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Interpreting Financial Statements


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Interpreting Financial Statements

  1. 1. Interpreting Financial Statements
  2. 2. Executive Summary <ul><li>The team made many difficult decisions during this term, calculating ratios, finding more information for investors, why we invest in the companies we do, and which one is the best to invest in during these difficult times. </li></ul><ul><li>Our team decided to use more resources to help our decisions for example researching the NASDAQ for information on stocks and where they are now, reports on earnings and not taking for granted that they are doing well just because the company says they are, but research the information to maintain the quality of the products. </li></ul><ul><li>Always keep the teams best interest at heart when making the decisions and finding the answers to the calculations needed. </li></ul>
  3. 3. Introduction <ul><li>Our team presentation is distinguishing specific details between the two companies Coca-Cola and Pepsi Company. Both offer a variety of services and goods to all parts of the world and have their advantages. </li></ul><ul><li>PepsiCo’s has become very successful in their diversity and has taken faster action on health and taking them far and beyond the Coca-Cola Company, for the first time in many years. </li></ul><ul><li>You will see from our analyzations of these companies, providing calculated ratios from their annual balance sheets, information from their annual reports that are important to an investor, distinguish which company is more profitable, and which companies stock would be the best to purchase. </li></ul>
  4. 4. Calculated Ratios <ul><li>Debt to total asses ratio – </li></ul><ul><li>Pepsi Company shows a slight higher total assets ratio only by 0.1%. Both have a 2:1 ratio on debt to assets </li></ul><ul><li> </li></ul><ul><ul><ul><li>Total Liabilities Coke Pepsi </li></ul></ul></ul><ul><ul><ul><li>Total Assets </li></ul></ul></ul><ul><li>Times Interest earned - </li></ul><ul><li>Both companies are equal in their percentages in times interest earned. Both have good return on their stock interests. </li></ul><ul><ul><li>Net income + Interest expense + Tax expense </li></ul></ul><ul><ul><li> Interest expense </li></ul></ul><ul><li> Coke Pepsi </li></ul>
  5. 5. Information Outside the Annual Report <ul><ul><ul><li>Their employees, </li></ul></ul></ul><ul><ul><ul><li>The communities, </li></ul></ul></ul><ul><ul><ul><li>World and environment. </li></ul></ul></ul><ul><ul><ul><li>Product portfolio </li></ul></ul></ul><ul><ul><ul><li>Benefit packages and incentives </li></ul></ul></ul>
  6. 6. Calculated Ratios cont. <ul><li>Cash debt coverage ratio – </li></ul><ul><li>Coke-Cola has a higher cash debt cover ratio of 0.24% then Pepsi Co. This shows that Pepsi has less debt then Coke. </li></ul><ul><ul><li>Cash provided by operations Coke Pepsi </li></ul></ul><ul><ul><li>Average total liabilities </li></ul></ul><ul><li>Free cash flow – </li></ul><ul><li>Coke-Cola has a higher free cash flow difference of 446 from Pepsi Co. This gives Coke a greater advantage with cash on hand. </li></ul><ul><li>  </li></ul><ul><ul><ul><ul><li>Cash provided - Capital - Cash </li></ul></ul></ul></ul><ul><ul><ul><ul><li>by operations expenditures dividends </li></ul></ul></ul></ul><ul><ul><ul><li> Coke Pepsi </li></ul></ul></ul>
  7. 7. Comparing Profitability <ul><li>Coke has surged 20.3 percent year to date </li></ul><ul><li>while Pepsi is up 7.2 percent. </li></ul><ul><li>The two currently are trading just a hair off their 52-week highs. </li></ul>
  8. 8. Company’s Stock <ul><li>The stock most favorable to purchase is Coke-Cola. </li></ul><ul><li>Due to their variety and many destinations around the world that help their market flourish. </li></ul><ul><li>Even during the time of recession, the Coke-Cola market is maintaining their value on the stock market. This is due to their increased opening in the German sectors and other over sea markets, which keep the increase of inflation and other issues of the United States to a minimum concern. </li></ul>
  9. 9. Conclusion/Recommendations <ul><li>Viewing the differences in the two companies gives a greater view of the companies and their financial abilities. </li></ul><ul><li>Coke-Cola being strong and finding ways to maintain longevity. </li></ul><ul><li>Pepsi tying to maintain and fight a good fight. </li></ul><ul><li>With the knowledge of taking the ratios and other forms of accounting methods we are able to see the areas these two companies are strongest. </li></ul>
  10. 10. References <ul><ul><li>P. R., La Monica (2009). Coke vs. Pepsi. Retrieved February 19, 2009, from CNN Money Web site: </li></ul></ul><ul><li>Wiley, 2007. P. Kimmel, J. Weygandt, and D. Kieso. Financial </li></ul><ul><li>Accounting: Tools for Business Decision Making (4th ed.). Hoboken, NJ </li></ul>