Comparison of Pepsi and Coca Cola Financials

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Submitted By shvetamathur
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Comparison of Pepsi and Coca Cola Financials

Introduction
Coca-Cola and Pepsi are the two most popular and widely recognized beverage brands in the world. They have been competing in the soft drink sector for over a century and both companies enjoy a high degree of brand consciousness globally. Both companies try to market as part of a lifestyle. Coca-Cola uses phrases such as “Coke side of life” in their website, while Pepsi uses phrases such as “Hot stuff” in their web, to promote the idea that Pepsi is “in sync” with the cool side of life.

Ironically, both Pepsi and Coke have similar beginnings: both were created in the 19th century and both were the results of the experimental work of innovative pharmacists. Coke was created in 1886 by Atlanta pharmacist John Pemberton while Pepsi was developed in 1898 by North Carolina pharmacist and drugstore owner, Caleb Bradham.

The primary purpose of this report is to identify and analyze the two dominant companies in the soft drink industry and determine the strongest performer as an investment opportunity.

Ability to pay current liabilities

The current ratio is mainly used to give an idea of the company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt, as there are many ways to access financing, but it is definitely not a good sign.

Based on the financial statements below, Coca Cola has a current ratio of 1.17 while Pepsi is at 1.10. The current ratio can give a sense of the efficiency of a company’s operating…...

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