales this is a really good way of development. The case of Coca Cola Co 2009: 2010: The Coca Cola Company has followed the same idea as Pepsi Co. They have reduced the time between production and sales too. Now if we compare the two firms we can say that Pepsi Co is managing the days in inventory better because they are able to have the half of time, around 40 days, contrary to Coca Colas which are around 75 and 80 days. [...]

[...] Investors have to be careful because both firms are using more and more debts to finance assets especially for the case of Pepsi Co during the year 2010. They have to follow carefully the evolution of the situation. Debt to total assets ratio Definition: this ratio indicates in what proportion the company's assets are being financed through debt. The case of Pepsi Co 2009: 2010: With our calculation, we are able to say that the Pepsi Co is financing its assets through equity. [...]