Essay about Pepsico vs. Coca-Cola

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PepsiCo vs. Coca-Cola – A Financial Comparison

June 13, 2007

AC550 May 2007 Executive Summary The purpose of this comparative analysis is to provide a summary of financial and accounting information to a potential investor who is looking to invest in either Coca-Cola or PepsiCo. This research will cover some facts from the financial statements of both companies for the year of 2004.
There are many factors to review when comparing these two companies. They are two of the top manufacturers of CSDs (carbonated soft drinks) in the world. Coke’s portfolio is weighted more heavily in the soft drink beverage industry, whereas PepsiCo has tried to diversify itself by merging with companies such as Quaker, Tropicana, and Gatorade.
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However, the results of operations of those entities were consolidated in April and didn’t have material impact for the year ended December 31, 2004. The impact of this method though can be seen in certain financial ratios and complicate comparability between the two companies.

Chapter 3: The Accounting Information System

A. PepsiCo reports and increase from $25,327 to $27,987 in total asses between the years of 2003 to 2004, or 10.5%. Coca-Cola’s statements show an increase as well. In 2003 total assets were in the amount of $27,342 and $31,327 in 2004, or 15%. The increase in current assets has the most effect on the increase of total assets for this company, specifically an increase in Cash and Cash Equivalents from $3,362 to $6,707. This change was due to operating activities mostly transactions in locations outside of US as stated in the company’s notes.

B. Calculations based on Selected Financial Data, PepsiCo’s 5-year compound growth rates related to sales is 5.6%. The compound growth of Coca-Cola is 5.5%. As we see both companies are very competitive and keep their sales going up at the same rate. A 5-year compound growth from continuing operations is not available from the data provided. PepsiCo is only reporting income from continuing operations starting as of 2002. Coca-Cola is providing a 5-year compound growth for income from operations, therefore these data is not comparable.

C. Depreciation and