An Analysis of PepsiCo and Coca-cola Essay -- Business Analysis

Since the mid 1980s many of us choose become well-known(prenominal) with the terms the Cola Wars (Wikipedia, 2010). Coca Cola and Pepsi have been the two largest soft drink competitors in the world for quite some time now. What makes these companies successful? What gives them the memory board to prosper for years across the globe? For this project I analyzed the financial statements from 2003 through 2005 of both companies to gain insight as to these questions and others. By reviewing and and then analyzing the data it becomes visible that these two companies are still standing strong in a market that is still dominated only by all(prenominal) other. To begin we will examine three ratios for each company. The first ratio is a liquidity ratio. Liquidity focuses on the reliability or availability of a borrower to pay thorn the loan they borrowed. A common liquidity metric is c electric rate of flow ratio. Current ratio measures a companys ability to pay back sh ort term obligations or debts. We get this calculation by taking the rate of flow assets and dividing by current liabilities. For instance, PepsiCos current ratio is equivalent to current assets in 2005 (10,454) divided by current liabilities in 2005(9,406) which equals 1.111. Their current ratio in 2004 was 1281. (Current assets for 2004/current liabilities for 2004 8639/6752). Coca Colas current ratio for 2005 was taken by computing their current assets for 2005 (10,250) and divided by the current 2005 liabilities 99836) which equaled a ratio of 1.041. In 2004 Coca Colas current ratio was equal to current assets for 2004 of 12,281 divided by current liabilities for 2004 of 11, 133, which totaled 1.101. What this means is that for every dollar of current liabilities, Coca Cola has $1.04 of ... ...ges and soft drinks. They have ventured out to non carbonated drinks like iced tea and juices but now need to move into the food market space. My final recommendation for Coca c ola is to wait with their product. One of the biggest setbacks for Coca Cola occurred when they introduced their new coke in the 1990s. (Wikipedia, 2010) This new formula did not go over well with their consumers and they were forced to quickly forfeit the new Coke production. In conclusion I think both companies are stable and strong. Obviously both companies are able to compete globally which in and of itself says an awful lot. Each company has its strengths and minor weaknesses but their overall financial success has been proven. Their ability to remain the only two competitors amongst their carbonated beverage industry is a strong indicator of their future potential.