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Ratio analysis
coca cola & pepsi
▪ The beverage industry is a major driver of economic growth.
▪ A national council of applied economic research (NCAER) study on the carbonated soft –drink industry indicates that this industry has an output multiplier effect of 2:1.
▪ In the comparative analysis of Coca Cola and Pepsi my main emphasis is on the financial position of both companies
Classification of ratio
▪ Profitability ratios
▪ Liquidity ratios
▪ Turnover ratio
▪ Solvency ratio
Balance sheet coca cola for quarter 27\6\2014
Current Assets
Cash and Cash Equivalents $356,000
Short-Term Investments $0
Net Receivables $2,199,000
Inventory $488,000
Other Current Assets $252,000
Total Current Assets $3,295,000
Long-Term Assets
Long-Term Investments $0
Fixed Assets $2,304,000
Goodwill $122,000
Intangible Assets $4,048,000
Other Assets $399,000
Deferred Asset Charges $0
Total Assets $10,168,000
Current Liabilities
Accounts Payable$2,443,000
Short-Term Debt / Current Portion of Long-Term Debt
$423,000
Other Current Liabilities $0
Total Current Liabilities $2,866,000
Long-Term Debt $4,053,000
Other Liabilities $226,000
Deferred Liability Charges $1,113,000
Misc. Stocks $0
Minority Interest $0
Total Liabilities $8,258,000
Stock Holders Equity
Common Stocks $4,000
Capital Surplus $3,916,000
Retained Earnings $1,763,000
Treasury Stock ($3,482,000)
Other Equity ($291,000)
Total Equity. $1,910,000
Total Liabilities & Equity $10,168,000
Quarter Ending:
Total Revenue $2,333,000
Cost of Revenue $1,487,000
Gross Profit $846,000
Operating Expenses:
Research and Development
Sales, General and Admin $551,000
Non-Recurring Items
Other Operating Items
Operating Income $295,000
Add'l income/expense items $1,000
Earnings Before Interest and Tax
$296,000
Interest Expense $30,000
Earnings Before Tax $266,000
Income Tax $68,000
Minority Interest 0
Equity Earnings/Loss Unconsolidated Subsidiary
0
Net Income-Cont. Operations $198,000
Net Income $198,000
Net Income Applicable to Common Shareholders
$198,000
Profit and loss
ballance sheet pepsi for quarter 27\6\2014
Current Assets
Cash and Cash Equivalents $7,607,000
Short-Term Investments $3,692,000
Net Receivables $8,470,000
Inventory $4,194,000
Other Current Assets $1,832,000
Total Current Assets $25,795,000
Long-Term Assets
Long-Term Investments $1,902,000
Fixed Assets $18,174,000
Goodwill $16,457,000
Intangible Assets $15,790,000
Other Assets $2,315,000
Deferred Asset Charges $0
Total Assets $80,433,000
Current Liabilities
Accounts Payable $12,986,000Short-Term Debt / Current Portion of Long-Term Debt
$7,242,000
Other Current Liabilities $0Total Current Liabilities $20,228,000Long-Term Debt $25,606,000Other Liabilities $4,927,000Deferred Liability Charges $6,072,000Misc. Stocks ($133,000)Minority Interest $129,000Total Liabilities $56,829,000Stock Holders Equity
Common Stocks $25,000Capital Surplus $3,978,000Retained Earnings $47,748,000Treasury Stock $0
Other Equity ($28,147,000)
Total Equity $23,604,000Total Liabilities & Equity $80,433,000
Profit and loss
Total Revenue $16,894,000
Cost of Revenue $7,778,000
Gross Profit $9,116,000
Operating Expenses
Research and Development $0
Sales, General and Admin. $6,198,000
Non-Recurring Items $0
Other Operating Items $22,000
Operating Income $2,896,000
Add'l income/expense items $18,000
Earnings Before Interest and Tax $2,914,000
Interest Expense $209,000
Earnings Before Tax $2,705,000
Income Tax $718,000
Minority Interest ($9,000)
Equity Earnings/Loss Unconsolidated Subsidiary
$0
Net Income-Cont. Operations$1,978,000
Net Income$1,978,000
Net Income Applicable to Common Shareholders
$1,978,000
PROFITABILITY RATIO
COCA COLA PEPSI
RETURN ON INVESTMENT=NET OPERATING PROFIT / CAPITAL EMPLOYED * 100
ROI=296000
1910000*100=15.49%
ROI=2,914,000
60205000*100=4.8%
PROFITABILITY RATIO
COCA COLA PEPSI
RETURN ON SHARE HOLDER’S FUND=PAT / SHARE HOLDER FUND
198000
1910000*100=10.36% 1,978,000
23,604,000*100=8.37%
PROFITABILITY RATIO
COCA COLA PEPSI
RETURN ON ASSET=PAT / TOTAL ASSETS *100
198000
10168000*100=1.94% 1,978,000
80,433,000*100=2.45%
PROFITABILITY RATIO
COCA COLA PEPSI
GROSS PROFIT RATIO=GROSS PROFIT / SALES *100
846000
2333000*100=36.26% 9,116,000
16,894,000*100=53.95%
PROFITABILITY RATIO
COCA COLA PEPSI
NET PROFIT RATIO=PROFIT AFTER TAX / TOTAL ASSET *100
198000
2333000*100=8.48% 1,978,000
80,433,000*100=2.45%
TURNOVER RATIO
COCA COLA PEPSI
CAPITAL TURNOVER RATIO=NET SALES / CAPITAL employed
2333000
7302000=.31 16,894,000
60205000=.2806
TURNOVER RATIO
COCA COLA PEPSI
FIXED ASSETS TURNOVER RATIO=NET SALES / FIXED ASSETS
2333000
2304000=1.0125 16,894,000
18174000=.9295
TURNOVER RATIO
COCA COLA PEPSI
WORKING CAPITAL TURNOVER RATIO=NET SALES / WORKING CAPITAL
2333000
429000=5.43:1 16,894,000
5567000=3.4:1
Test of liquidity/ solvency ratio
Coca cola company 2014
Current assets 3,295,000
Current liabilities 2,866,000
inventory $488,000
Pepsi company 2014
Current assets 21601000
Current liabilities $20,228,000
inventory 4,194,000
Title and Content Layout with Chart
1.06
1.27
0.97
1.14
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1 2
Chart Title
pepsi coca cola
Test of liquidity pepsi Coca cola
Current ratio 1.27 1.14
Quick ratio 1.06 .97
Long term solvency ratio
COCA COLA PEPSI
Debt-Equity ratio == Debt/ Equity
25,606,00023,604,000
=1.08:14,053,000
1,910,000=2.12:1
ANALYSIS
▪ ROI OF coca cola is higher than Pepsi . Through Net operating profit of Pepsi is higher but cola has less capital employed
▪ Return on investment is higher in coca cola . Through operating profit is less than Pepsi but shareholder fund is less
conclusion
▪ Pepsi is earning more profit and and good return on investment in it providing good value to the share holder
Thank you
