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Coca Cola And The Largest Beverage Industry

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Coca-Cola and PepsiCo are the two biggest beverage companies in the world. Both companies dominate the beverage industry and are globally recognized by a large and diverse array of consumers. Both are massive industry leaders, each with a market cap of over $150 billion dollars. The Coca-Cola Company is roughly 130 years old and is based in the United States. Coca-Cola products are sold in over 200 countries across the world and every single day billions of coke beverages are consumed. PepsiCo was also established about 125 years ago and is based in the United States. PepsiCo, since its early beginnings, has always rivaled Coca-Cola Company as the most prominent beverage company in the world. Although each of these companies have …show more content…

As a result of this, KO has taken on more debt to purchase these shares, and the purchasing of these shares has simultaneously aided in increasing the stock’s value per share. One can decipher this by looking at KO’s times interest earned ratio, which is a measure of how many times a company’s EBIT can cover the interest expenses on its long-term debt, because for KO this has decreased from 20.64 to 12.06 in the last two years. Consequently, despite the fact that KO’s liquidity ratios are rising, KO’s EBITDA, essentially the company’s ability to generate cash, is falling. In the future, KO could face a problem when paying off its long-term debt because this shows the limitations at looking at solely liquidity ratios. Regardless of the recent uptick in liquidity ratios, the company’s debt management ratios show that the company is taking on debt faster than it is producing cash to pay off those same obligations.
Moving on to KO’s profitability ratios, for the most part they have been fairly consistent from the perspective of the financial statements. Nevertheless, it is troubling to see sales decline from $46 billion in 2014 down to $42 billion in 2016. This could be attributed to the recent health kick that has been surging across not only America, but the rest of the world. The entire beverage industry has taken a slight hit over the past few years

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