Financial Analysis of PepsiCo and Coca-Cola

PepsiCo and coca plant dope argon devil major companies that manufacture beverages. They postulate to be the repress on manufacturer and distributor of beverages in the world. These ii companies are actually identifiable in this market and you know them as PepsiCo and coca Cola. These deuce companies throw away undoubtedly dominated the markets world-wide that they both receive general recognition for their different products. Although, there are many separate manufacturers and distributors of beverages these deuce are the major competitors.Not only do they produce soda drinks, they too produce flavored water, spring water, and some energy drinks. PepsiCo, best known for Pepsi and Coca Cola best known for Coke have great selling anddue to this they are able to target all income brackets. Their marketing and reasonable prices cook up iteasy for the people to buy their products in all income brackets. I will be examining both companys income statements and commensuratene ss sheets to disclose the financial condition of these companies in relation unmatched to a nonher.I will also perform vertical and level synopsis from their annual report of financial data. There are a massive amount of manufacturers and distributors in this market, but Pepsi and Coca-Cola have managed to stay in the progeny one spot for a couple of decades. These two companies have not only dominated the market domestically they have dominated the worldwide market. They arriveed a plan that kept them above and beyond the market of around the bend drinks. They have overcome obstacles that allowed them to manufacture and distribute globally. (The Coca Cola Company, 2009).These companies compete with one some other for the same customers. When one company comes up with a product the other company comes out with something very similar to it this is called the follow up strategy, and while doing so they live the other companies behind dazed and confused, wondering what just hap pened. (www. PepsiCo. com, 2009). Being 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 leadership is the power of play.They design their product geared towards a certain(p) taste and to appeal to a certain population and make realise as though they are subjected to certain ethical and moral practices. Their influence in this market is so powerful that they drive out and omit down any other competitor in this market. I would standardized for you to keep in mind that all financial data of these companies are coming into courtn in millions so if you take up a figure of 200 that government agency 200 million and if you see 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 complete assets for each company will be the get-go point of this analysis. Coca Colas total assets in 2004 were $31,441 and its 2005 total assets were $29,427. PepsiCos total assets for 2004 were $27,987 and its total assets for 2005 were $31,727. (Weygandt, Kimmel, & Kieso, 2008). The total asset of each of the figures relates to items from each companys balance sheet. The salute of sales for PepsiCo during 2004 was $12,674 amenable a proportion percentage of 45. 3% of total assets and for 2005 the cost of sales was $14,167 yielding a dimension percentage of 44. 7% of total assets.Coca-Colas cost of sales in 2004 was $7,674 yielding a proportionality percentage of 24. 4% of total assets and in 2005it was $8,195 yielding a ratio percentage of 27. 8% of total assets. PepsiCo experienced a 5% development within a one social class span and Coca Cola experienced a 3. 4% increase during the same span. This does not mean that this increase is a positive analysis since the single figure does not reveal whether the increase is a positive measu re. A higher cost of sales whitethorn not be offset by higher revenues matching or exceeding the increased cost. The next thing we are going to watch at is net income.Pepsi had in 2004 a net income of $4,212 and this yielded a ratio percentage of 15. 1% of total assets and in 2005 their net income was $4,078 yielding a ratio percentage of 13. 2% of their total assets. This is a 1. 9% come down in their net income between 2004 and 2005 and they also immortalize a falloff in the cost of sales during the same period. Coke 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 entirely an offset of their income overall, making this a negative distinction for Coca Cola. Now the breakdown of each companys consolidated balance sheets to compare authorized a ssets and true liabilities to their total assets for each year considered. Pepsis total current assets in 2004 were $8,639 which yields a ratio percentage of 30. 9% of total assets for that year. Pepsis total current 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 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 different locutions that can be employed to teach this information. The first one uses the current year amount and subtracts from that the substructure year amount. The second formula divides the current year amount by the vile 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 second 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. All the analysis shows that PepsiCo and Coca Cola both experienced lour net profits in 2005than in 2004. They showed an increased operation expenses which resulted in a lower net profit. Both has had a higher operate expense in 2005 than in 2004 a nd need to modify their operations to swerve their expenses so their profit margins can increase so they will not keep experiencing a decrease in profits. I have study two well-known companies in this paper.These two companies are PepsiCo and Coca Cola. These two companies have been around for a long time and have stormed the market. We have seen in my vertical and horizontal analysis that their financial data reveals middling a different picture of each companys financial status. Both companies have experienced a moment were they were not gainful and a moment when they were profitable. During this exercise made me realize that although these companies appear to be profitable the analyses showed that these two companies performance were very different from one another in the years 2004 and 2005