Download - Interpreting Financial Statements
Interpreting Financial Statements
Executive Summary
The team made many difficult decisions during this term,
calculating ratios, finding more information for investors, why we
invest in the companies we do, and which one is the best to invest in
during these difficult times.
Our team decided to use more resources to help our decisions for
example researching the NASDAQ for information on stocks and
where they are now, reports on earnings and not taking for granted
that they are doing well just because the company says they are, but
research the information to maintain the quality of the products.
Always keep the teams best interest at heart when making the
decisions and finding the answers to the calculations needed.
Introduction
Our team presentation is distinguishing specific details
between the two companies Coca-Cola and Pepsi Company.
Both offer a variety of services and goods to all parts of the
world and have their advantages.
PepsiCo’s has become very successful in their diversity and
has taken faster action on health and taking them far and
beyond the Coca-Cola Company, for the first time in many
years.
You will see from our analyzations of these companies,
providing calculated ratios from their annual balance sheets,
information from their annual reports that are important to an
investor, distinguish which company is more profitable, and
which companies stock would be the best to purchase.
Calculated RatiosDebt to total asses ratio –
Pepsi Company shows a slight higher total assets ratio only by 0.1%. Both have a 2:1 ratio on debt to assets
Total Liabilities Coke PepsiTotal Assets
Times Interest earned - Both companies are equal in their percentages in times interest earned. Both have good return on their stock interests.
Net income + Interest expense + Tax expense
Interest expense
Coke Pepsi
Information Outside the Annual Report
• Their employees,
The communities,
World and environment.
Product portfolio
Benefit packages and incentives
Calculated Ratios cont.Cash debt coverage ratio –
Coke-Cola has a higher cash debt cover ratio of 0.24% then Pepsi Co. This shows that Pepsi has less debt then Coke.
Cash provided by operations Coke Pepsi Average total liabilities
Free cash flow – Coke-Cola has a higher free cash flow difference of 446 from
Pepsi Co. This gives Coke a greater advantage with cash on hand.
Cash provided - Capital - Cash by operations expenditures dividends
Coke Pepsi
Comparing ProfitabilityCoke has surged 20.3 percent year to datewhile Pepsi is up 7.2 percent.
The two currently are trading just a hair off their 52-week highs.
Company’s Stock
The stock most favorable to purchase is Coke-Cola.
Due to their variety and many destinations around the
world that help their market flourish.
Even during the time of recession, the Coke-Cola
market is maintaining their value on the stock market.
This is due to their increased opening in the German
sectors and other over sea markets, which keep the
increase of inflation and other issues of the United
States to a minimum concern.
Conclusion/Recommendations
Viewing the differences in the two companies gives a greater view of the companies and their financial
abilities.
Coke-Cola being strong and finding ways to maintain longevity.
Pepsi tying to maintain and fight a good fight.
With the knowledge of taking the ratios and other forms of accounting methods we are able to see the
areas these two companies are strongest.
References
P. R., La Monica (2009). Coke vs. Pepsi. Retrieved February 19, 2009, from CNN Money Web site: http://money.cnn.com/2002/05/10/pf/investing/q_cola/index.htm
Wiley, 2007. P. Kimmel, J. Weygandt, and D. Kieso. Financial Accounting: Tools for Business Decision Making (4th ed.). Hoboken, NJ