Hello, I am looking for someone to write an essay on Financial Comparison of Pepsi Co. and Coca-Cola. It needs to be at least 1750 words.
In this paper, 2004 to 2005 financial analysis will be based on comparing financial ratios of both companies along with essential Balance Sheet items.
In PepsiCo, the gross profit ratio has fallen by 1 percent from 2004 to 2005. Therefore, the company dwindled slightly on generating more cash from sales in 2005. In Coca-Cola, the gross profit ratio also fell by 1 percent from 2004 to 2005. This tells us that both companies’ capacity of cash generation showed similar trend. Decline in gross profit ratio means a company has less cash in hand to make payments to creditors, suppliers etc. However, since the ratio decline rate of PepsiCo and Coca-Cola was not very high (only 1 percent) from 2004 to 2005, hence it can be said that both the beverage companies had in them to plan their activities in a more economic way resulting in efficient management of their business activities. The net profit ratio of PepsiCo has decreased from 33% in 2004 to 29% in 2005, which means profit per dollar has decreased. The net profit ratio of Coca-Cola has dropped by same rate from 63% in 2004 to 59% in 2005. Coca-Cola has incurred similar loss per unit in 2005 which means both the companies have shown same level of performance as far as profits are concerned. The return of equity ratio of PepsiCo has fallen from 31% in 2004 to 28% to 2005, while Coca-Cola’s has remained same at 30% in both the years. It means investors have been getting better returns from Coca-Cola while PepsiCo’s shareholders have received reduced returns in 2005 than in 2004. This leads to more trust of investors on Coca-Cola and they will be encouraged to invest more in this company than in PepsiCo. The return on capital ratio means how well a company manages its assets to garner profit. Coca-Cola’s management of assets has been prudent since the ratio has increased from 15% in 2004 to 17% in 2005. Comparatively, PepsiCo has shown poor management of assets