Financial Analysis
The purpose of this paper is to compare the top two soft drink companies and to identify the one with strongest financial background and to determine which would be the best company to invest in. PepsiCo and Coca-Cola have both been around for over a century with Coca-Cola beginning in 1886 and Pepsi in 1898. Both companies are globally known and until now Coca-Cola has outperformed its rivalry. I will compare the two companies using the following: (a) key ratios, (b) vertical analyses, and (c) horizontal analyses.
For the purpose of my report, all relevant financial data on both Coca-Cola and PepsiCo was derived from the reliable Yahoo Finance and Morningstar website and the accompanying 10-k reports. Coca-Cola is the largest manufacturer and distributor of non-alcoholic beverage concentrates and syrups in the world. Additionally, the company has ownership interests in numerous bottling and canning operations. Furthermore, Coca-Cola groups its products into eight business divisions including: Africa, Eurasia, European Union, Latin America, North America, Pacific, Bottling Investments, and Corporate. Finished beverage products are sold in more than 200 countries worldwide. Coca-Colas major products are comprised of: Coca-Cola, Crush, Sprite, Fanta, Diet Coke, POWERade, Fruitopia, Minute Maid juices, Dasani water and various coffees and teas.
The next important area reviewed is stock price and revenues. Please refer to Figure 1 as we examine Coca-Colas stock price in the five-year range. In 2003, Coca-Colas stock was trading at an average valuation of approximately $45.00 dollars per share, approaching $50.00 dollars (i.e., an all-time high). As of April 25, 2008, Coca-Colas stock price is valued at $59.33 dollars per share, a significant drop from the $100.00 dollar price range which briefly traded during the late 1990s. A contributing factor is the change in consumers tastes in that they are favoring