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Coca-Cola vs PepsiCo Analysis of Annual Financial Statements

You will assume the role of a financial adviser and be creating a full analysis between Coca-Cola and PepsiCo. Please ensure that you fully explain all calculations and that you answer each and every question thoroughly. You will need to locate Coca-Cola and PepsiCo, Inc annual financial statements for 2004. These can be obtained through the internet, should you have any difficulty please let me know.

Your analyses should answer these questions:

1. What are the primary lines of business of these two companies as shown in their notes to the financial statement?
2. Which company has the dominant position in beverage sales?
3. What are the gross profits, operating profits, and net income for these two companies?
4. Compute both companies 1) current cash debt coverage ratio 2) cash debt coverage ratio 3) free cash flow. Please fully explain what each ratio is telling you.
5. What ratios do each of these companies use in the Management's Discussion and Analysis section of the annual report to explain their financial condition related to debt financing?
6. Compute and compare the inventory turnover ratios and days to sell inventory for Coca-Cola and PepsiCo for 2004. Indicate why there might be a significant difference between the two companies.
7. Compute 1) asset turnover 2) Profit margin on sales 3) rate of return on assets 4) debt to total assets ratio 5) times interest earned ratio. Please fully explain what each ratio is telling you.
8. What employee stock option compensation plans are offered by Coca-Cola and PepsiCo?

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Coca-Cola vs. PepsiCo Analysis

You will assume the role of a financial analysis and be creating a full analysis between Coca-Cola and PepsiCo. Please ensure that you fully explain all calculations and that you answer each and every question thoroughly. You will need to locate Coca-Cola and PepsiCo, Inc annual financial statements for 2004. These can be obtained through the internet, should you have any difficulty please let me know.

Your analyses should answer these questions:

1. What are the primary lines of business of these two companies as shown in their notes to the financial statement?

Primary lines of business are:
1) Coca Cola- Beverages
2) Pepsi- Beverages and Food products
http://www.pepsico.com/Download/2004-Annual-English.pdf

2. Which company has the dominant position in beverage sales?
Coca Cola has dominant position in beverage sales.

3. What are the gross profits, operating profits, and net income for these two companies?

Pepsi-
In $000'
Gross Profit- 15,855,000
Operating Profit- 5,259,000
Net Income- 4,004,000

Coca Cola-
In $000'
Gross Profit- 14,324,000
Operating Profit- 5,698,000
Net Income- 4,847,000

Other Important figures:
In$mn
Coca Cola PepsiCo
Total current assets $12,094 $8,639
Total current liabilities 10,971 6,752
Net sales 21,962 29,261
Cost of goods sold ...

Solution Summary

The solution takes on the position of a financial adviser to compare Coca Cola and PepsiCo on a number of fronts such as primary lines of business, dominant position, gross profits, financial ratios, debt financing, inventory turnover and employee stock options and compensation. 883 words with a report in Word and calculations in Excel attached.

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