When looking at the financial status of PepsiCo, Inc. and Coca-Cola, every dollar amount in every column has some significance. To find out what these amounts represent a financial comparison of both companies is required. Using financial analysis tools such as vertical analysis, horizontal analysis, and ratio analysis, one can get a clearer picture of the financial status of each company. Horizontal Analysis When evaluating financial statement data for a specific period of time we use a technique call horizontal analysis. This method will show if there has been an increase or decrease in the financial status of PepsiCo, Inc. and Coca-Cola. In comparing both of these companies I have evaluated the net revenue and net income for the period of 2003 to 2005, with 2003 being the base year and 2005 being the current year. The formula I have used will show the change in the net revenue and net income for this span of time. The formula to calculate the change since the base period is the current year amount minus the base year amount divided by the base year amount. COCA-COLA (dollar amounts in millions) Net Revenue 23,104(2005) – 20,857(2003) divided by 20,857(2003) = 2247 divided by 20,857= 10.77% Net Income 4872(2005) – 4387(2003) divided by 4387(2003) = 485 divided by 4387 = 11.0% PEPSICO, INC. Net Revenue 32,562(2005) – 26,971(2003) divided by 26971(2003) = 5591 divided by 26,971 = 20.73% Net Income 4078(2005) – 3568(2003) divided by 3568(2003) = 14.29% The balance sheet for PepsiCo, Inc. showed an increase in assets, liabilities, and stockholders equity for the period of 2003 to 2005. These increases suggest “the company expanded its assets base and financed it primarily by retaining in... ... middle of paper ... ...offer a stock option to employees. This would help to increase both employee productivity, which in turn would increase sales, and total shareholders equity. Coca-Cola could also offer stock options to their employees which would also increase productivity and total shareholders equity. They could also reduce long term debt which would reduce their liabilities. Both companies have a long history and reputation that will help them to continue to be profitable. With a dwindling economy, they have both continued to generate considerable revenue which has helped to make them the top beverage companies in the United States. Their dedication to excellence has been rewarded with continued sales and profits. If one were to decide which company to invest in, there would no wrong choice. Both of these companies have a strong following and sales continue to flourish.
The first analysis will be on Verizon. The current ratio and the debt to equity ratio both improved in 2006 when compared to 2005. However, the net profit margin dropped from 9.8% to 7.0%. What does this tell us as investors...
2000: (2,698/5,173) = .522 = 52.2% 2001: (2,841/5,450 = .521 = 52.1% 2002: (4,767/7,949) = .599 = 59.9% 4. Net Income: 2000: $614 million 2001: $665 million 2002: $458 million When comparing the net income figures for the past three years, it is seen that between 2000 and 2001, the net income increased by $51 million, but between 2001 and 2002, the net income decreased by $207 million.
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).
Vertical analysis presents an opportunity to evaluate a company’s make-up and reveals information about its year-to-year changes by comparing each lin...
For the year 2010, the return on sales was .0892. That number is calculated by dividing the net earnings by the total sales. 2010 Return on Sales = $1,069,326 / $11,991,558 and 2011 Return on Sales = $891,082 / $11,850,460.
I subtracted the ratio from 1. Next, I calculated r, by taking net income and
The Porter’s model of competitive advantage of nations is based on four key elements including factor endowments, demand conditions, related and supporting industries and firm strategy, structure and rivalry. This makes it suitable in understanding the competition existing in the soft drinks industry in the Asian markets. The factor conditions identify the natural resources, climate, location, and demographics. Coca cola and Pepsi enjoy the growing population in the Asian markets (Yoffie, 2002). A higher population guarantees the two companies adequate revenues. Other factors include communication infrastructure and availability of skilled workers. Most of the Asian countries are embracing new technologies that grow much knowledge of the diverse beverage drinks. Secondly, the demand conditions play a significant role in enhancing competitiveness for the firms. Both Coca cola and Pepsi are an
As we all should know, PepsiCo is one of the world’s leader in convenient food and beverages. PepsiCo shares are traded worldwide and particularly in NYSE (United States). PepsiCo is in the same line with Coca cola and Cadbury Schweppes as the dominating beverage companies. PepsiCo has successfully built a great brand name rivaling with coca cola, probably because PepsiCo unlike coca cola has its own bottling companies. With a competitive strategy based on differentiation rather than cost leadership like its fellow competitors PepsiCo invests highly in new packaging, flavors, formulas to outsmart their competition. Founded in 1919, producing a variety of sweet and grain-based snacks, carbonated and non-carbonated
At the end of 1991, PepsiCo had EBITDA of $2.1 billion or operating profit margin of 10.8% - down from profit margins of 12.2% and 11.7% in 1990 and 1989, respectively. In addition, net sales only grew by 10.1% in 1991 – considerably low versus growth of 16.8% and 21.6% in 1990 and 1989, respectively. Recent acquisitions of Taco Bell franchises in 1988, bottling operations in 1989, Smiths Crisps Ltd. and Walkers Crisps Holding Ltd. in 1989, and Sabritas S.A. de C.V. in 1990 aided sales in growth in 1989 and 1990. Additionally, a joint venture with the Thomas J. Lipton Co. in 1991 to develop and market new tea-based beverages may lead to greater sales in the future. However, there is some need for an immediate return on its investments in order to sustain historical revenue growth and increase the current profit margins.
When analyzing Coca-Cola’s statement of cash flow, the first thing to note is a steady increase in operating activities within the past few years. These transactions affect the net income. From 2001 to 2003 the cash from net income increased from $4.1 million to $5.5 million. The operating activities is often the most important cash flow of a business because it shows the cash from revenue compared to the payments made for expenses (2).
Thirsty for a cold Mountain Dew or Pepsi? Hungry for some Ruffles potato chips? Or maybe it is breakfast time and some Quaker oatmeal is on the menu. These are just some of the items the company PepsiCo handles. PepsiCo handles a variety of items from beverages and snacks to Quaker products and breakfast cereal to Gatorade and Propel Zero water. PepsiCo has remained a highly successful organization throughout these rough economic times. PepsiCo's executive management team has done an outstanding job in managing the company through a recession and created more global expansion for the company. This paper will explain how the company is managed, what the culture is like, and how management control is handled and how that balance creates a great company like PepsiCo.
Price and advertising strategy: PepsiCo Overhauls Statergy. PepsiCo plans on saving 1.5 billion dollars in...
...eivables $51,322 $67,444 $74,775 Subtotal Cash from Operations $89,442 $113,188 $125,093 Additional Cash Received Extraordinary Items $0 $0 $0 Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of other Short-term Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 Capital Input $0 $0 $0 Subtotal Cash Received $89,442 $113,188 $125,0 Expenditures 2001 2002 2003 Expenditures from Operations: Cash Spent on Costs and Expenses $1,396 $1,029 $1,150 Wages, Salaries, Payroll Taxes, etc. $53,100 $76,200 $85,800 Payment of Accounts Payable $11,446 $9,556 $10,252 Subtotal Spent on Operations $65,942 $86,785 $97,202 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Short-term Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Adjustment for Assets Purchased on Credit $0 $0 $0 Subtotal Cash Spent $65,942 $86,785 $97,202 Net Cash Flow $23,500 $26,404 $27,891 Cash Balance $28,500 $54,903 $82,794
First, let's take a look at Pepsi Co. to determine profitability, there are several ratios utilized. The profit margin is probably the most popular, This ratio is the net income divided the net sales. This helps identify the amount of net income generated by each dollar of sales. For the year of 2005, the profit margin for Pepsi was 12 1/2 percent. In 2004, the profit margin was 14.4 percent and in 2003 it was 13.3 percent. The profit margin for Coca Cola using the same ratio was at about 17 percent for 2005, down from the previous two years of about 18 percent. The average industry profit margin was at about 11.3 percent (Biz Miner 2005). This means that Pepsi Co was average, and maintain a solid profit. While Coca Cola's profit decreased ever so slightly, it was still higher than the industry average. Another look at profitability can be determined by analyzing the efficiency of each company. To do this, a ratio would evaluate how efficiently assets are used to generate sales( Weygandt 2008) This ratio would be the asset turnover. It uses net sales divided by average assets. In 2005, Pepsi Co's asset turnover was at 1.02 while Coca Cola's asset turnover was at 1.06. These are well below the industry average of about 3.5 (Biz Miner 2005).
The gross profit margin is at 27% which is a percent higher than industry standards. The company is performing good and meeting industry standards in terms of cost of goods sold and sales volume. The net income margin decreased to 0.7% in 2003 a decrease of 0.3% compared to 2002.