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Coca-Cola and PepsiCo Presentation

ACC/423

http://www.coca-cola.com/global/

http://www.pepsico.com/

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What is the par or stated value of Coca-Cola's and PepsiCo's common or capital stock?

What percentage of authorized shares was issued by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014?

How many shares are held as treasury stock by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014?

How many Coca-Cola common shares are outstanding at December 31, 2014?

How many PepsiCo shares of capital stock are outstanding at December 31, 2014?

Coca-Cola and PepsiCo Presentation

In this presentation we will be covering the questions you see here and on the next slide.

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What amounts of cash dividends per share were declared by Coca-Cola and PepsiCo in 2014?

What were the dollar amount effects of the cash dividends on each company's stockholders' equity?

What are Coca-Cola's and PepsiCo's return on common/capital stockholders' equity for 2014 and 2013?

Which company gets the higher return on the equity of its shareholders?

What are Coca-Cola's and PepsiCo's payout ratios for 2014?

What was the market price range (high/low) for Coca-Cola's common stock and PepsiCo's capital stock during the fourth quarter of 2014?

Which company's (Coca-Cola's or PepsiCo's) stock price increased more (%) during 2014?

Coca-Cola and PepsiCo Presentation

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Coca-Cola and PepsiCo's Common or Capital Stock

Coca-Cola -- Common/Capital Stock

Common Stock Par Value is .25 cents per share.

PepsiCo -- Common/Capital Stock

Common Stock par value is 1 2/3 cent per share.

Converted $ 1.6667

http://www.coca-cola.com/global/

http://www.pepsico.com/

If you look at the comparison between the two common stocks of Coca-Cola and PepsiCo, you see that the par value of Coke is more than Pepsi. For the Coke Company, their share is .25 cents per share while Pepsi is 1 2/3 cents per share or $1.6667 or almost two cents per share. So Coca-Cola pays a full .23 cents more than PepsiCo (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company"), (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

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Percentage of Authorized Shares

Issued Authorized Percentage
7040 11200 62.86%
Coca-Cola

December 31, 2014

PepsiCo

December 31,2014

Issued Authorized Percentage
1488 3600 41.33%
https://us.coca-cola.com/

http://www.pepsico.com/company

“

As far as authorized shares go, Coca-Cola has authorized 62.86 %. This is from the 7040 million shares that were issues divided by the 11200 million that the company had authorized in 2014 (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company").

In comparison, PepsiCo, had only 41.33 % of shares. This was also taken from the 1488 million shares that were issued and divided by the 3600 million shares that were authorized in 2014 (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

When you look at the two companies, we can obviously see that Coca-Cola authorized more shares and has higher percentage of authorized shares.

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Treasury Stocks Held

Coca-Cola

December 31,2014

Total of Treasury Stock was 2,674 million of shares.

PepsiCo

December 31,2014

Total Treasury Stock was 378 million of shares.

http://www.coca-colacompany.com/content/dam/journey/us/en/private/2015/02/contour-100-bottle-line-up-604-604-337-bfeb9c41.jpg

http://foodravel.com/wp-content/uploads/2015/10/pepsi-bottle-1.png

Again, here, for treasury stocks held by Coca-Cola has 2,674 million of shares. Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company").

And, just like the authorized shares, PepsiCo, had only 378 million of shares of treasury stock. (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

The comparison between the two companies show that Coca-Cola has more treasury shares than PepsiCo, the difference in the companies is 2,296 million of shares.

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Common Shares Outstanding:

Common Shares outstanding:

Coca-Cola

December 31, 2014

4,387 million shares.

PepsiCo

December 31, 2014

1,488 million shares.

https://aoghs.org/wp-content/uploads/2013/06/CocaCola-stock-aoghs.jpg

http://www.kabukencafe.com/images/large/Pepsi%20lg.jpg

When we look at the two companies, Coca-Cola has 4,387 million of shares of common stock that is considered is outstanding. Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company"). And, PepsiCo had only 1,488 million of shares of common stock that the company considered to be outstanding.. (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

The difference between the two companies show that Coca-Cola has more common stock outstanding than PepsiCo. The difference in the companies is 2,899 million of shares held outstanding by Coca-Cola.

Picture 1: https://aoghs.org/wp-content/uploads/2013/06/CocaCola-stock-aoghs.jpg

Picture 2: http://www.kabukencafe.com/images/large/Pepsi%20lg.jpg

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Dividends per Share Declared

Coca-Cola for 2014

PepsiCo for 2014

Coca-Cola dividends per share were $1.22

PepsiCo dividends per share were $2.5325

http://www.naturalnews.com/wp-content/uploads/sites/91/2017/05/Computer-Coca-Cola-Money.jpg

https://dncache-mauganscorp.netdna-ssl.com/thumbseg/927/927136-bigthumbnail.jpg

The declared dividends for Coca-Cola were $1.22 per share to their shareholders in 2014. Coca-Cola would have paid out $8,588,800 in dividends to their stockholders in 2014 (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company").

When we look at PepsiCo, on the other hand, provided their shareholders at $2.5325 per share. During the same time period, PepsiCo would have paid $3,768,360 in dividends to their shareholders (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

When we look at the comparison between the two companies, Coca-Cola has more shares of stock issued but they are paying out less dividends than PepsiCo is to their shareholders. PepsiCo shareholders are making $1.3125 more per share than Coca-Cola shareholders.

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Cash Dividends on Stockholder’s Equity

Coca-Cola

2013 & 2014

PepsiCo

2013 & 2014

Decrease in the Retained Earnings

Decrease in Reinvested Earnings

https://d.stockcharts.com/img/articles/2016/03/14576706120491682893265.png

https://static.seekingalpha.com/uploads/2017/5/2/saupload_1257f732c401396d81f12129dff7d5f6.png

In the years, 2013 & 2014, Coca-Cola had a decrease in their reinvested earnings. This is due to them providing dividends to their shareholders in both years. The amount of the dividends increase from 2013 to 2014, so the company would have less money to reinvest (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company").

However, PepsiCo, also had a decrease in their retained earnings for 2013 and 2014 as they also provided dividends to the shareholders (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

When you look at the contrast of the two companies, both had less money that was reinvested. If the companies did not pay out dividends to their shareholders, they could have reinvested into their companies.

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Year Net Income Average Common Equity Rate of Return
2014 $7,124,000.00 $30,320,000.00 23.50%
Year Net Income Average Common Equity Rate of Return
2013 $8,626,000.00 $33,173,000.00 26.00%
Return on Common/Capital Stockholders Equity

PepsiCo Rate of Return for 2013 & 2014

Coca-Cola Rate of Return for 2013 & 2014

Year Net Income Average Common Equity Rate of Return
2014 $6,558,000.00 $17,578,000.00 37.31%
Year Net Income Average Common Equity Rate of Return
2013 $6,787,000.00 $24,409,000.00 27.81%
The formula for rate of return on common stocks is found by using:

Net Income/Average Common Equity= Rate of Return

When you compare the two companies, both companies provide a good rate of return on the stock that they have issued. However, PepsiCo does provide their shareholders with a better rate of return than Coca-Cola does to their shareholders. So, in this case, it looks better to be a PepsiCo shareholder than Coca-Cola shareholder (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company"), (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

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Year Dividends Paid Net Income Payout Ratio
2014 $5,350,000.00 $7,124,000.00 75.10%
Payout Ratios

PepsiCo

2014

Coca-Cola

2014

Year Dividends Paid Net Income Payout Ratio
2014 $3,730,000.00 $6,558,000.00 56.88%
The formula for Payout ratio is:

Dividends Paid/Net Income = Payout Ration

Looking at the two companies, both companies provide a good payout ratio because both are over 50%. However, this time, Coca-Cola provides a better payout at 75.10%, compared to PepsiCo‘s 56.88%. So, Coca-Cola is providing 18.22% more of a payout than PepsiCo (Kieso, Weygandt, & Terry D. Warfield, 2016, "Specimen Financial Statements: The Coca-Cola Company"), (Kieso, Weygandt, & Terry D. Warfield, 2016, Specimen Financial Statements: PepsiCo, Inc.).

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Market Range for Common/Capital Stock in Fourth Quarter

Pepsi

2014

Coca-Cola

2014

High $45.00

Low $39.80

High $100.70

Low $ 89.82

http://www.marketwatch.com/investing/stock/KO

http://www.marketwatch.com/investing/stock/pep

In their filing of their 10 K form in 2015, Coca-Cola listed in their fourth quarter, their high common market price was $45.00 and the low for the same period was $39.80. They declared dividends during that period at 0.305 ("United States Securities And Exchange Commission Washington, D.C. 20549 Form 10-K ý Annual Report Pursuant To Section 13 Or 15(d) Of The Securities ", 2015).

In PepsiCo’s filing of their 10 K form in 2015, they listed that in their fourth quarter, the high common market price was $100.70 and the low for the same period was $89.82. They declared dividends during that period at 0.655 ("Pepsico, Inc. Annual Report On Form 10-K", 2015).

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THANK YOU

References

Kieso, D. E., Weygandt, J. J., & Terry D. Warfield, T. D. (2016). Intermediate Accounting

(16th ed.). Retrieved from https://phoenix.vitalsource.com/#/books/9781119175179/cfi/6/2!/4/2/2/6@0:0.

PepsiCo, Inc. Annual Report on Form 10-K. (2015). Retrieved from

http://www.pepsico.com/docs/album/annual-reports/pepsico-2015-annual-report_final_s57dqszgmy22ggn.pdf?sfvrsn=0

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES. (2015). Retrieved from

http://coca-cola-ir.prod-use1.investis.com/~/media/Files/C/Coca-Cola-IR/documents/financial-reports/2015-annual-report-on-form-10k.pdf

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