American Corporation Analysis

Financial ratio analysis is a valuable tool that allows one to assess the success, potential failure or future prospects of the company (Bazley 2012). The ratios are helpful in spotting useful trends that can indicate the warning signs of

1. Liquidity ratios are a class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

Short-term liquidity ratios help to determine if a company can operate financially on a daily basis (Dess, Lumpkin, Eisner & McNamara, 2014). The current ratio, quick ratio and cash ratio

These ratios are used to provide an insight of the long-term solvency of a company. They differ from Liquidity Ratios by indicating how a company is using its long-term debt.

Description: A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Liquidity ratios are useful in obtaining an indication of a firm's ability to meet its current liabilities. It measures the liquidity of a firm.

Ratio Analysis is a type of Financial Statement Analysis that is utilized to achieve a quick indication of a firm's financial performance in numerous key regions. Financial ratios aid in deciding the connection between two variables in the financial statements. The data necessary for the computation of the ratios is supplied by the financial statements of the firm. Areas where performance has improved or deteriorated over time can be recognized this way. Ratios are utilized methodically to deduce the strengths and weaknesses of a firm and also its historical performance and current financial conditions.

Ratio is a useful measuring tool as a part of financial statement analysis. It usually categorized as three kinds that named liquidity ratio, solvency ratio and profitability ratio, each ratio assist in valuing the efficiency and profitability of a company based on its annual financial report.

its profits. Also when a customer tends to see the same company products everywhere and that

The trend in Coca-Cola’s net profit margin the past five years has significantly deteriorated from 2010. Analysts believe this is due to multiple factors: Coke is primarily a North/South American and Western Europe company; there has been significant uncertainty within the economy of Western Europe; and, the Coke brand has not truly taken hold in Asia. (Zacks Equity Research, 2015). Pepsi’s net margin has seen nominal up-down ticks during this same five year stretch. Both soft drink companies have seen a reduction in 2014. However, Monster made a bold statement finishing with a positive 20.70% in net profit margin; a year-to-year increase of almost 32% in 2014. (YCharts, 2015) Coke and Monster remained above the industry benchmark line while Pepsi fell just below.

In this paper, you will find financial comparisons on both PepsiCo and the Coca-Cola Corporation. Some increases in certain areas of one company and some decreases in areas of another company. There are vertical analysis, horizontal analysis, and ratios of both the industries. These are still the two leading soft drinks in the industry, and most like will remain the leaders in the upcoming years.

In the world of soda wars, there has always stood two main players; Pepsi and Coke. With Coca-Cola Company Revenue of nearly $46 billion (Coca-Cola Company, 2015) to Pepsi Company’s $67 billion (PepsiCo, Inc., 2015), Pepsi is a much bigger company in terms of

Comparing financial data from statements can help determine whether or not it is a sound decision to invest in a company. This information can also help determine if a company is operating successfully and areas of risk within the company. This analyzing can help one company compare itself to another company and ensure that they are able to compete with other companies in their respective industries. PepsiCo and Coca-Cola are two major companies that make a majority of their money from producing and selling soft drinks. To compare these companies we are going to use vertical and horizontal analyses to see if these

PepsiCo operates in the beverages/soft drinks industry in the consumer goods sector (Yahoo! Finance, 2016). According to Forbes, PepsiCo is rated 29th as the most valuable brand (Forbes, 2016). While Coca-Cola has mostly stayed within the boundaries of the beverage/soft drink industry, only venturing out from soft drinks to include sport drinks, energy waters, and most recently tea and coffee, PepsiCo has done that in addition to adding snack foods to its distribution.

Ratio analysis is generally used by the company to provide some information on how the company has performed during that year, so that the parties involved including shareholders, lenders, investors, government and other users could make some analysis before making any further decision towards that particular company. As mentioned by Gibson (1982a cited in British Accounting Review, 2002 pg. 290) where he believes that the use of ratio analysis is such an effective tool to evaluate the company’s finance, and to predict its future financial state. Ratios are simply divided in several categories; these are the profitability, liquidity, efficiency and gearing.

The Study of the ratio analysis technique to financial statements offers potential in expanding insight into specific strengths and weaknesses of a company financial situation. The primary objective of financial analysis is to provide information useful for decision making.