PEPSICO VS COCA-COLA

PepsiCo vs Coca-Cola

Abstract

The prime reason of this report is to identify and analyze the two superior businesses in the supple drink industry and work out the strongest entertainer as an investment opportunity. Coca-Cola and PepsiCo have been vying in the soft drink sector for over a century and both companies enjoy a high degree of emblem consciousness globally. Coca-Cola has, until lately, outpaced its number two competitor considerably, both in the U.S. and overseas. Iwill contrast the two companies utilising the following criteria: comparative statistics and relevant figures affecting probability, key ratios.

PepsiCo vs Coca-Cola

Quation 1

Liquidity measurement ratio

The present ratio is an sign of the short-term debt-paying ability of a company. Usually, the higher the ratio, the more fluid the company is. Another interpretation of a high ratio is that the company is squatted on money and not buying into it wisely. PepsiCo's present ratio is 1.31 times, substantially higher than Coca-Cola's 0.92 times.

Pepsi

Liquidity Ratios

12/26/2009

12/27/2008

12/29/2007

12/30/2006

Quick Ratio

0.98

0.77

0.68

0.78

Current Ratio

1.44

1.23

1.31

1.33

Net present Assets % TA

9.57

5.61

6.93

7.58

Coca Cola

Liquidity Ratios

12/31/2009

09/30/2008

09/30/2007

09/30/2006

Quick Ratio

-

0.01

0.01

0.02

Current Ratio

1.01

1.17

1.05

1.54

Net Current Assets % TA

0.49

6.49

2.52

19.94

Question 2

Profitability indicator ratios

PepsiCo's return on equity (ROE) is 34.0%, well overhead the commerce (30.7%) and the S&P 500(21.0%). Coca-Cola's ROE is 27.0% versus the commerce (30.7%) and the S&P 500(21.0%).Coca-Coca is not consigning as much worth to stockholders as PepsiCo. PepsiCo's overseas partnerships and acquisitions are adding significantly to shareholder value (Ongkrutaraksa, 2006). The ratio of snare earnings to total assets assesses the come back on total assets (ROA) after interest and taxes. PepsiCo's 5 year ROA is 15.89%, somewhat higher than the industry's 14.70%. Coca-Cola fares better one time again, 16.37% versus the industry's 14.70%.

Aassisting factor here may be PepsiCo's reliance on long-term debt to double-check proceeded growth. Here's a fast evaluation: PepsiCo's long-term debt is identical to 24.3% of its total liabilities. Coca-Cola's long-term liability is identical to 15.3% of total liabilities. This means that Coca-Cola is much less susceptible to adverse components such as inflation, recession or war (Jackson, 2001).

Pepsi

Profitability Ratios

12/26/2009

12/27/2008

12/29/2007

12/30/2006

ROA % (Net)

15.72

14.6

17.58

18.35

ROE % (Net)

41.25

35.15

34.8

38.2

ROI % (Operating)

35.85

33.3

36.29

34.3

Calculated Tax Rate %

27.22

28.27

27.9

21.14

Coke

Profitability Ratios

12/31/2009

09/30/2008

09/30/2007

09/30/2006

ROA % (Net)

(8.76)

5.31

(15.41)

(2.54)

ROE % (Net)

(16.14)

10.67

(30.01)

(5.75)

ROI % (Operating)

(7.1)

13.06

(12.54)

2.44

Calculated Tax Rate %

0.62

0.74

0.61

0.59

Question 3

Investment valuation ratio

Price/earnings (P/E) ratios are higher for firms with powerful growth prospects, other things held unchanging, but they are smaller for riskier firms. PepsiCo's P/E ratio is 19.7 times, which is smaller than the commerce (21.1) and the S&P 500(19.8). Coca-Cola has a higher ratio here, 22.1 times, which beats the industry (21.1) and the S&P 500(19.8). Both of these businesses are in the beverage manufacturing industry, which has been a tough industry to be in for the past ten years. As previously cited, Americans are consuming less carbonated beverages and rotating to other healthier choices (Fabozzi, 2004). PepsiCo has the advantage here, even though Coca-Cola has the more favorable ratio: Its diversity into snacks and other food goods means that PepsiCo's incomes will be less influenced by buyers' changingpreferences in comparison to Coca-Cola.

The most important accounting ratio is the ratio of net earnings to widespread ...