Recommendations Financial Analysis

Recommendations

In reference to ratios it is concluded that the net profits of both companies, PepsiCo and Coca-Cola, decreased in amount from 2004 to 2005.
These decreases were a direct result of operations expenses shared by each company.
The operating expenses of both companies were higher in 2005 than in the previous year.
For both PepsiCo and Coca-Cola to boost profitability these corporations should focus on reducing operating costs.
PepsiCo experienced a slight increase in current assets from the years in question, but a profound increase in its liabilities.
Furthermore, a 5.8% increase in liabilities housed only a 2% increase of assets.
I recommend that PepsiCo make all efforts to reduce liabilities and avoid taking on any new liabilities while keeping a focus on assets its priority.
In contrast, Coke had a decrease of 4.3% in assets but decreased liabilities as well by 4.9%.
I recommend that Coke continue to reduce liabilities especially when assets are decreasing, but to make valiant efforts to increase net profits which will increase assets as a result.
(Weygandt, Kimmel, & Kieso, 2008)