Common Size And Percentage Change Analysis

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Common-size Income Statement Analysis The common-size income statement shows that Coca-Cola’s cost of goods sold to revenues percentage rose very slightly from 39.14% in 2011 to 39.32% in 2013. At the same time, PepsiCo’s cost of goods sold to revenues percentage decreased from 47.51% in 2011 to 47.04% in 2013, bringing the 3-year-average to 47.44%. However, 47.44% is still much higher than Coca-Cola’s 3-year-average of 39.38%. With lower cost of goods sold to revenues ratio, Coca-Cola was able to obtain higher gross profit margin, which proves the advantages Coca-Cola have in pricing power over PepsiCo and other competitors. This makes sense because as stated in the overview, Coca-Cola is one of the most recognizable brand in the world…show more content…
The higher growth rate in cost of goods sold than in revenues brought the gross profit growth rate down to an average of 8.91%. The gross profit margin was calculated and presented clearly on the company’s annual report. As stated on the report, the gross profit margin decreased in 2012 mainly because of the increased commodity costs during 2012, the increased expenses while shifting channel and package mix, the ongoing fluctuations in foreign currency exchange rates, and the increased cost associated with the acquisition of Great Plains in North America as well as the bottling operations in Vietnam, Cambodia, and Guatemala (50). A decreasing trend in selling, general and administrative expenses could be seen from Coca-Cola’s percentage-change income statement. Other operating charges decreased in 2011 and 2012 by 10.62% and 38.93% respectively, but increased by 100.22% in 2013. According to the company’s 10K, this increase was primary due to the increased fund (the increase of $224 million or 82.96% compared to 2012) invested in the company’s productivity and reinvestment program (127). The change in operating income of Coca-Cola was brought down to -5.11% in 2013. One factor that made the operating income decrease in 2013 was the unfavorable impact in foreign currency exchange rates (54). However, Coca-Cola still managed to have its operating income growth rate averaged 7.08%. Coca-Cola’s figures in interest income, interest expenses, equity income
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