Comparative financial statement analysis of pepsico and coca cola

Running Head: “COMPARATIVE FINANCIAL STATEMENT” 2

“COMPARATIVE FINANCIAL STATEMENT” 2

“Comparative Financial Statement”

Tamara Golson

Accounting 205 Principles of Accounting I

Instructor Keith Graham

April 13,2020

Comparative Financial Statement

Different companies have embraced the importance of financial statements as a tool for reviewing, analyzing and gauging their past, present and even predicting the future financial performance. There are different techniques commonly used during preparation of financial statements. The paper below describes the comparative financial statements for Coca-Cola Company, Keurig Dr. Pepper Inc. and PepsiCo companies.

“Company Overview”

Coca-Cola Company is a beverage company based in Atlanta, Georgia. It is popular for the production of non-alcoholic carbonated beverages, concentrates and syrups, which it markets and sells in different parts of the world. The company produce over 500 brands of the beverages it markets from over 200 countries in the world. Other than the non-alcoholic carbonated drinks, the company also produces, markets and distributes other kinds of drinks such as water and enhanced water, juice, ready tea and coffee as well as sports and energy drinks. The company has been facing quite a number of challenges within the beverage industry, among them being competition. The industry has been characterized with a number of companies that have been able to attract a large share of the market, thus posing a threat to Coca-Cola Company. Amongst the main competitors are Nestle and PepsiCo companies which are also popular for the production and distribution of non-alcoholic beverages within the market.

Keurig Dr. Pepper Inc is based in Plano, Texas. The company is also popular for retailing, manufacturing and marketing non-alcoholic carbonated drinks, tea, juice, mixer, water and other quality drinks. The organization founded its bottling and supply system in 2006 after acquiring full possession of Seven Up Bottling Group/Dr. Pepper, which was the largest independent bottling organization in the America. Since then, the organization has established other major independent bottling and distribution enterprises. With the diversification of the beverage products offered by the company, Dr Pepper has been able to acquire more than 50% of the market share within the beverage industry in the USA. The company has also gained access to a high population of prospective customers within the region as well as in other parts of the world Amongst the largest opposers for the company include Coca-Cola Company and PepsiCo.

PepsiCo company is also a beverage company based in the USA. It is also popular for the production, marketing and distribution of non-alcoholic carbonated drinks in different parts of the world. This company also offers juices, waters, teas, smoothies as well as other premium drinks. There are different brands of beverages that are made within the organization. The company has a sturdy manufacturing portfolio and has grown steadily over the years through expanding the portfolio. This has seen it towards becoming one of the fastest growing beverage companies within the industry and hence increased market share. The main target consumers for the company are young beverage connoisseurs. The company faces competition from other beverage companies like Keurig Dr. Pepper Inc. Company.

Ratio Analysis

Current Ratio is acquired by dividing the current assets with current liabilities. Quick ratio is acquired by dividing the sum of cash and accounts receivables with the current liabilities.

For Coca-Cola Company

Current year 2017

current ratio

quick ratio

gross profit percentage

inventory turnover

accounts receivable turnover

asset turnover ratios

1.34

1.25

64.20%

4.99

9.66

0.40

For Keurig Dr. Pepper Inc

Current year 2017

current ratio

quick ratio

gross profit percentage

inventory turnover

accounts receivable turnover

asset turnover ratios

1.64

1.46

64.20%

7.52

10.67

0.73

For PepsiCo

Current year 2018

current ratio

quick ratio

gross profit percentage

inventory turnover

accounts receivable turnover

asset turnover ratios

0.99

0.75

55.85%

1.70

10.67

0.17

Current Ratio is acquired by dividing the current assets with current liabilities. Quick ratio is acquired by dividing the sum of cash and accounts receivables with the current liabilities.

“Discuss potential liquidity issues based on your calculations of the current and quick ratios”

There are different potential liquidity issues based on the calculations of the current and quick ratios for the organizations. For instance, the issues are likely to arise in a situation where the companies are unable to converts assets into cash without losing capital or revenue during the process.

“Are there any factors that could be erroneously influencing the results of the ratios?”

There are different reasons that could affect the ratios such as occurrences of off-season lulls. They tend to affect the profitability of the companies as well s the activity analyses, especially for the seasonal products offered by the company. Other factors include revenue changes and seasonal inventory. Some product sales may artificially reduce or increase the worth of the organizational assets.