Coca-Cola vs Pepsi Essay

1064 Words Apr 28th, 2011 5 Pages
Coca-Cola vs. Pepsi Co 2

1. Using the current ratio, discuss what conclusions you can make about each company’s ability to pay current liabilities (debt).
The current ratio measures the company’s ability to pay its short term obligations with its short term assets. Between Coca Cola and PepsiCo, PepsiCo has a higher current ratio implying that is more capable of paying its obligations. The debt management policies of Coca-Cola in conjunction with share repurchase program and investment activity resulted in current liabilities exceeding current assets. From the ratio Pepsi Co suddenly had to pay all its short-term
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Cash Flow Indicator Ratio | Coca-Cola | Pepsi Co. | Dividend Payout Ratio | 20.11% | 45.95% |

Investment Valuation Ratio | Coca-Cola | Pepsi Co. | Price/Earnings ratio | 14.23 | 17.58 |

4. As an investor, discuss which company you would choose to invest in and provide a rationale for your decision.
By comparing various ratios of both companies for 2009, the Coca-Cola company is not as attractively valued as PepsiCo. On most of the ratios, Pepsi Co fares better than Coca- Cola. The dividend payout ratio for Pepsi Co is more attractive for long term growth in dividend payouts. Pepsi Co has a better debt ratio presenting lesser risk to investors than
Coca-Cola vs. Pepsi Co 5

Coca-Cola. The current ratio for Pepsi Co is better than Coca-Cola and its return on assets and equity ratios are also better than Coca-Cola. Pepsi Co’s ratios are also above the industry averages, which indicate that the company is performing well in terms of financials and has the potential to further improve. 5. Discuss what non-financial criteria you would consider when choosing between these two investment options?
Pepsi Co has an advantage over Coca-Cola, which is its diversity into snacks and other food products. This means that PepsiCo's revenues will be less affected by consumers' changing preferences in comparison to

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