PepsiCo and the Coca Cola Company Financial Analysis (Research Paper Sample)
(a) Based on the information contained in these financial statements, determine each of the following for each company.
1. The percentage increase (decrease) in (i) net sales and (ii) net income from 2012 to 2013.
2. The percentage increase in (i) total assets and (ii) total common stockholders' (shareholders') equity from 2012 to 2013.
3. The basic earnings per share and price-earnings ratio for 2013. (For both PepsiCo and Coca-Cola, use the basic earnings per share.) Coca-Cola's common stock had a market price of $41.31 at the end of fiscal-year 2013, and PepsiCo's common stock had a market price of $82.71.
(b) What conclusions concerning the two companies can be drawn from these data?source..
PepsiCo and the Coca Cola Company Financial Analysis
The financial analysis and comparison in this paper are based on the financial statements of PepsiCo and the Coca-Cola Company from 2016 to 2017. The net sales of Coca-Cola decreased by 15.41457%, while those of PepsiCo increased, albeit small, by 1.156069%. These two companies operate in a highly competitive beverage industry and the actions of one competitor affect the sales volume. In the case of Coca-Cola, the decline in net sales could be attributed to the refranchising activities that took place in China. It can also be attributed to the consolidation of ABI's controlling interest in CCBA (The Coca-Cola Company). These structural changes are strategic moves that affect the operations of a company and are aimed at giving the company a competitive position in the future, although they may affect the net revenues in the short term. The decline is also attributable to the 41% decline in the unit case volume, which was also as a result of the refranchising activities. In the case of PepsiCo, the increase in net sales is attributed to their net pricing technique and other structural changes such as deconsolidation of their Venezuelan businesses (PepsiCo Inc. 51).
Both companies registered a percentage decrease in their net income from 2016 to 2017. Coca-Cola had an 80.41221% decrease while PepsiCo had a 23.06004% decrease in net income. Coca-Cola had a 15% increase in interest expense which contributed to lower net income in 2017. In addition, the income taxes were much higher in 2017 than in 2016, which decreased the net income for the company. In the case of PepsiCo, the provision for income taxes in 2017 was twice as much as those in 2016, which affected the net income. PepsiCo's percentage decrease in net income was not as much as Coca-Cola's, and this could be because PepsiCo's interest expense decreased from $1,342 million in 2016 to $1,151 million in 2017. The changes in tax, where as a result of the Tax Reform Act, which was signed into law in 2017 (The Coca-Cola Company 68).
In terms of assets, both companies had a percentage increase in total assets from 2016 to 2017. Coca-Cola had a 0.717314% increase, which arose mostly from assets held for sale from their discontinued operations. The increase in assets in the case of Coca-Cola does not necessarily imply growth since the assets that prompted the increase are from discontinued operations. PepsiCo had an 8.591645% increase, which resulted from an increase in cash and its equivalents, inventories,
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