Coca Cola vs Pepsi

1313 Words Jan 13th, 2012 6 Pages
The Coca-Cola Company versus PepsiCo, Inc.
Andy Berg
Ufuoma Omosebi
Intermediate Accounting III ACC305
19 November, 2011

Coca Cola and Pepsi are the two most popular and widely recognized beverage brands in the United States. Pepsi and Coca Cola contrast each other on their taste, its associated colors and themes, and ingredients. Even the pension plans and funding status are a competitive comparison.
1. Compare the pension plans of Coca-Cola and PepsiCo, including type of plan and funded status at 2007 year-end.
PepsiCo, Inc. has a voluntary defined benefit pension plan that includes all full time U.S. employees and some international employees. This plan is a noncontributory plan; the employer is the only contributor funding
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PepsiCo’s rate of compensation or “rate of increase in compensation levels” percentage used to compute pension information for December 21, 2007 is 4.7%.
3. Determine which company you would rather invest in if you were a potential shareholder. Justify your answer.
PepsiCo, Inc. is also a large company that has been around since 1898. They are also a leader in the beverage market but have diversified into another area; snacks. The diversity is pretty impressive. They also indicate stability and liquidity with favorable ratios. They have a 53.15% gross profit margin for 2007 and less than 40% of their net operating revenue comes from operations outside the U.S.
Coca Cola is a large company that has been around since 1886. They are primarily marketing and selling one product; beverages. They have a 63.9% gross profit margin for 2007and show reasonably good ratios indicating stability. For the 46th consecutive year dividends have risen. About 74% of their net operating revenue comes from operations outside of the U.S.
Coke and Pepsi trade in the No. 10 and No. 9 positions at 13.31 and 16.67. This may be explained by the relative growth and return on capital positions of the companies. Coke has a ROIC of 23.91% annually for the last five years, and growth of revenue per share of 9.29% per year. Pepsi’s ROIC was 19.96% and revenue per share growth of 13.43%. Assessing how the

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