The Financial Status of PepsiCo, Inc. and Coca-Cola Essay

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When looking at the financial status of PepsiCo, Inc. and Coca-Cola, every dollar amount in every column has some significance. To find out what these amounts represent a financial comparison of both companies is required. Using financial analysis tools such as vertical analysis, horizontal analysis, and ratio analysis, one can get a clearer picture of the financial status of each company.
Horizontal Analysis When evaluating financial statement data for a specific period of time we use a technique call horizontal analysis. This method will show if there has been an increase or decrease in the financial status of PepsiCo, Inc. and Coca-Cola. In comparing both of these companies I have evaluated the net revenue and net income for the
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This would suggest they didn’t retain any income and any expansion would incur additional long term debt for the company. The increase in both company’s gross profit and net income, however, signals a favorable profit trend.
VERTICAL ANALYSIS This financial tool can also be used to evaluate the financial status of both PepsiCo, Inc. and Coca-Cola. Vertical analysis expresses each item as a percentage of a base amount. In comparing both companies I used this tool to evaluate their assets for the years 2004 and 2005. The base amount used for these calculations is the Total Assets of each.
Pepsico, Inc.
Consolidated Balance Sheet
PepsiCo, Inc. and Subsidiaries
December 31, 2005 and December 25, 2004
(

in millions except per share amounts) 2005 2004 2005 % 2004 %

ASSETS
Current Assets

Cash and cash equivalents............................................................................................ $ 1,716 5.40% $ 1,280 4.57%

Short-term investments ................................................................................................. 3,166 9.97% 2,165 7.74%
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