NMILLS_XACC_WK9_CAPSTONE - decrease Pepsi experienced a...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Both companies are solid investments if you are looking to invest into the stock market. Coca-Cola is in a slightly better financial situation. However, they both offer similar investment opportunities. For liquidity Coca-Cola has a stronger short term debt ratio at 1.04:1 vs Pepsi at 1.11:1 current assets divided by current liabilities. This is the case for solvency as well. Pepsi has a higher debt to asset ratio at 55% opposed to only 44% for Coke. But when it comes to profitability for investors, the competition is a wash. EPS (Earnings per share) is net income divided by weighted common shares outstanding which was 2.48 in 2004 and 2.44 in 2005 for Pepsi. This was the opposite for Coke at 2.00 in 2004 and 2.04 in 2005 a slight increase. As for price-earnings for the two, investors seemed less optimistic with Coke at $26.39 in 2004 and $25.88 in 2005 a
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: decrease. Pepsi experienced a slight increase in investors confidence at $25.15 in 2004 and $25.57 in 2005. Type of Analysis Tool PepsiCo Coca-Cola Solvency analysis Debt to total assets (total debt ÷ total assets) 2005 $17,476÷ $31,727= 55% 44% Debt to total assets (total debt ÷ total assets) 2004 $14,464 ÷ $27,987= 52% 49% Profitability analysis Price earnings ratio (price per share÷ earnings per share) 2005 $25.57 $25.88 Price earnings ratio (price per share÷ earnings per share) 2004 $25.15 $26.39 Liquidity analysis Current ratio for 2005 $10,454 ÷ $9,406 = 1.11:1 or 1.11 to 1 $10,250 ÷ $9,836 = 1.04:1 or 1.04 to 1 Current ratio for 2004 8,639 ÷ 6,752 = 1.28:1 or 1.28 to 1 12,281 ÷ 11,133 = 1.10:1 or 1.10 to 1...
View Full Document

Ask a homework question - tutors are online