Financial Analysis of PepsiCo and Coca Cola for the Period 2012 – 2014, Research Paper Example

Total Revenue

The Total Revenue of PepsiCo has been increased by 1% in 2013 and by 0.4% in 2014 .However Coca Cola total revenue was instead decreased by 2% in both 2014 and 2013 years. As far as total revenue is concerned PepsiCo has performed well as PepsiCo Revenue (66.683 Billion) is 45% higher than Coca Cola (45.998 Billion). Hence PepsiCo has increased its revenue by 2% (2012 – 2014) and in case of Coca Cola decline by 4% (2012 – 2014) has been seen.

Net Income Applicable To Common Shares

The net income applicable to common shares of PepsiCo has increased by 9% in 2013 from previous year however it is declined by 3% in 2014 and overall increased by 5% (2012 – 2014). In case of Coca Cola 6% declined was seen in 2013, further 17% declined was seen in 2014 and overall decrease by 22% (2012 – 2014) was seen. These analysis shows that net income applicable to common shares has been decreased in both companies in the year 2014, but decline of Coca Cola (-17%) is much higher than PepsiCo (-3%) in 2014.

However, net income applicable to common shares of Coca Cola is 9% higher than that of PepsiCo as investors may choose to invest in Coca Cola. Hence share holders may be getting more return from Coca Cola as compared to PepsiCo. However PepsiCo is chasing the Coca Cola because the deference was 47% in 2012 and then decreased to 27% in 2013 and further decreased to 9% in 2014. Hence overall PepsiCo is improving its net income applicable to common shares to chase with Coca Cola. Additionally the Net Profit Margin ratio of Coca Cola is 15% which is higher than 10% of PepsiCo which means that Coca Cola has better cost control than PepsiCo.

Total Assets

The total assets of PepsiCo were increased by 4% in 2013 but decreased in 2014 by 9%.The total assets of Coca Cola were increased by 5% in 2013, further increase of 2% in 2014 was noted. Coca Cola has increased their total assets to 92.023 million (7% increase 2012 – 2014) where as PepsiCo total assets were decreased to 70.509 million (6% decrease 2012 – 2014). Hence Coca Cola has 30% higher total assets than PepsiCo, However Asset turnover ratio of PepsiCo is 0.90 is higher than the Coca Cola 0.51 in 2014 which means PepsiCo is using its assets efficiently to generate more revenue. PepsiCo is managing its assets efficiently as it has higher Return on asset ratio (9%) than Coca Cola (8%) in 2014.

Total Liabilities

The total liabilities of PepsiCo were increased by 2% in 2013 but favorably decreased in 2014 by 0.24%.The total liabilities of Coca Cola were increased by 6% in 2013, further increased by 9% in 2014. PepsiCo total liabilities were increased by 1% from 2012 to 2014 (53.071 million in 2014) where as Coca Cola total liabilities were increased by large margin of 16% from 2012 to 2014 (61.703 million in 2014). However even Coca Cola liabilities have increase the Debt ratio is 67% in 2014 which is favorably lower than 75% of PepsiCo. Hence Coca Cola has better financial leverage and solvency conditions from PepsiCo.

Conclusion

Hence overall PepsiCo has high Revenue and lower liabilities and it is managing its assets efficiently to generate revenue but Coca Cola has higher assets and net income, hence it has good cost control, better financial leverage and investor’s preference.