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PepsiCo vs Coca-Cola Financial Analysis

Based on the analysis of annual reports and financial ratios, PepsiCo appears to be in a healthier financial position than Coca-Cola. PepsiCo has a higher current ratio and lower debt-to-total assets ratio, indicating stronger short-term liquidity and less financial risk. However, Coca-Cola has a higher profit margin, suggesting it is more profitable per dollar of sales. Overall, PepsiCo seems to be growing continuously while Coca-Cola may be shrinking, making PepsiCo the better investment choice between the two companies based on the information provided.

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Tiffany Getchell
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76 views1 page

PepsiCo vs Coca-Cola Financial Analysis

Based on the analysis of annual reports and financial ratios, PepsiCo appears to be in a healthier financial position than Coca-Cola. PepsiCo has a higher current ratio and lower debt-to-total assets ratio, indicating stronger short-term liquidity and less financial risk. However, Coca-Cola has a higher profit margin, suggesting it is more profitable per dollar of sales. Overall, PepsiCo seems to be growing continuously while Coca-Cola may be shrinking, making PepsiCo the better investment choice between the two companies based on the information provided.

Uploaded by

Tiffany Getchell
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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After reviewing both annual reports, I see that PepsiCo looks healthier on paper than Coca-Cola.

I would invest in PepsiCo if I had a choice between the two companies. PepsiCo has a continuous growth rate and are expanding. Coca-Cola on the other hand looks like it is shrinking.

Liquidity Ratios- CURRENT TURNOVER


The current ratio is a widely used measure for evaluating a companys liquidity and short-term debt-paying ability. The ratio is computed by dividing current assets by current liabilities.
Current Ratio = Current Assets/Current Liabilities

PepsiCo $10,454/$9,406 = 1.11:1 Coca-Cola $10,250/$9,836 = 1.04:1

Profitability Ratios - PROFIT MARGIN


Profit margin is a measure of the percentage of each dollar of sales that results in net income. This ratio is computed by dividing net income by net sales.
Profit Margin = Net Income/ Net Sales

PepsiCo $4,078/$32,562 = 12.5% Coca-Cola $4,872/$23,104 = 21%

Solvency Ratios- DEBT TO TOTAL ASSETS RATIO


The debt to total assets ratio measures the percentage of the total assets that creditors provide. The ratio is computed by dividing total debt (both current and long-term liabilities) by total assets. This ratio indicates the companys degree of leverage. It also provides some indication of the companys ability to withstand losses without impairing the interests of creditors. In the Debt to total Assets ratio- the higher the percentage of debt to total assets- the greater the risk that the company may be unable to meet its maturing obligations.
Debt to Total Assets Ratio = Total Debt/Total Assets

Coca-Cola $13,072/$29,427 = 44.4% PepsiCo $17,476/$31,727 = 55.0%

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