Financial Management Analysis on Coca-Cola Company

2747 Words May 26th, 2013 11 Pages
This paper is intended to conduct financial management analysis, evaluation and comment on Coca-Cola Company’s financial reports in comparison with its competitor PepsiCo Inc. Its scope is limited to provide financial information to investor and other users by applying theories, concepts, calculation and principles of financial management. The method used for financial management analysis includes vertical analysis of selected income statement items (operating revenue, EBITDA, EBIT, EBT and net income.)by assigning revenue as base and vertical analysis of selected balance sheet accounts (total asset, current asset, plant asset, total liability and stock holders equity, current liability, long term liability and common stock
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And it increased from 35.78% in 2009 to 63.86% in 2010 but slightly decreased to 60.86% in 2011. When we see PepsiCo Inc’s EBITDA it is not that high proportion of revenue compared with other items of income statement of PepsiCo Inc and it decreases from 18.75% in 2009 to 14.61 in 2010 and slightly increased to 14.68% in 2011. Coca-Cola company EBITDA increased on average 12.54% per year whereas PepsiCo Inc’s EBITDA decreased by 2.03% per year, on average. Throughout all of these three years Coca- Cola Company’s EBITDA is greater than that of PepsiCo Inc due to Coca-Cola Company’s advantage on lower cost of goods sold.

Earnings before interest and tax (operating income)
Even if Coca-Cola Company’s operating income increased in absolute term, it has actually decreased when we see it on relative to operating revenue. This is because the increment on revenue is much more than that of operating income (EBIT).so EBIT has decreased from 26.56% in 2009 to 24.06% in 2010 and to 21.82% in 2011. PepsiCo Inc’s EBIT has also increased in absolute term but when we come to relative term it decreases from 18.62% in 2009 to 14.41% in 2010 but it has shown a little progress in 2011(14.53%).On average EBIT has decreased 2.37% and 2.04% on both Coca-Cola Company and PepsiCo Inc per year respectively.
Earnings before tax (EBT)
An earnings before tax is fluctuating in
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