Financial Analysis for Pepsi and Coke
Financial Analysis for Pepsi and Coke Axia College of University of Phoenix
Comparing financial data from statements can help determine whether or not it is a sound decision to invest in a company. This information can also help determine if a company is operating successfully and areas of risk within the company. This analyzing can help one company compare itself to another company and ensure that they are able to compete with other companies in their respective industries. PepsiCo and Coca-Cola are two major companies that make a majority of their money from producing and selling soft drinks. To compare these companies we are going to use vertical and horizontal analyses to see if these companies are built for long-term success as well as short-term success. The use of ratio analyses for both companies can be useful to compare financial data for specified areas of each company. Both ratios and analyses will help determine which company would be of better interest to an individual for investment opportunities. Using financial analysis will help use the financial statements of PepsiCo and Coca-Cola to see which company is more financially sound, and determine which company will have the ability to make money over a longer period of time. Horizontal Analyses Horizontal analysis is a technique of comparing data from financial statements over a period of time. The purpose of comparing this data is to track and trend information that can help people understand whether a company is doing good or bad financially. After conducting horizontal analysis for PepsiCo and Coca-Cola, it looks as though Coca-Cola is in better shape financially. While PepsiCo’s net revenues (Example 1) have grown at a much greater rate, their net income (Example 2) has come down at a good rate. Coca-Cola’s net revenues (Example 1) have dropped, but the net income has rose. Even though PepsiCo’s net revenues grew Coca-Cola’s dropped,
Comparing financial data from statements can help determine whether or not it is a sound decision to invest in a company. This information can also help determine if a company is operating successfully and areas of risk within the company. This analyzing can help one company compare itself to another company and ensure that they are able to compete with other companies in their respective industries. PepsiCo and Coca-Cola are two major companies that make a majority of their money from producing and selling soft drinks. To compare these companies we are going to use vertical and horizontal analyses to see if these companies are built for long-term success as well as short-term success. The use of ratio analyses for both companies can be useful to compare financial data for specified areas of each company. Both ratios and analyses will help determine which company would be of better interest to an individual for investment opportunities. Using financial analysis will help use the financial statements of PepsiCo and Coca-Cola to see which company is more financially sound, and determine which company will have the ability to make money over a longer period of time. Horizontal Analyses Horizontal analysis is a technique of comparing data from financial statements over a period of time. The purpose of comparing this data is to track and trend information that can help people understand whether a company is doing good or bad financially. After conducting horizontal analysis for PepsiCo and Coca-Cola, it looks as though Coca-Cola is in better shape financially. While PepsiCo’s net revenues (Example 1) have grown at a much greater rate, their net income (Example 2) has come down at a good rate. Coca-Cola’s net revenues (Example 1) have dropped, but the net income has rose. Even though PepsiCo’s net revenues grew Coca-Cola’s dropped,
References: Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial accounting (6th ed.). Hoboken, NJ: Wiley.