Coca Cola Analysis
William Fanning
U16827185
FIN 4461
Professor Rutherford.
Financial of the Coca-Cola Company and Pepsico
SUMMARY
This report compares the two dominant companies in the soft drink industry, Coca-Cola, and Pepsico. The introduction will cover an overview of the soft drink industry, followed by the strategies and the positions of each company within the industry. Then the financial analysis will explain each company’s statement of cash flows, common size and original income statement and balance sheet. Accompanying that will be an explanation of the various financial statement ratios, such as, ROA, ROCE and their components, liquidity ratios, and solvency ratios for the past three fiscal years (2013, 2012, 2011). Lastly, a conclusion will be stated based on the results of this analysis.
There are two leaders in the highly profitable soft drink/ beverage industry, they are Coca-Cola and Pepsico. These are two similar, but yet very different companies. Coca-Cola is the worlds most recognized brand. Pepsico has stellar name recognition, but has diversified into more lines of business than Coca Cola. Since Pepsico does not hold nearly as much market share as Coca-Cola their other line of business in the chips industry. Frito-Lay is their largest subsidiary in the industry, and is the top selling snack company in the United States of America. This is one of the reasons that Pepsico is able to compete with Coca-Cola. One of the reasons that the soft drink industry is able to obtain returns much higher than the S&P 500 is because of these two companies. Coca-Cola was formed in 1886 and Pepsico in 1919, these companies are very well established, and also have created incredible barriers to entry. Coca-Cola and Pepsico both have their own secret formula/recipe for their colas. If you combine that with the customer loyalty that brings in and also the various ways they have both dominated the distribution channels it makes it incredibly difficult for any competitor to
U16827185
FIN 4461
Professor Rutherford.
Financial of the Coca-Cola Company and Pepsico
SUMMARY
This report compares the two dominant companies in the soft drink industry, Coca-Cola, and Pepsico. The introduction will cover an overview of the soft drink industry, followed by the strategies and the positions of each company within the industry. Then the financial analysis will explain each company’s statement of cash flows, common size and original income statement and balance sheet. Accompanying that will be an explanation of the various financial statement ratios, such as, ROA, ROCE and their components, liquidity ratios, and solvency ratios for the past three fiscal years (2013, 2012, 2011). Lastly, a conclusion will be stated based on the results of this analysis.
There are two leaders in the highly profitable soft drink/ beverage industry, they are Coca-Cola and Pepsico. These are two similar, but yet very different companies. Coca-Cola is the worlds most recognized brand. Pepsico has stellar name recognition, but has diversified into more lines of business than Coca Cola. Since Pepsico does not hold nearly as much market share as Coca-Cola their other line of business in the chips industry. Frito-Lay is their largest subsidiary in the industry, and is the top selling snack company in the United States of America. This is one of the reasons that Pepsico is able to compete with Coca-Cola. One of the reasons that the soft drink industry is able to obtain returns much higher than the S&P 500 is because of these two companies. Coca-Cola was formed in 1886 and Pepsico in 1919, these companies are very well established, and also have created incredible barriers to entry. Coca-Cola and Pepsico both have their own secret formula/recipe for their colas. If you combine that with the customer loyalty that brings in and also the various ways they have both dominated the distribution channels it makes it incredibly difficult for any competitor to
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