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