Coca Cola vs Pepsi

Company Comparison

For this project you are going to conduct an analysis with the concepts you have learned so far and to apply them in a real world scenario. You will start looking for information, analyze it and conclude based on your findings. I understand that going from theory to real world is hard given that the companies information presented on the SEC Website, Yahoo or the companies annual reports are not presented as simplified as the book. Therefore, you have to dig a little to find the information, and if you cannot find it, (maybe a company does not report that line item), just make a note on your comments or conclusions.

Steps

• Before you begin, make sure to watch the videos posted in the week 2 folder and review the Target and Home Depot spreadsheets provided, as they will serve as examples of what you will need to calculate. Additionally, watch the how to get information on a public company and watch all the rest of the videos in the Week 2 Folder to help with the ratio Analysis calculations. (This should be a review from your accounting class

• You will have to go to the SEC.gov web site and do a search for the Financial Information for both companies on the EDGAR search engine. Use the most recent 10K (latest annual report). The SEC website is a good resource to use, as you can download the financial information on an excel format. (https://www.sec.gov/edgar/searchedgar/companysearch.html) Use the companiesticker to find the information (Coca Cola KO, Pepsico PEP)

• Download their latest 10-K Statement on to Excel and copy onto the spreadsheet provided. Use these numbers for your calculations. Make sure to reference these numbers in your calculations. (If you need help copying the information look at the Appendix of this assignment)

• For additional information you can refer to the companies investor relations pages and Annual Reports. Take some time to review them and look at how the information is presented.

• You will also need to obtain stock information from Yahoo finance or any other website that has market information for publicly traded companies. (This is also covered in the video on how to obtain information on a public company) (finance.yahoo.com).

Conduct the following calculations on excel and for each one compare both companies. There is space provided in the spreadsheet. You need to reference the info that you copied to do your calculations. (Look at the Appendix below if you do not know how to do this)

1. Common Size Balance Sheet and Income Statement (***Note: Watch the video under resources and materials for week 2. This in not covered in the text book.) (3 points)
2. Short Term and Long Term Solvency/Liquidity Ratios (3 points)
3. Financial Ratios(3 points)
4. Asset Management Ratios(3 points)
5. Profitability Ratios(3 points)
6. Market Value Ratios (for simplicity, use current stock price) (3 points) Make sure that you are comparing both companies on the same basis ( for example millions to millions)
7. Construct the Dupont Identity(2 points)
8. Operating Ratios(3 points)

1. What type of information is presented in the Companies Annual Reports (other than financial statements)? (3 points)

2. Examine the market-to-book ratios you calculated for each firm. Which, if either, of the two firms can be considered growth firm and which, if either, can be considered value firm? (5 points)

3. Compare the valuation ratios across the two firms. How do you interpret the difference between them? (5 points)

4. Consider the enterprise value of both firms for each of the four years. How have the values of both firms changed over the time period? (5 points)

5. Conclude. Which of the companies is better managed? Which one is a better investment? Why?..... (9 points)

HINTS/NOTES

• Look at the cells marked in yellow. These give you reminders or hints

• Make sure that you are comparing apples to apples..

Some company information may be presented in thousands and other in millions. Make sure that when you calculate ratios that all information is in the same units

• The income statement can also be called statement of Operations.

• Dividend Payment per share Information is included in the statement of Cash Flows and in the Consolidated Statements of Stockholders' Equity (Parenthetical). This statement also includes number of shares outstanding (which you will need)