GROUP 7

I. Overview of the two companies

II. Analysis Ratios

PEPSI:

COCA-COLA

Founded in 1965

Founded in 1892

Popular in Asia for its flavor

Popular in EU and America for its

flavor

Remarkable Product:
1. Pepsi

O 2. Gatorade
v 3. Lays
e 4. Doritos
5. Frappuccino
r 6. Mountain Dew
a Operating income : $ 6,44 bil
(2006)
l Net income: $ 5,64 bil (2006)
Employee : 153,000 (2005)

Remarkable Product:

1. Coca-Cola zero
2. Aquarious
3. Diet Coke
4. Fanta
5. Fruitopia
6. Sprite
Operating income: $ 8,23 bil
(2009)
Net income: $5,82 bil (2009)
Employee: 92,400 (2009)

Efficiency

Profitability Ratios
Profit margin

Return on assets (investment)

Return on Equity

 Profit margin

Coca
Pepsi

Net income

Sales

2009

2008

2007

6,842
30,990

5,807
31,944

5,981
28,857

22%

18%

20.72%

5,940
43,232

5,134
43,251

5,646
39,474

13.73%

11.87%

14.30%

 Return on Assets (Investment)

6,824
48,671

5,807
40,519
5,981
43,269

Net income
Total assets

14%

14.33%

13.82%
2007

2008

2009

5,646
34,628
5,134
35,994
5,940
39,848

16.30%

14.26%

14.90%

Return on Assets (Investment)

Net income
Sales
X
Sales
Total assets
16.50%

16.30%

16.00%
15.50%
14.90%

15.00%
14.33%14.26%

14.50%
14.00%

14%

13.82%

13.50%
13.00%
12.50%
2007

2008

2009

Coca-cola
Pepsi

 Return on Equity = __Net income__

Stockholders equity

= Return on asset (investment)

(1 Debt/Assets)

Coca
Pepsi

2009

2008

2007

6,824
24,799

5,807
20,472

5,981
21,744

27.5%

28.4%

27.5%

5,940
16,804

5,134
12,106

6,646
17,234

35.4%

42.4%

32.8%

Return on Equity
45.00%

42.4%

40.00%
35.4%
35.00%
30.00%

32.8%
27.5%

28.4%

27.5%

25.00%

Pepsi
Cocacola

20.00%
15.00%
10.00%
5.00%
0.00%
2007

2008

2009

ASSET
UTILIZATION
Receivable
Turnover

RATIOS

Average Collection Period

Inventory Turnover
Turn over
its assets
more
rapidly

Fixed Asset Turnover

Total Asset Turnover

Receivables turnover
Sale(credit)
Re ceivables

8.7
times

8.25
times
10.34
times
30990
3758

2009

31944
3090

2008

28857
3317

2007

Receivables turnover
12
10.34
10

8.7

9.24

9.35
8.25

TIMES

8
Pepsi

Cocacola
4
2
0
Pepsi
Cocacola

2007

2008

2009

9.24

9.35

8.7

10.34

8.25

YEAR

Average collection period

___Account receivable___
Average daily credit sales

Coca
44 days
35 days
41 days

3317
8.16

3090
88.73

_3758_
86083

39 days

39 days

40 days

Pepsi
_4624_
120.88

4683_
120.141

4389
109.65

Average collection period

50

40 41

DAYS

40

44
39

35

39

30

Pepsi

20

Cocacola

10
0

2007

2008

2009

Pepsi

40

39

39

Cocacola

41

35

44

YEAR

Inventory turnover = _Sales__

Inventory

Coca

Pepsi

2009

2008

2007

30990
2354

31944
2187

28857
2220

13.16 times

16.61 times

13.00 times

43232
2618

_43251_
2522

39474
2290

16.51 times

17.15 times

17.24 times

Inventory turnover
20
18

17.24

17.15

16

TIMES

14

16.51

14.61
13.16

13

12

Pepsi

10

Cocacola

8
6
4
2
0

Pepsi
Cocacola

2007

2008

2009

17.24

17.15

16.51

13

14.61

13.16

YEAR

 Fixed asset turnover = __Sales___

Fixed assets

Coca

Pepsi

2009

2008

2007

30990
31120

31944
28343

28857
31364

1 times

1.1 times

0.9 times

43232
27277

_43251_
25188

39474
24531

1.6 times

1.7 times

1.6 times

Fixed asset
turnover

1,8
1,6
1,4
1,2
1
0,8
0,6
0,4
0,2
0

Pepsi
Coca-Cola

2009

2008

2007

2009

2008

2007

Cola

1.1

0.9

Pepsi

1.6

1.7

1.6

High

Low

Generate
Oversales better invested

Pepsi Cola

 Total assets turnover = __Sales__

Total assets

Coca

Pepsi

2009

2008

2007

30990
48671

31944
40519

28857
43269

0.6 times

0.8 times

0.7 times

43232
39848

43251
35994

39474
34628

1.1 times

1.2 times

1.1 times

Total assets
turnover

1,2
1
0,8
Cola
Pepsi

0,6
0,4

High

Low

0,2
0
2009

2008

2007

2009

2008

2007

Cola

0.6

0.8

0.7

Pepsi

1.1

1.2

1.1

Low profit High profit

margins
margins

Pepsi Cola

Liquidity Ratios
Current Ratio
Quick Ratio
Liquidity of the firm

Current Ratio

Current Ratio

2009
COCACOLA
Current assets
17551
Current liabilities
13721
Current Ratio
1.28
PEPSI
Current assets
12571
Current liabilities
8756
Current Ratio
1.44

2008

2007

12176
12988
0.94

12105
13225
0.92

10806
8787
1.23

10151
7753
1.31

Current Ratio
An indication of a company's ability to meet short-term debt

obligations; the higher the ratio, the more liquid the company is.

2007

2008

2009

0,92

0,94

1,28

1,31

1,23

1,44

Pepsis current ratio is still high, which is favorable for short-term

solvency
Coca-colas current ratio is slightly increase but still under Pepsi

Current Ratio
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0

1.31
0.92

1.23

1.44
1.28

0.94
Cocacola
Pepsi

2007

2008

2009

Quick Ratio

2009

2008

2007

COCACOLA
Current assets

17551

12176

10151

Current liabilities

13721

12988

13225

Inventories

2354

2187

2220

Quick ratio

1.11

0.77

0.75

PEPSI
Current assets

12571

10806

10151

Current liabilities

8756

8787

7753

Inventories

2618

2522

2290

Quick ratio

1.14

0.94

1.01

Quick Ratio
A measure of a company's liquidity and ability to
meet its obligations. Quick ratio, often referred to as
acid-test ratio
2007

2008

2009

0,75

0,77

1,11

1,01

0,94

1,14

Quick Ratio
1.2

1.11

1.14

1.01

1
0.8

0.94
0.75

0.77

Cocacola
Pepsi

0.6
0.4
0.2
0
2007

2008

2009

Debt Utilization Ratios

Measure the prudence of the debt
management policies of the firm

Debt to total assets

Times Interest Earned

Debt to total assets =

Coca
Pepsi

Total debt
Total assets

2009

2008

2007

23872
48671

20047
40519

21525
43269

50%

50%

50%

23044
39848
60%

23888
35944
70%

17394
34628
50%

Debt To Total Assets: (%)

80%

70%

70%
60%
50%

60%
50% 50%

50%

50%
P eps i

40%

C ocacola

30%
20%
10%
0%
2007

High Debt ratios

2008

2009

high risk><high profit

Times interest earned

=
Income before interest and taxes
Interest

Coca
Pepsi

2009

2008

2007

8231
355

8446
438

7252
456

23.2 times

19.3 times

15.9 times

8044
397

6959
329

7182
224

20.3 times

21.2 times

32 times

Times Interest Earned : (times)

35

32

30
25
20

21.2

23.2
19.3

20.3

P eps i

15.9
C ocacola

15
10
5
0
2007

2008

2009

Market Value Ratio

Earning per share

Total earnings divided by the number of shares outstanding

Earnings available to
common shareholders

EPS =
Number of outstanding shares

2009
COCACOLA
Net income
6824
Outstanding shares
2329
EPS
2.93
PEPSI
Net income
5946
Outstanding shares
1577
EPS
3.77

2008

2007

5807
2332
2.49

5981
2327
2.57

5142
1601
3.21

5658
1659
3.41

Earning per share

4
3.5
3

3.77
2.93

3.21
2.49

3.41
2.57

2.5
Cocacola
Pepsi

2
1.5
1
0.5
0
2009

2008

2007

Payout ratio
Amount of earnings paid out in dividends

Payout ratio
2009
0.7
COCACOLA
0.61
0.55
0.6
Dividend
per share
0.51 0.53 1.64
0.47
0.5
0.42
EPS
2.93
0.4
Payout ratio
0.55
0.3
PEPSI
0.2
Dividend per share
1.78
0.1
EPS
3.77
0
Payout
ratio 2008
2009
20070.47

2008

2007

1.52

1.36

2.49

2.57

0.61Cocacola
0.53
Pepsi

1.65

1.43

3.21

3.41

0.51

0.42

Price earning ratio

(P/E)
Expectation about the future

Market price per share

P/E =
Earning per share

Price earning ratio

2009
2008
COCACOLA
23.88
25
Market price per share 56.99 22.19
45.27
19.45
18.18
20
EPS
2.49
17.122.93
16.13
P/E
19.45
18.18
15
PEPSI
10
Market price per share 60.81
54.96
5
EPS
3.77
3.21
P/E
16.13
17.12
0
2009
2008
2007
30

2007
61.37
2.57
Cocacola
23.88
Pepsi

75.67
3.41
22.19

Dividend yield
how much a company pays out in dividends each year

Dividend per share

Dividend yield =
Market price per share

Dividend yield
2009
0.035
COCACOLA
0.03
Dividend per share
1.64
Market0.025
price per share 56.99
0.02yield
Dividend
0.03
0.015
PEPSI
Dividend
per share
1.78
0.01
Market0.005
price per share 60.87
Dividend 0yield
0.03
2009

2008

2007

2008

2007

1.52
1.36
45.27
61.37
0.03 Cocacola
0.02
Pepsi

1.65
54.96
0.03

1.43
75.67
0.02

the ratio of market price of a company's shares

(share price) over its book value of equity

Price to book value

2009
8
COCACOLA
6.99
7
Market
price per share 56.996.54
5.63
6
5.29 per share
Book value
10.77
5.12
5
P/B
5.29
4
PEPSI
3
Market
price
per
share
60.81
2
Book
value per share
10.80
1
P/B
5.63
0
2009

2008

2008

2007

7.01

45.27
8.85
5.12

61.37
9.38
6.54
Cocacola
Pepsi

54.96
7.86
6.99

2007

75.67
10.79
7.01

Conclusion
Coca-cola
Current ratio slowly
increase
Stable in debt ratio
Increase in asset
turnover in 2008,
decrease in 2009
Low volatility in ratios

Pepsi
Current ratio is high
Reduce in debt ratio
Decrease slightly
asset turnover
Greater volatility in
ratios