Coca-Cola Company and PepsiCo Stock Comparison
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The CEO of your organization has asked your Learning Team to analyze the companies listed in Problem BYP13-4, of Financial Accounting: Tools for Business Decision Making.
Resources: Problem BYP13-4 (Ch. 13) of Financial Accounting: Tools for Business Decision Making; and Section 4.2 (Ch. 4) of Communication Skills Handbook for Accounting
Provide an oral report to your CEO according to the report structure outlined in Section 4.2 of Communication Skills: Handbook for Accounting.
Which company's stock would you purchase? Why?
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Solution Summary
The solution compares the Coca-Cola Company and PepsiCo stock.
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Company Stock
The company stock that to purchase:
The company's stock that I would purchase is that of Pepsi because its profitability and liquidity ratios are higher than those of Coca Cola Company. Investors often look at the profitability and the liquidity state of a company before they decide to purchase stock. The earnings of a company are the measure of the worth of a stock and therefore, it is very important to consider the profitability of the company because the aim of purchasing stock is to acquire the company. Investors also look at the profitability because they know that some companies reinvest their cash instead of paying dividends to the shareholders (Kansas, n.d).
The measure for profitability of a company is through return on asset ratio which shows how profitable the company is by looking at the total assets of the company. This ratio shows how the company uses its assets efficiently. The return on asset for the Pepsi Company is 0.18 while that of Coca Cola Company is 0.19 and this shows that Coca Cola Company uses its assets well though it has no big difference from ...
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