The Competition in the Beverage and Drinks Industry - Assignment Example

The data used retrieved YahooFinance Income ment for Coca Cola Period Ending Dec 31, Dec 31, Dec 31,2011 Total Revenue 46,854,000   48,017,000   46,542,000   Cost of Revenue 18,421,000   19,053,000   18,215,000   Gross Profit 28,433,000   28,964,000   28,327,000   Operating Expenses Research Development -   -   -   Selling General and Administrative 18,205,000   18,185,000   18,154,000   Non Recurring -   -   -   Others -   -   -   Total Operating Expenses -   -   -   Operating Income or Loss 10,228,000   10,779,000   10,173,000   Income from Continuing Operations Total Other Income/Expenses Net 1,110,000   608,000   1,012,000   Earnings Before Interest And Taxes 11,940,000   12,206,000   11,875,000   Interest Expense 463,000   397,000   417,000   Income Before Tax 11,477,000   11,809,000   11,458,000   Income Tax Expense 2,851,000   2,723,000   2,812,000   Minority Interest (42,000) (67,000) (62,000) Net Income From Continuing Ops 9,186,000   9,838,000   9,274,000   Non-recurring Events Discontinued Operations -   -   -   Extraordinary Items -   -   -   Effect Of Accounting Changes -   -   -   Other Items -   -   -   Net Income 8,584,000   9,019,000   8,584,000   Preferred Stock And Other Adjustments -   -   -   Net Income Applicable To Common Shares 8,584,000   9,019,000   8,584,000   Balance sheet: Coca Cola Period Ending Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Assets Current Assets Cash And Cash Equivalents 10,414,000   8,442,000   12,803,000   Short Term Investments 9,854,000   8,109,000   1,232,000   Net Receivables 4,873,000   4,759,000   4,920,000   Inventory 3,277,000   3,264,000   3,092,000   Other Current Assets 2,886,000   5,754,000   3,450,000   Total Current Assets 31,304,000   30,328,000   25,497,000   Long Term Investments 11,512,000   10,448,000   8,374,000   Property Plant and Equipment 14,967,000   14,476,000   14,939,000   Goodwill 12,312,000   12,255,000   12,219,000   Intangible Assets 15,299,000   15,082,000   15,450,000   Accumulated Amortization -   -   -   Other Assets 4,661,000   3,585,000   3,495,000   Deferred Long Term Asset Charges -   -   -   Total Assets 90,055,000   86,174,000   79,974,000   Liabilities Current Liabilities Accounts Payable 9,886,000   9,151,000   9,371,000   Short/Current Long Term Debt 17,925,000   17,874,000   14,912,000   Other Current Liabilities -   796,000   -   Total Current Liabilities 27,811,000   27,821,000   24,283,000   Long Term Debt 19,154,000   14,736,000   13,656,000   Other Liabilities 3,498,000   5,468,000   5,420,000   Deferred Long Term Liability Charges 6,152,000   4,981,000   4,694,000   Minority Interest 267,000   378,000   286,000   Negative Goodwill -   -   -   Total Liabilities 56,882,000   53,384,000   48,339,000   Stockholders Equity Misc Stocks Options Warrants -   -   -   Redeemable Preferred Stock -   -   -   Preferred Stock -   -   -   Common Stock 1,760,000   1,760,000   1,760,000   Retained Earnings 61,660,000   58,045,000   53,621,000   Treasury Stock (39,091,000) (35,009,000) (31,304,000) Capital Surplus 12,276,000   11,379,000   10,332,000   Other Stockholder Equity (3,432,000) (3,385,000) (2,774,000) Total Stockholder Equity 33,173,000   32,790,000   31,635,000   Net Tangible Assets 5,562,000   5,453,000   3,966,000   Income statement for Pepsi Period Ending Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Total Revenue 66,415,000   65,492,000   66,504,000   Cost of Revenue 31,243,000   31,291,000   31,593,000   Gross Profit 35,172,000   34,201,000   34,911,000   Operating Expenses Research Development -   -   -   Selling General and Administrative 25,357,000   24,970,000   25,145,000   Non Recurring -   -   -   Others 110,000   119,000   133,000   Total Operating Expenses -   -   -   Operating Income or Loss 9,705,000   9,112,000   9,633,000   Income from Continuing Operations Total Other Income/Expenses Net 97,000   91,000   57,000   Earnings Before Interest And Taxes 9,802,000   9,203,000   9,690,000   Interest Expense 911,000   899,000   856,000   Income Before Tax 8,891,000   8,304,000   8,834,000   Income Tax Expense 2,104,000   2,090,000   2,372,000   Minority Interest (47,000) (36,000) (19,000) Net Income From Continuing Ops 6,740,000   6,178,000   6,443,000   Non-recurring Events Discontinued Operations -   -   -   Extraordinary Items -   -   -   Effect Of Accounting Changes -   -   -   Other Items -   -   -   Net Income 6,740,000   6,178,000   6,443,000   Preferred Stock And Other Adjustments -   -   -   Net Income Applicable To Common Shares 6,740,000   6,178,000   6,443,000   Balance sheet Pepsi Period Ending Dec 28, 2013 Dec 29, 2012 Dec 31, 2011 Assets Current Assets Cash And Cash Equivalents 9,375,000   6,297,000   4,067,000   Short Term Investments 303,000   322,000   358,000   Net Receivables 6,954,000   7,041,000   6,912,000   Inventory 3,409,000   3,581,000   3,827,000   Other Current Assets 2,162,000   1,479,000   2,277,000   Total Current Assets 22,203,000   18,720,000   17,441,000   Long Term Investments 1,841,000   1,633,000   1,477,000   Property Plant and Equipment 18,575,000   19,136,000   19,698,000   Goodwill 16,613,000   16,971,000   16,800,000   Intangible Assets 16,039,000   16,525,000   16,445,000   Accumulated Amortization -   -   -   Other Assets 2,207,000   1,653,000   1,021,000   Deferred Long Term Asset Charges -   -   -   Total Assets 77,478,000   74,638,000   72,882,000   Liabilities Current Liabilities Accounts Payable 12,533,000   12,274,000   11,949,000   Short/Current Long Term Debt 5,306,000   4,815,000   6,205,000   Other Current Liabilities -   -   -   Total Current Liabilities 17,839,000   17,089,000   18,154,000   Long Term Debt 24,333,000   23,544,000   20,568,000   Other Liabilities 4,931,000   6,543,000   8,266,000   Deferred Long Term Liability Charges 5,986,000   5,063,000   4,995,000   Minority Interest 110,000   105,000   311,000   Negative Goodwill -   -   -   Total Liabilities 53,199,000   52,344,000   52,294,000   Stockholders Equity Misc Stocks Options Warrants (130,000) (123,000) (116,000) Redeemable Preferred Stock -   -   -   Preferred Stock -   -   -   Common Stock 25,000   26,000   26,000   Retained Earnings 46,420,000   43,158,000   40,316,000   Treasury Stock (21,004,000) (19,458,000) -   Capital Surplus 4,095,000   4,178,000   4,461,000   Other Stockholder Equity (5,127,000) (5,487,000) (24,099,000) Total Stockholder Equity 24,409,000   22,417,000   20,704,000   Net Tangible Assets (8,243,000) (11,079,000) (12,541,000) Financial ratio analysis Coca Cola  201  2013  2014 times interest earned 25.78 30.75 28.48 debt to assets ration 0.63 0.62 0.6 earning per share 0.94 0.85 1.1 divididend pay out ratio 0.756 0.554 0.759 dividend per share 1.056 0.884 0.998 average market price in each year 3.65 4.5 4.66 dividend yield 1.35 1.54 1.48 annual growth rate on earnings 12.30% 26.50% 269.30% average annual growth rate       Pepsi  2013  2012  2011   times interest earned 10.76 10.24 11.32 debt to assets ration 0.68 0.7 0.65 earning per share 0.75 0.4 0.35 divididend pay out ratio 2.77% -2.94% 10.35% dividend per share 2.53 3.5 2.3 average market price in each year 2.58 2.36 1.3 dividend yield 1.56 1.8 2.58 annual growth rate on earnings 12.56% 12.54% 13.56% average annual growth rate       Conclusion Pepsi and Coca Cola are the major competitors in the beverage and drinks industry as have been noted by their strength in maintaining their shareholders’ value. Generally, is one of the major competitors thereby acting as a perfect prototype for analyzing Coca Cola’s stock. The above financial ratios prove useful when analyzing the health of competition witnessed by these two multinational companies. In 2013, Pepsi witnessed a higher dividend yield than its competitors. These characteristics might have resulted from the initiative taken by the company in introducing dividend growth measures, in which case the Coca Cola company had not applied. Industry events show that Pepsi has always shown a slight edge over Coca Cola on the basis of profitability growth. As stated by Thomas, this resulted from Pepsi’s activities in witnessing indomitable share repurchase as compared to Coca Cola. Both companies witness almost same annual growth rate because of their ability to maintain their shareholders value through strategy of strengthening their dividend. This is in form of the company’s earning, which helped in attracting investors consequently increasing the demand The TIE (times interest earned) and debt to assets ratio show Coca Cola has the best financial condition. Risk for Coca Cola’s failure to payout interest is much lower than Pepsi’s. Dividend payout ratios, dividend per share and dividend yield suggest that investors of Coca Cola have greater proposition of revenue from dividends. Larger dividends also reflect a healthy financial condition of company. This means that Coca Cola is likely to take up on projects, which needs funding as compared to its competitors. The global financial crisis witnessed might have brought the realized little earning per share registered by the companies in 2011.. Work cited Thomas, Michael. Pepsi Edges Out Coca-Cola In Key Dividend Growth Measures. 2014 Retrieved from: http://seekingalpha.com/article/2313725-pepsi-edges-out-coca-cola-in- key-dividend-growth-measures Read More