Using Coke and Pepsi
Long time competitors in the soft drink industry, PepsiCo and Coca-Cola continue efforts to gain additional market share. Which do you prefer, Coke or Pepsi? Let's take a look at these two companies from a financial perspective rather than our drink preference.
To learn more about PepsiCo and Coca-Cola Enterprises, download the latest PepsiCo 2014 Annual Report at: HYPERLINK "https://www.pepsico.com/docs/album/default-document-library/pepsico-2014-annual-report_final.pdf" https://www.pepsico.com/docs/album/default-document-library/pepsico-2014-annual-report_final.pdf and the Coca-Cola 2014 Annual Report at https://ir.cokecce.com/phoenix.zhtml?c=117435&p=irol-reportsannual:. Review the annual reports for general information.
Required:
1. Read -Understanding the Income Statement at: https://www.investopedia.com/articles/04/022504.asp
2. Read -Reading the Balance Sheet at: https://www.investopedia.com/articles/04/031004.asp
3. Compute- the following financial ratios for both companies and provide as an appendix to the required paper. If you need help understanding the meaning of the ratios or how to they are computed, go to: https://www.investopedia.com/university/ratios/
Liquidity measurement ratio: · Current ratio
Profitability indicator ratios:· Return on assets · Return on equity
Debt ratio: · Debt ratio
Operating performance ratio: · Fixed asset turnover ratio
Cash flow indicator ratio: · Dividend payout ratio
Investment valuation ratio: · Price / Earnings ratio
For each company and comparing the two, you are to write a eight to ten (8-10) page report that answers the following:
1. Provide a short background on each company, the industry and the market (growing, declining, etc?) in which they operate. (This should be no more than 1- 1.5 pages for both companies in total and can be a part of your introduction.)
2. Using the current ratio and debt ratios, discuss what conclusions you can make about each company's ability to pay current liabilities (debt). Support your conclusions. Which company is doing better, why or why not?