"In 2010, The Coca-Cola Company (TCCC) stands firm in the top spot, while PepsiCo trails way behind its archrival. In light of the slow economic recovery and lingering discussions about a double-dip recession in developed Western markets, it is important to note which players have proved resilient or even outperformed the overall market, and the possible factors affecting their global performance." Ratios are used in much of our daily life. When we buy cars based on miles per gallon, when we evaluate soccer players based on goals per game, or target per shoots and so on. All these ratios allow us to compare performance.
Financial ratios serve the same purpose, but it is important to understand what is being measured in order to understand the results and make judgments. It seems logical that only companies within a same industry can be compared in order to make accurate assumptions or forecasts. Some ratios would be able to show more efficiency but some times its just different ways of doing business. In the first part we are going to analyze Coca-Cola's financial ratios. Secondly, we will analyze Pepsi's financial ratios. Finally, in the third and last part we will compare both companies' ratios. Let us now see Coca-Cola's financial ratios.
[...] Hirt, Foundations of Financial Management, page 55, 2008. 5 Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. 6 Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. 7 Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. 8 Unisgned, DuPont Analysis, , accessed on December 19th, 2010. 9 Unsigned, The Pespsi-Cola Story, , accessed on December 19th, 2010. 10 Unsigned, PepsiCo, Inc., , accessed on December 19th, 2010. [...]
[...] Hirt, Foundations of Financial Management, page 55, 2008. [5] Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. [6] Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. [7] Stanley B. Block & Geoffrey A. Hirt, Foundations of Financial Management, page 55, 2008. [8] Unisgned, DuPont Analysis, , accessed on December 19th, 2010. [9] Unsigned, The Pespsi-Cola Story, , accessed on December 19th, 2010. [10] Unsigned, PepsiCo, Inc., , accessed on December 19th, 2010. [...]
[...] Secondly, we will analyze Pepsi's financial ratios. Finally, in the third and last part we will compare both companies' ratios. Let us now see Coca- Cola's financial ratios. Coca-Cola “The Coca-Cola Company began building its global network in the 1920s. Now operating in more than 200 countries and producing nearly 450 brands, the Coca-Cola system has successfully applied a simple formula on a global scale: provide a moment of refreshment for a very small amount of money -- a billion times a day. [...]
[...] Let us now see Pepsi's financial ratios. Pepsi “A remarkable business phenomenon occurred as the 1960s gave way to the '70s. Business people, the media and consumers began to observe that Pepsi, an upstart, aggressive company, was challenging the dominant soft drink company, Coca-Cola, with increasing success. The media named the competition “the cola wars,” and as events were to prove, it was to have far-reaching effects on the soft drink industry. Midway through the decade, The Pepsi Challenge, a landmark international marketing strategy, was born when consumer test after consumer test confirmed that more people preferred the taste of Pepsi over Coke. [...]
[...] Finally we can see clearly that both Coca-Cola and Pepsi are the market leaders with very high profit margin ratios. This 10 % range between the rivals shows that nothing is granted and that the war for leadership pursues itself. Asset Utilization Ratios: 1/Fixed Asset Turnover: [pic] Fixed Asset Turnover in times 2/Total Asset Turnover: [pic] Total Asset Turnover in times After analyzing these two charts we can say that Pepsi puts a high emphasis on the asset turnover management with a high total asset turnover which show how its investments are worth it. [...]
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