Coca-Cola & Pepsi Financial Statement Analysis
Coca-Cola & Pepsi
Financial Statement
Analysis
Team A
Frances Sanchez, Herbie Merced, and
Javier Urbina
ACC 400 Accounting for Decision Making
August 22, 2013
Introduction
• Comparison of Coca-Cola and Pepsi
• Financials from 2004
• Review financial ratios
▫ Liquidity
▫ Solvency
▫ Profitability
• Discuss profitability of each company
• Which company is the best investment opportunity
Coca-Cola & Pepsi Ratios Comparison
Liquidity Ratios
Current Ratio (Current Assets/Current Liabilities)
Coca-Cola
Pepsi-Cola
1.10
1.27
($12,094/$10,971)
($8,639/$6,752)
Current Cash Debt Coverage Ratio (Cash Provided By
.63
.76
Operations/Average Current Liabilities)
($5,968/$9,429)
($5,054/$6,584)
Inventory Turnover Ratio (Cost of Goods Sold/Average Inventory)
5.71
9.07
($7,638/$1,336)
($13,406/$1,477)
63.92
40.24
(365/5.71)
(365/9.07)
Receivables Turnover Ratio (Net Credit Sales/Average Net
10.30 times
10.03 times
Receivables)
($21,962/$2,131)
($29,261/$2,915)
Average Collection Period (365 days/Receivables Turnover Ratio)
35.43 days
36.39 days
(365/10.30)
(365 ÷ 9.7)
Days In Inventory (365 days/Inventory Turnover Ratio)
Coca-Cola & Pepsi Ratios Comparison
Solvency Ratios
Debt to Total Assets Ratio (Total Liabilities/Total Assets)
Coca-Cola
Pepsi-Cola
49%
51%
($15,392/$31,327)
($14,464/$27,987)
Cash Debt Coverage Ratio (Cash Provided By
.41
.18
Operations/Average Total Liabilities)
($5,968/$14,322)
($5,054/$27,917)
Times Interest Earned Ratio (Net Income + Interest Expense +
32.74%
34.43%
Tax Expense/Interest Expense)
($4,847 + $196 +
($4,212 + $167 +
$1,375/$196)
$1,372/$167)
Free Cash Flow (Cash Provided By Operations – Capital
$2,784,000
$2,338,000
Expenditures – Cash Dividends)
($5,968 - $755 - $2,429)
($5,054 - $1,387 - $1,329)
Profitability Ratios
Profitability
Financial Statement
Analysis
Team A
Frances Sanchez, Herbie Merced, and
Javier Urbina
ACC 400 Accounting for Decision Making
August 22, 2013
Introduction
• Comparison of Coca-Cola and Pepsi
• Financials from 2004
• Review financial ratios
▫ Liquidity
▫ Solvency
▫ Profitability
• Discuss profitability of each company
• Which company is the best investment opportunity
Coca-Cola & Pepsi Ratios Comparison
Liquidity Ratios
Current Ratio (Current Assets/Current Liabilities)
Coca-Cola
Pepsi-Cola
1.10
1.27
($12,094/$10,971)
($8,639/$6,752)
Current Cash Debt Coverage Ratio (Cash Provided By
.63
.76
Operations/Average Current Liabilities)
($5,968/$9,429)
($5,054/$6,584)
Inventory Turnover Ratio (Cost of Goods Sold/Average Inventory)
5.71
9.07
($7,638/$1,336)
($13,406/$1,477)
63.92
40.24
(365/5.71)
(365/9.07)
Receivables Turnover Ratio (Net Credit Sales/Average Net
10.30 times
10.03 times
Receivables)
($21,962/$2,131)
($29,261/$2,915)
Average Collection Period (365 days/Receivables Turnover Ratio)
35.43 days
36.39 days
(365/10.30)
(365 ÷ 9.7)
Days In Inventory (365 days/Inventory Turnover Ratio)
Coca-Cola & Pepsi Ratios Comparison
Solvency Ratios
Debt to Total Assets Ratio (Total Liabilities/Total Assets)
Coca-Cola
Pepsi-Cola
49%
51%
($15,392/$31,327)
($14,464/$27,987)
Cash Debt Coverage Ratio (Cash Provided By
.41
.18
Operations/Average Total Liabilities)
($5,968/$14,322)
($5,054/$27,917)
Times Interest Earned Ratio (Net Income + Interest Expense +
32.74%
34.43%
Tax Expense/Interest Expense)
($4,847 + $196 +
($4,212 + $167 +
$1,375/$196)
$1,372/$167)
Free Cash Flow (Cash Provided By Operations – Capital
$2,784,000
$2,338,000
Expenditures – Cash Dividends)
($5,968 - $755 - $2,429)
($5,054 - $1,387 - $1,329)
Profitability Ratios
Profitability
References: Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2007). Financial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons.