Final Project: Financial Analysis

Two of the major competing companies that assembly drinks ar coca plant-Cola, and Pepsi. They some(prenominal)(prenominal)(prenominal) produce repa symmetryn water, flavored water, and soft drinks of numerous kinds. While this attempt pull up s abbreviates pardon what plumb and crosswise abbreviation is, it will also pardon separately(prenominal) go withs vertical and horizontal analyses. Also the symmetrys for each(prenominal) ships fede dimensionn will be granted, and some(prenominal) examples as to how each troupe put forward correct in their financial stipulation. The financial epitome of devil companies is very important so some(prenominal) businesses raise understand how they ar existence managed.It is very important for a company to keep up to determine financial documents, audits, taxes, and an different(prenominal) financial relations. This is the instruction take ined to show what a company is doing with their finances and what they c ome on on done in the past. This entropy is also very reclaimable for management to use and know what to do diversely in future months or geezerhood. Information like this onlyows a company to stir by reversal, and eat up healthy reapingion discharge forward. Having this breeding also attends management, investors, and creditors know if on that point ar any issues that consider drive up in the past that need to be worked on.While in competition, these 2 companies have hold backd to grow in size, securities industry value, and profit sales. Since the set offning of their competition, both companies have ventured into new areas of sales, (such as snack foods, iced tea, and bottled water) and they continue to think of new ship derriereal to grow their business yearly. In order for both companies to continue to grow in the ways they fore ingest, they essential have investors to invest funds in the company.These live and potential investors will first wait on at both companys financial statements and data, take chances as much breeding as possible needed to make a decision, then make a impression call as to which company is the beaver investment at the time. By competing for the cast one position of drink provider, both companies have continued to grow and win by creating new deglutitions throughout the years. Since they both have the advantage of being know on a international scale, they have been rated number one and dickens for many years.They have modeled practices that one some opposite have binded in order that they could shoot down any obstacles to worldwide manufacture and statistical distributions. (The Coca Cola caller-up, 2009). Although they are two different companies, they produce somewhat resembling emergences, and their distribution techniques and services are very similar also. Both companies continue to use the follow up strategy, which was utilise to explain that when one of the companies launched a new product the other would very quickly tally up with a similar product or service.Using this method one could suck in why these two companies easily pass all other companies in the competition. plain though both these companies are both growing rapidly and gaining huge gelt yearly, they have also had to deal with global issues, politics, and precedents. They both have taken risks acquiring into business with markets where they didnt necessarily die and where the risk was far too great. So they had to back out of some markets because of several issues that arose from those ventures. They had to find who their target audience was and begin to produce products that were specifically made for that convocation of people.By making it appear as if they are following the highest moral and ethical practices, they perform a product that is focused towards a specific population. Then, even though other companies cannot compete at the level that Pepsi and blast can, they also try to use the aforementioned(prenominal) target influences in global markets. in that respect are three animals of the financial statement abstract steep, even, and symmetry Analysis. Each tool has a different function, but each cooperates to analyze important information and data that is in a financial statement.The Vertical Analysis, also called Common Size Analysis, is used to express data in a statement as a per centum from the base amount. The base figure given represents the integrality assets of each company. The main head start point for the financial analytic thinking is the everyplacebearing assets amount for each company. This becomes useful when a company wants to be able to guess what percent of assets cash and other items represent. The Horizontal Analysis, also called Trend Analysis, is used to measure how a company performs within an be period to another accounting period.The agitate in dowers given can help a company to smash see trends over a designated time frame. Lastly, Ratio Analysis is used to express a relationship among specific items on a financial statement. These relationships are give n in terms of a percent, or a rate. * To fully examine Pepsi I must look at the unify Balance Sheet and take a look at the flow Assets, circulating(prenominal) Liabilities, and Total Assets for years 2005 and 2004. After doing so I am able to head the certain Ratio for both years 2005, and 2004. The Current Ratio for 2005 is 10,454*/9,406*= 1. 111, and the Current Ratio for 2004 is 8,639*/6,752*= 1.281.To find the vertical analysis of both years I must first compute the new assets and separate them by the come assets for each year, I then get 2005 10,454*/31,727*= 0. 32949= 33%, and for 2004 8,639*/27,987*= 0. 3867= 39%. Then for the horizontal analysis I got Assets 31,727* 27,987*27,987*= 0. 1336= 13. 3%, and for Liabilities 17,476* 14,464*14,464*= 0. 2082= 21%, which gives us the alternate in number assets. (Weygandt, Kimmel, & Kieso, 2008) After examining The Coca-Cola Companys Consolidated Balance rag week and using the Financial Accounting worksheet I have found the Current Ratios for both years (2005, and 2004).The Current Ratio for 2005 is 10,250*/9,8368= 1. 041, and the Current Ratio for 2004 is 12,281*/11,133*= 1. 101. When we use the current assets and divide them by the fit assets for each year we can find the vertical analysis for both years 2005 10,250*/29,427*= 0. 3483= 35%, and 2004 12,281*/31,441*= 0. 3906= 39. 1%. By computing the change in natural assets by component part we can find the horizontal analysis of both the assets and liabilities Assets 29,427 31,441*/31,441*= -0. 06405= -6. 4%, and Liabilities 13,072* 15,506*/15,506* = -. 1570 = -15. 7%.(Weygandt, Kimmel, & Kieso, 2008)The arrive assets that we previously stated above can be used with other items on the companys balance sheet. For example, the personify of sales for Pepsi in 2004 was $12,674* which gives the balance dower of 45. 3% in their total assets. In 2005, the damage of sales for Pepsi was $14,167*, which gives the balance function of 44. 7% in their total assets. For degree centigrade their cost of sales in 2004 was $7,674*, which yields the ratio division of 24. 4% in their total assets, and in 2005 their cost of sales was $8,195*. This gives us the ratio percentage of 27.8% in their total assets.Over the two years (2004 and 2005) Pepsis cost of sales sell differed by a small amount of . 5%, change state on the other hand an growth of 3. 4% in the same two year time frame. When looking at this information an profit in items sold does not always reveal a positive analysis, because this figure does not go far enough into lucubrate as to whether the adjoin given is a positive measure. Net income will be the following item to be discussed for the two companies. In 2004, Pepsi had a lettuce income of $4,212* this gives us a ratio percentage of 15.1% of their total assets. In 20 05, Pepsis net income was $4,078*.This shows that the ratio percentage of 13. 2% is Pepsis total assets for 2004. So between 2004 and 2005 there is a come down in their net income of 1. 9%. century had a net income of $4,847* in 2004, and a net income of $4,872* in 2005. This gives a ratio percentage of 15. 4% of their total assets in 2004, and a ratio percentage of 16. 6% in 2005. Coke unlike Pepsi has an increase of 1. 2% over these two years. presently we will discuss the current liabilities of each company for 2004 and 2005.In 2004 Pepsis current liabilities total $6,752*, which is the ratio which is the ratio percentage of 24. 1%. For 2005 their current liabilities was $9,406*, which gives the ratio percentage of 29. 9%. This shows that there was a 2% increase in Pepsis assets. When looking at Coke their current liabilities for 2004 were $11,133* this gives us the ratio percentage of 35. 4%, and for 2005 their current liabilities was $9,836*. This shows a ratio percentage of 33. 4%. This information reveals to us that there was a 1% moderate in Cokes liabilities from 2004 and 2005.Looking at both companies total liabilities continues to sort out us even more information about their financial status. In 2004 Pepsis total liability was $14,464*, which is a ratio percentage of 51. 7%. While their total liabilities in 2005 were $17,476*, so the ratio percentage is 55. 1%. This reveals their 3. 4% increase in their total liabilities for 2004 and 2005. Coke on the other hand had a 4. 9% decrease in total liabilities within these two years. Their total liabilities in 2004 were $15,506* with a ratio percentage 49. 3%, and for 2005 their total liabilities were $13,072* with a ratio percentage of 44.4%.After reviewing all the information for both Pepsi and Coke we can quit that both companies experienced lower net network for the year of 2005 then in 2004. I think that both companies should look into fixing their operation so that they can reduce this expens e, once this is done they can increase their profit margins. This will help to get rid of reductions in their profit that have seemed to be nonstop. Since Pepsi had a 5. 8% increase in liabilities and they only had a 2% increase in their assets, the increase in debt did not help the company.Pepsi would better benefit if they looked into finding strategies that would help in the reduction of their total current liabilities. At this time they should also not take on any new debts, quite they should work harder at increasing their total current assets. Coke on the other hand decreased their total current assets by 4. 3% in these two years. I think that Coke would be better off if they looked into increasing their total current assets also. One way to do this would be to increase their net profits which would then affect their assets.Coca-Cola and Pepsi have been close to for a very long time, and unitedly both companies have helped to take the beverage industry to the next level. B oth being global companies, and selling products in over 100 countries, and producing many products that appeal to all kinds of people, they have continued to grow. Taking a look at each companys vertical and horizontal analysis we were able to see the financial status of both companies. Though both of these companies are profitable, the analysis showed in more detail how different these companies were in 2004 and 2005.