Pepsi vs. Coca Cola
American university of beirut | FINANCE 210 CASE | PEPSI VS. COCA COLA | Instructor: Leila Atwi | | 12/12/2010 |
Raneem Jaffal
(Ratio Computation)
Jana Haounji (Ratio Analysis)
Alexandra Aboulhosn (Recommendations and Comparison) This is a financial comparison between Pepsi and Coca Cola in terms of company liquidity, solvency, asset management, profitability, and valuation between the years 2008 and 2009 respectively. |
Part One: Pepsi
Ratio Analysis: Pepsi PEPSI RATIOS | | 2009 | 2008 | Percent Change (%) | Liquidity | Current Ratio | 1.436 | 1.230 | 16.745 | | Cash Ratio | 0.472 | 0.259 | 82.242 | | NWC to Total Assets | 0.096 | 0.056 | 70.680 | | | | | | Solvency | Total Debt Ratio | 0.578 | 0.664 | -12.863 | | Debt Equity Ratio | 0.440 | 0.640 | -31.250 | | Equity Multiplier | 2.370 | 2.970 | -20.202 | | | | | | Asset Management | Inventory Turnover | 7.670 | 8.060 | -4.839 | | Days in Sales Inventory | 47.580 | 45.280 | 5.080 | | Receivables Turnover | 9.340 | 9.230 | 1.192 | | | | | | Profitability | Profit Margin (PM) | 0.130 | 0.110 | 18.182 | | Return on Assets (ROA) | 0.150 | 0.140 | 7.143 | | Return on Equity (ROE) | 0.350 | 0.420 | -16.667 | | | | | | Valuation | Earnings Per Share (EPS) | 3.770 | 3.210 | 17.445 | | Price-Earnings (PE) Ratio | 16.12 | 17.06 | -5.510 | | Price-Sales Ratio | 2.350 | 2.330 | 0.833 |
Short Term Liquidity * The current ratio has rose by 16.745% because current assets have increased. * The NWC to total assets has increased by 70.680% because the current assets increased and the current liabilities decreased. * The cash ratio has increased by 82.242% because the increase in cash was larger than the decrease in liabilities. * Overall, the company has become more liquid due to the increase in the company’s current assets and cash. As a result, the company has no difficulty in borrowing money since creditors
Raneem Jaffal
(Ratio Computation)
Jana Haounji (Ratio Analysis)
Alexandra Aboulhosn (Recommendations and Comparison) This is a financial comparison between Pepsi and Coca Cola in terms of company liquidity, solvency, asset management, profitability, and valuation between the years 2008 and 2009 respectively. |
Part One: Pepsi
Ratio Analysis: Pepsi PEPSI RATIOS | | 2009 | 2008 | Percent Change (%) | Liquidity | Current Ratio | 1.436 | 1.230 | 16.745 | | Cash Ratio | 0.472 | 0.259 | 82.242 | | NWC to Total Assets | 0.096 | 0.056 | 70.680 | | | | | | Solvency | Total Debt Ratio | 0.578 | 0.664 | -12.863 | | Debt Equity Ratio | 0.440 | 0.640 | -31.250 | | Equity Multiplier | 2.370 | 2.970 | -20.202 | | | | | | Asset Management | Inventory Turnover | 7.670 | 8.060 | -4.839 | | Days in Sales Inventory | 47.580 | 45.280 | 5.080 | | Receivables Turnover | 9.340 | 9.230 | 1.192 | | | | | | Profitability | Profit Margin (PM) | 0.130 | 0.110 | 18.182 | | Return on Assets (ROA) | 0.150 | 0.140 | 7.143 | | Return on Equity (ROE) | 0.350 | 0.420 | -16.667 | | | | | | Valuation | Earnings Per Share (EPS) | 3.770 | 3.210 | 17.445 | | Price-Earnings (PE) Ratio | 16.12 | 17.06 | -5.510 | | Price-Sales Ratio | 2.350 | 2.330 | 0.833 |
Short Term Liquidity * The current ratio has rose by 16.745% because current assets have increased. * The NWC to total assets has increased by 70.680% because the current assets increased and the current liabilities decreased. * The cash ratio has increased by 82.242% because the increase in cash was larger than the decrease in liabilities. * Overall, the company has become more liquid due to the increase in the company’s current assets and cash. As a result, the company has no difficulty in borrowing money since creditors
References: Google Finance Investopedia.com Moneycentral.msn.com