the first page is the question and the next 7 pages are the vertical and horizontal analysis of coca-cola and pepsi's balance sheet and income statment. need help solving this.
Coca-Cola vs Pepsi Financial Analysis Create a vertical (same-size) & horizontal analysis (change in dollars and percent of change) for Coca-Cola and Pepsi, for 2016 and 2017. Also, calculate the following ratios for Coca-Cola and Pepsi, for 2016 and 2017: current ratio & quick ratio accounts receivable turnover & days sales in receivables inventory turnover & days in inventory gross profit margin ratio, profit margin & return on investment After completing all the necessary calculations and analyses, explain what that information tells us about the companies: 1. Write a comparison of each company's 2016's current & quick ratio to its 2017 ratios, and a comparison of Pepsi's current & quick ratio to Coca-Cola's. Which company seems to be more liquid? What are the advantages and disadvantages of liquidity? 2. Write a comparison of each company's 2016's accounts receivable turnover and days sales in receivables to its 2017 ratios, and a comparison of Pepsi's accounts receivable turnover and days sales in receivables to Coca- Cola's. Which of the two seems to be doing a better job with receivables? How does this collection process affect the overall success of the companies? 3. Write a comparison of each company's 2016's inventory turnover and days in inventory to its 2017 ratios, and a comparison of Pepsi's inventory turnover and days in inventory to Coca-Cola's. Calculate for both companies for 2016 and 2017. Write a paragraph comparing 2016 with 2017 and Coca-Cola with Pepsi using these two ratios to indicate how they manage their inventory. Which one of the two companies has a better approach to inventory management? Why? What are the problems that come with poor inventory management? 4. Indicate which company shows the best prospects for future profits and explain in detail why you think the ratios support your observation 5. Write a summary comparison of each company's 2016's vertical analysis to its 2017 analysis, and a summary comparison of Pepsi's vertical analysis to Coca-Cola's. Explain why vertical analyses are beneficial 6. Write a summary comparison of each company's 2016's horizontal analysis to its 2017 analysis, and a summary comparison of Pepsi's horizontal analysis to Coca-Cola's. What do the changes indicate about the companies improvement or lack thereof between 2016 and 2017? Explain why one company is better than the other. 7. Based on all of your calculations and observations described above, make a recommendation as to which company would be a better investment. Give the reasons for your conclusion Coca-Cola Balance Sheet Vertical Analysis % 2017 6006000 2016 8555000 6.8 14669000 16.7 13646000 15.6 Cash and cash equivalents Short term investments Net Receivables Inventory Other Current Assets Total current assets 3667000 2655000 7548000 4.2 3,0 3856000 2675000 2797000 8.6 36,545,000 41.6 34,010,000 39.0 9.3 10635000 12.2 25.0 17249000 19.8 10.7 19.8 12.0 18.2 5.2 100.0 10.0 10629000 10499000 4248000 87,270,000 9490000 100.0 10.9 05 307000 4887000 0.4 5.6 710000 0.8 Gross property, 8203000 plant, and equipment Equity and other 21952000 investments Goodwill 9 401000 Intangible assets 7235000 Other assets 4560000 Total assets 87,896,000 Accounts 8748000 payable Taxes payable 410000 Accrued 5259000 liabilities Other current 1533000 liabilities Long Term debt 31182000 Deferred taxes 2522000 liabilities Other long term 8021000 liabilities Total liabilities 68,919,000 Common Stock 1760000 Retained 60430000 earnings Accumulated (10305000) other comprehensive income 355 34.0 29684000 3753000 4.3 4081000 78.4 73.4 64,050,000 1760000 65502000 75.1 (11.7) (11205000) 12.8 17,072,000 19.4 23,062,000 26.4 Total stockholder's equity Total liabilities and stockholder's equity 87,896,000 100.0 87,270,000 100.0 Coca-Cola Balance Sheet Horizontal Analysis 2016 8555000 Difference (2549000) 129.8) 13646000 1023000 7.5 3856000 2675000 2797000 (189000) (20,000) 4751000 (4.9) (0.7) 169.7 34,010,000 2,535,000 7.5 10635000 (2432000) (22.9) 17249000 4703000 27.3 2017 Cash and cash 6006000 equivalents Short term 14669000 investments Net Receivables 3667000 Inventory 2655000 Other Current 7548000 Assets Total current 36,545,000 assets Gross property, 8203000 plant, and equipment Equity and other 21952000 investments Goodwill 9401000 Intangible assets 7235000 Other assets 4560000 Total assets 87,896,000 Accounts 8748000 payable Taxes payable 410000 Accrued 5259000 liabilities Other current 1533000 labilities Long Term debt 31182000 Deferred taxes 2522000 abilities 10629000 10499000 4248000 87,270,000 9490000 (1228000) (3264000) 312000 626,000 (742000) (11.6) (0.3) 73 (7.8) 307000 4887000 103000 372000 33.6 7.6 710000 823000 115.9 29684000 3753000 1498000 (1231000) 50.5 (32.8) 8021000 4081000 3940000 96.5 4,869,000 68,919,000 1760000 60430000 64,050,000 1760000 65502000 7.6 0 (7.7) (5072000) (10305000) (11205000) 900000 18.0) Other long term liabilities Total liabilities Common Stock Retained earnings Accumulated other comprehensive income Total stockholder's equity Total liabilities and stockholder's equity 17,072,000 23,062,000 (5,990,000) (26.0) 87,896,000 87,270,000 626,000 Coca-Cola Income Statement Vertical Analysis 2017 35,410,000 13256000 22154000 12496000 100.0 37.4 62.6 35.3 2016 41.863.000 16465000 25398000 15262000 100.0 39.3 60.7 36.5 Total Revenue Cost of revenue Gross profit Selling, general, administrative and other Operating income Interest expense Total other income/expenses net Income before 7501000 21.2 8626000 20.6 841000 (595000) 2.4 (1.7) 733000 (399000) 1.6 (0.95) 6742000 19.0 8136000 19.4 5560000 1586000 3.8 Income tax expense Income from continuing operations 1182000 6550000 15.6 Net Income 1,248,000 5 3. 6 ,527,000 15.6 Coca-Cola Income Statement Horizontal Analysis 2016 41,863,000 16465000 25398000 15262000 Difference (6,453,000) (3209000) (3244000) (2766000) (15.4) (19.5) (12.8) (18.1) 2017 Total Revenue 35,410,000 Cost of revenue 1356000 13256000 Gross profit 22154000 Selling general, 12496000 administrative and other Operating 7501000 income Interest expense 841000 Total other (595000) income/expenses 8626000 (1125000) (13.0) 733000 (399000) 108000 (196000) 14.7 49.1 net Income before 6742000 8136000 (7494000) (92.1) 250.6 5560000 1586000 3974000 1182000 6550000 (5368000) (820) Income tax expense Income from continuing operations Net Income 1,248,000 6,527,000 (5,279,000) (80.9) Horizonal Analysis for Pepsi Balance Sheet in thousands Dollar Amount Change Percent 15.9 27.7 210 Cash and Cash Equivalents Short Term Investments Total Cash Net Receivables Inventory Total Current Assets Gross Property. Plant, and Equipment Accumulated Depreciation 1.452.000 1.933,000 3.385.000 247.000 224.000 3.938.000 2.228,000 (1.639,000) 145 -4.4 Net Property. Plant, and Equipment Equity Other Investments 649.000 92,000 1.6 3.0 314,000 405.000 RO 1.737.000 5.675,000 7.7 -0.2 92 Goodwill Intangible Assets Other Long-Term Assets Total Noncurrent Assets Total Assets Liabilities Total Revenue Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities Long Term Debt Deferred Taxes Liabilities Other Long Term Liabilities Total Noncurrent Liabilities Total Liabilities 6.4 (1.407,000) 569,000 (54,000) 180.000 (633,000) 3,743,000 (1.031.000) 4,614.000 6526.000 5.893,000 -20.3 69.2 14.6 9.4 Stockholders' Equity Common Stock 100 0.6 Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity Total Liabilities and Stockholders' Equity 321.000 862.000 (206,000) 5.675.000 Dollar Amount Change Percent Income Statement in the sands Chance Total Revenue 726,000 1.2 0.4 Cost of Revenue Gross Profit Selling General and Admin. Total Operating Expenses Operating Income or Loss Interest Expense Before Income Tax Income Tax Expense Income from Continuing Operations Net Income Net Income Available for Common Stock 576,000 150.000 (504.000) (574.000) 724,000 (191.000) 1.049,000 2.520.000 (1,471.000) (1,472,000) (1.470.000) -2.0 -23 7.4 - 14.2 12.2 1 16,0 -23.1 -23.3 -23.2 2016 1296 99% 2296 896 396 49% 3790 50% -27% 229 396 19% 0.05% 61% 100% Vertical Analysis for Pepsi Balance Sheet in thousands 2017 Cash and Cash Equivalents 13% Short Term Investments 11% Total Cash 24% Net Receivables 8% Inventory 4% Total Current Assets 39% Gross Property, Plant, and Equipment 49% Accumulated Depreciation -27% Net Property. Plant, and Equipment 22% Equity/Other Investments Goodwill 199% Intangible Assets 17% Other Long-Term Assets 0.4% Total Noncurrent Assets 61% Total Assets 100% Liabilities Total Revenue Accounts Payable 82 Accrued Liabilities 3% Other Current Liabilities Total Current Liabilities 26% Long Term Debt 429 Deferred Taxes Liabilities 4% Other Long Term Liabilities 14% Total Noncurrent Liabilities 61% Total Liabilities 86% Stockholders' Equity Common Stock 0.1% Retained Earnings 66% Accumulated Other Comprehensive Income -16.49 Total Stockholders' Equity 14% 79 9% 8% 490 29% 41% 796 9% 56% 85% 0.1% 71% -18.896 15% Total Liabilities and Stockholders' Equity 100% 100 2016 100% 459 55 389 100% 4595 559 399 399 3893 Income Statement in thousands Total Revenue Cost of Revenue Gross Profit Selling General and Admin. Total Operating Expenses Operating Income or Loss Interest Expense Before Income Tax Income Tax Expense Income from Continuing Operations Net Income Net Income Available for Common Stock 17 29 296 1496 15% 7% 8% 89 10% 10% 1096 8% Coca-Cola vs Pepsi Financial Analysis Create a vertical (same-size) & horizontal analysis (change in dollars and percent of change) for Coca-Cola and Pepsi, for 2016 and 2017. Also, calculate the following ratios for Coca-Cola and Pepsi, for 2016 and 2017: current ratio & quick ratio accounts receivable turnover & days sales in receivables inventory turnover & days in inventory gross profit margin ratio, profit margin & return on investment After completing all the necessary calculations and analyses, explain what that information tells us about the companies: 1. Write a comparison of each company's 2016's current & quick ratio to its 2017 ratios, and a comparison of Pepsi's current & quick ratio to Coca-Cola's. Which company seems to be more liquid? What are the advantages and disadvantages of liquidity? 2. Write a comparison of each company's 2016's accounts receivable turnover and days sales in receivables to its 2017 ratios, and a comparison of Pepsi's accounts receivable turnover and days sales in receivables to Coca- Cola's. Which of the two seems to be doing a better job with receivables? How does this collection process affect the overall success of the companies? 3. Write a comparison of each company's 2016's inventory turnover and days in inventory to its 2017 ratios, and a comparison of Pepsi's inventory turnover and days in inventory to Coca-Cola's. Calculate for both companies for 2016 and 2017. Write a paragraph comparing 2016 with 2017 and Coca-Cola with Pepsi using these two ratios to indicate how they manage their inventory. Which one of the two companies has a better approach to inventory management? Why? What are the problems that come with poor inventory management? 4. Indicate which company shows the best prospects for future profits and explain in detail why you think the ratios support your observation 5. Write a summary comparison of each company's 2016's vertical analysis to its 2017 analysis, and a summary comparison of Pepsi's vertical analysis to Coca-Cola's. Explain why vertical analyses are beneficial 6. Write a summary comparison of each company's 2016's horizontal analysis to its 2017 analysis, and a summary comparison of Pepsi's horizontal analysis to Coca-Cola's. What do the changes indicate about the companies improvement or lack thereof between 2016 and 2017? Explain why one company is better than the other. 7. Based on all of your calculations and observations described above, make a recommendation as to which company would be a better investment. Give the reasons for your conclusion Coca-Cola Balance Sheet Vertical Analysis % 2017 6006000 2016 8555000 6.8 14669000 16.7 13646000 15.6 Cash and cash equivalents Short term investments Net Receivables Inventory Other Current Assets Total current assets 3667000 2655000 7548000 4.2 3,0 3856000 2675000 2797000 8.6 36,545,000 41.6 34,010,000 39.0 9.3 10635000 12.2 25.0 17249000 19.8 10.7 19.8 12.0 18.2 5.2 100.0 10.0 10629000 10499000 4248000 87,270,000 9490000 100.0 10.9 05 307000 4887000 0.4 5.6 710000 0.8 Gross property, 8203000 plant, and equipment Equity and other 21952000 investments Goodwill 9 401000 Intangible assets 7235000 Other assets 4560000 Total assets 87,896,000 Accounts 8748000 payable Taxes payable 410000 Accrued 5259000 liabilities Other current 1533000 liabilities Long Term debt 31182000 Deferred taxes 2522000 liabilities Other long term 8021000 liabilities Total liabilities 68,919,000 Common Stock 1760000 Retained 60430000 earnings Accumulated (10305000) other comprehensive income 355 34.0 29684000 3753000 4.3 4081000 78.4 73.4 64,050,000 1760000 65502000 75.1 (11.7) (11205000) 12.8 17,072,000 19.4 23,062,000 26.4 Total stockholder's equity Total liabilities and stockholder's equity 87,896,000 100.0 87,270,000 100.0 Coca-Cola Balance Sheet Horizontal Analysis 2016 8555000 Difference (2549000) 129.8) 13646000 1023000 7.5 3856000 2675000 2797000 (189000) (20,000) 4751000 (4.9) (0.7) 169.7 34,010,000 2,535,000 7.5 10635000 (2432000) (22.9) 17249000 4703000 27.3 2017 Cash and cash 6006000 equivalents Short term 14669000 investments Net Receivables 3667000 Inventory 2655000 Other Current 7548000 Assets Total current 36,545,000 assets Gross property, 8203000 plant, and equipment Equity and other 21952000 investments Goodwill 9401000 Intangible assets 7235000 Other assets 4560000 Total assets 87,896,000 Accounts 8748000 payable Taxes payable 410000 Accrued 5259000 liabilities Other current 1533000 labilities Long Term debt 31182000 Deferred taxes 2522000 abilities 10629000 10499000 4248000 87,270,000 9490000 (1228000) (3264000) 312000 626,000 (742000) (11.6) (0.3) 73 (7.8) 307000 4887000 103000 372000 33.6 7.6 710000 823000 115.9 29684000 3753000 1498000 (1231000) 50.5 (32.8) 8021000 4081000 3940000 96.5 4,869,000 68,919,000 1760000 60430000 64,050,000 1760000 65502000 7.6 0 (7.7) (5072000) (10305000) (11205000) 900000 18.0) Other long term liabilities Total liabilities Common Stock Retained earnings Accumulated other comprehensive income Total stockholder's equity Total liabilities and stockholder's equity 17,072,000 23,062,000 (5,990,000) (26.0) 87,896,000 87,270,000 626,000 Coca-Cola Income Statement Vertical Analysis 2017 35,410,000 13256000 22154000 12496000 100.0 37.4 62.6 35.3 2016 41.863.000 16465000 25398000 15262000 100.0 39.3 60.7 36.5 Total Revenue Cost of revenue Gross profit Selling, general, administrative and other Operating income Interest expense Total other income/expenses net Income before 7501000 21.2 8626000 20.6 841000 (595000) 2.4 (1.7) 733000 (399000) 1.6 (0.95) 6742000 19.0 8136000 19.4 5560000 1586000 3.8 Income tax expense Income from continuing operations 1182000 6550000 15.6 Net Income 1,248,000 5 3. 6 ,527,000 15.6 Coca-Cola Income Statement Horizontal Analysis 2016 41,863,000 16465000 25398000 15262000 Difference (6,453,000) (3209000) (3244000) (2766000) (15.4) (19.5) (12.8) (18.1) 2017 Total Revenue 35,410,000 Cost of revenue 1356000 13256000 Gross profit 22154000 Selling general, 12496000 administrative and other Operating 7501000 income Interest expense 841000 Total other (595000) income/expenses 8626000 (1125000) (13.0) 733000 (399000) 108000 (196000) 14.7 49.1 net Income before 6742000 8136000 (7494000) (92.1) 250.6 5560000 1586000 3974000 1182000 6550000 (5368000) (820) Income tax expense Income from continuing operations Net Income 1,248,000 6,527,000 (5,279,000) (80.9) Horizonal Analysis for Pepsi Balance Sheet in thousands Dollar Amount Change Percent 15.9 27.7 210 Cash and Cash Equivalents Short Term Investments Total Cash Net Receivables Inventory Total Current Assets Gross Property. Plant, and Equipment Accumulated Depreciation 1.452.000 1.933,000 3.385.000 247.000 224.000 3.938.000 2.228,000 (1.639,000) 145 -4.4 Net Property. Plant, and Equipment Equity Other Investments 649.000 92,000 1.6 3.0 314,000 405.000 RO 1.737.000 5.675,000 7.7 -0.2 92 Goodwill Intangible Assets Other Long-Term Assets Total Noncurrent Assets Total Assets Liabilities Total Revenue Accounts Payable Accrued Liabilities Other Current Liabilities Total Current Liabilities Long Term Debt Deferred Taxes Liabilities Other Long Term Liabilities Total Noncurrent Liabilities Total Liabilities 6.4 (1.407,000) 569,000 (54,000) 180.000 (633,000) 3,743,000 (1.031.000) 4,614.000 6526.000 5.893,000 -20.3 69.2 14.6 9.4 Stockholders' Equity Common Stock 100 0.6 Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity Total Liabilities and Stockholders' Equity 321.000 862.000 (206,000) 5.675.000 Dollar Amount Change Percent Income Statement in the sands Chance Total Revenue 726,000 1.2 0.4 Cost of Revenue Gross Profit Selling General and Admin. Total Operating Expenses Operating Income or Loss Interest Expense Before Income Tax Income Tax Expense Income from Continuing Operations Net Income Net Income Available for Common Stock 576,000 150.000 (504.000) (574.000) 724,000 (191.000) 1.049,000 2.520.000 (1,471.000) (1,472,000) (1.470.000) -2.0 -23 7.4 - 14.2 12.2 1 16,0 -23.1 -23.3 -23.2 2016 1296 99% 2296 896 396 49% 3790 50% -27% 229 396 19% 0.05% 61% 100% Vertical Analysis for Pepsi Balance Sheet in thousands 2017 Cash and Cash Equivalents 13% Short Term Investments 11% Total Cash 24% Net Receivables 8% Inventory 4% Total Current Assets 39% Gross Property, Plant, and Equipment 49% Accumulated Depreciation -27% Net Property. Plant, and Equipment 22% Equity/Other Investments Goodwill 199% Intangible Assets 17% Other Long-Term Assets 0.4% Total Noncurrent Assets 61% Total Assets 100% Liabilities Total Revenue Accounts Payable 82 Accrued Liabilities 3% Other Current Liabilities Total Current Liabilities 26% Long Term Debt 429 Deferred Taxes Liabilities 4% Other Long Term Liabilities 14% Total Noncurrent Liabilities 61% Total Liabilities 86% Stockholders' Equity Common Stock 0.1% Retained Earnings 66% Accumulated Other Comprehensive Income -16.49 Total Stockholders' Equity 14% 79 9% 8% 490 29% 41% 796 9% 56% 85% 0.1% 71% -18.896 15% Total Liabilities and Stockholders' Equity 100% 100 2016 100% 459 55 389 100% 4595 559 399 399 3893 Income Statement in thousands Total Revenue Cost of Revenue Gross Profit Selling General and Admin. Total Operating Expenses Operating Income or Loss Interest Expense Before Income Tax Income Tax Expense Income from Continuing Operations Net Income Net Income Available for Common Stock 17 29 296 1496 15% 7% 8% 89 10% 10% 1096 8%
