I have been asked to put myself in the place of an analyst and perform an analysis and provide a recommendation to management. The aim of this analysis is to arrive at financial comparisons between PepsiCo, Inc., and Coca Cola. I will be applying both vertical and horizontal analysis to help form my opinion. With that said, let’s move ahead with my analysis.
To begin, let’s discuss the two company histories. PepsiCo, Inc. was established through the merger of Pepsi-Cola and Frito-Lay. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, North Carolina Pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W. Lay,…show more content… PepsiCo, Inc. total revenues at the closing of 2012 and 2013 were $65,492 and $66,415 (in millions). PepsiCo shows a gain of $3,078 in 2013, using 2012 as the base year. The difference between 2013 minus 2012 total assets is a gain of $3,078, or 13.4% rise in total assets. The ratio used to calculate the percent change in total assets, equals 0.0380, or 3.8% for PepsiCo, Inc. The difference between 2013 minus 2012 total liabilities is a gain of $2,840 or a 20.8% increase in total liabilities. The ratio used to calculate the percent change in total liabilities equals 0.0380, or 3.8% for PepsiCo, Inc.
The total revenues of Coca Cola for 2012 and 2013 were $48,017 and $46,854 (in millions). Coca Cola shows a loss of $1,163 for the year. The percentage change in total assets for Coca Cola, using the same formulas, as for PepsiCo, Inc., is negative 2.4% change in 2013. The percent change in total liabilities is negative 2%. The figures for this equal -0.043 or negative 4.3% drop in liabilities.
Comparing the two companies, I notice that PepsiCo had a larger increase in revenue from 2012 to 2013. Comparing the change since the 2012 base period, PepsiCo, Inc. had a 13.4% rise in assets and a 3.8% rise in liabilities. Their liabilities are growing quicker than their assets compared to Coca Cola who had a loss of