COCA-COLAVS
PEPSICO
Coca-Cola at a Glance
Coca-Cola at a Glance
Coca-Cola at a Glance
KEY DRIVERS OF COCA-COLA
• WINNING CULTURE
• “LIVE OUR VALUES”
• FOCUS ON THE MARKET
• WORK SMART
• ACT LIKE OWNERS
• BE THE BRAND
KEY CHALLENGES OF COCA-COLA
• OBESITY
• WATER SCARCITY
• EVOLVING CONSUMER PREFERENCE
• INCREASED COMPETITION AND CAPABILITIES
• PRODUCT SAFETY AND QUALITY CONCERNS
Key Competitors of Coca-Cola & PepsiCo
COCA-COLA’S EVENT TIMELINE
STREET’S POSITION
Coca-Cola - 99% BULLISH
STREET’S POSITION COCA-COLA
Coca-Cola's 3 year trend of stock prices
STREET’S POSITION COCA-COLA
BUSINESS SEGMENTATION COCA-COLA
The Organizational Structure Consists Of The Following Operating Segments:
• Eurasia And Africa
• Europe
• Latin America
• North America
• Asia Pacific
• Bottling Investment Group And
• Corporate.
BUSINESS SEGMENT WISE REVENUE COCA-COLA
EXECUTIVE COMPENSATION STRUCTURE COCA-COLA
Executive compensation is the compensation paid to the company’s CEO, CFO and three other highly compensated executive officers.
EXECUTIVE COMPENSATION STRUCTURECOCA-COLA
SUMMARY OF MOST RECENT EARNINGS CALL: COCA-COLA (THIRD QUARTER 2015)
• Reported Net Revenue Declined 5% And Organic Revenue Grew 3%
• Global Price/Mix Of 3% Reflecting Positive Pricing And Packaging Initiatives Across Key
Markets
• Reported Eps Was $0.33 And Comparable EPS Was $0.51
• Global Volume Grew 3%
• Year-to-date Cash From Operations Increased 5% To $8.4 Billion, Despite Significant
Foreign Currency Headwinds
• Expect Full-year Comparable Currency Neutral Eps Growth Of 5%, In Line With The Range
Laid Out At The Beginning Of The Year
PepsiCo at a Glance
COMPANY PROFILE
PepsiCo at a Glance
Product Portfolio
PepsiCo at a Glance
PROFITS
PepsiCo at a Glance
GEOGRAPHIC MIX
BALANCED GEOGRAPHIC FOOTPRINT
KEY DRIVERS OF PEPSICO
PEPSICO’S VALUES & MISSION
• Performance With Purpose
• Human Sustainability
• Environmental Sustainability
• Talent Sustainability
BUSINESS STRATEGIES
• The Growth of the Middle Class
• Continue to focus on productivity
• The Evolution of the Retail Environment
• Acceleration of Consumer Focus on Health and Wellness
KEY CHALLENGES OF PEPSICO
• IMPOSITION OF NEW TAXES
• UNFAVORABLE ECONOMIC CONDITIONS
• DISRUPTION OF SUPPLY
• PRODUCT CONTAMINATION
• FAILURE TO SUCCESSFULLY NEGOTIATE COLLECTIVE BARGAINING
AGREEMENTS
• PROTECTING INTELLECTUAL PROPERTY
• FAILURE TO INTEGRATE ACQUISITIONS
STREET’S POSITION
PepsiCo - 99% BULLISH
STREET’S POSITION PEPSICO
PepsiCo’s 3 year trend of stock prices
STREET’S POSITION PEPSICO
BUSINESS SEGMENTATION PEPSICO
The organizational structure consists of the following operating segments:
• Frito-Lay North America
• Quaker Foods North America
• PepsiCo Americas Beverages
• Latin America Foods
• PepsiCo Europe
• PepsiCo Asia, Middle East & Africa
BUSINESS SEGMENT WISE REVENUE PEPSICO
EXECUTIVE COMPENSATION STRUCTURE PEPSICO
Executive Compensation is the compensation paid to the company’s CEO, CFO and three other highly compensated executive officers.
EXECUTIVE COMPENSATION STRUCTUREPEPSICO
SUMMARY OF MOST RECENT EARNINGS PEPSICO (Q3 2015)• Organic Revenue Went Up By 7.4%.
• Operating Profit Went Up By 12%.
• Currency Eps Went Up By 14%.
• Core Gross Margin Went Up 120 Basis Points.
• Currency Eps Growth Raised To 9%.
• Productivity Savings Up To $1 Billion.
• Cash Returns To Shareholders $9 Billion.
• Reported Net Revenue Declined By 5%.
• Reported Operating Profit Declined By 50%.
• Reported Eps Declined By 73%.
• Reported Gross Margin Exported 115 Basis Points
HORIZONTAL AND VERTICAL ANALYSISCOKE VS PEPSI
HORIZONTAL ANALYSIS
Horizontal analysis is also called trend analysis, is a technique for
evaluating a series of financial statement data over a period of time.
VERTICAL ANALYSIS
Vertical analysis also called common-size analysis, is a technique
that expresses each financial statement item as a percent of a base
amount.
HORIZONTAL ANALYSIS OF BALANCE SHEETS (2013-2014)
VERTICAL ANALYSIS OF BALANCE SHEETS 2014
VERTICAL ANALYSIS OF BALANCE SHEET 2013
HORIZONTAL ANALYSIS INCOME STATEMENTS (2013-2014)
VERTICAL ANALYSIS OF INCOME STATEMENTS 2014
VERTICAL ANALYSIS OF INCOME STATEMENTS 2013
KEY RATIO’S
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2014 2014 2013 2013
1.02
1.14 1.13
1.24
Curent Ratio
LIQUIDITY RATIO’S
KEY RATIO’S
LIQUIDITY RATIO’S
0.84
0.86
0.88
0.9
0.92
0.94
0.96
0.98
1
1.02
1.04
1.06
2014 2014 2013 2013
0.92
0.97
1.01
1.05
Quick Ratio
KEY RATIO’S
LIQUIDITY RATIO’S
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2014 2014 2013 2013
0.67
0.48
0.73
0.54
Cash Ratio
0.48
0.5
0.52
0.54
0.56
0.58
0.6
0.62
2014 2014 2013 2013
0.61
0.54
0.61
0.53
Gross Margin
KEY RATIO’S
PROFITABILITY RATIO’S
0
0.05
0.1
0.15
0.2
0.25
2014 2014 2013 2013
0.21
0.14
0.22
0.15
Operating Margin
KEY RATIO’S
PROFITABILITY RATIO’S
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
2014 2014 2013 2013
0.15
0.10
0.18
0.10
Profit Margin
KEY RATIO’S
PROFITABILITY RATIO’S
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
2014 2014 2013 2013
0.23
0.37
0.260.28
Return on Equity
KEY RATIO’S
PROFITABILITY RATIO’S
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
2014 2014 2013 2013
5.77
9.83
5.62
9.16
Inventory Turnover
KEY RATIO’S
TURNOVER RATIO’S
KEY RATIO’S
TURNOVER RATIO’S
9.00
9.20
9.40
9.60
9.80
10.00
10.20
10.40
2014 2014 2013 2013
10.30
10.03
9.62
9.55
Receivables turnover
KEY RATIO’S
TURNOVER RATIO’S
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
2014 2014 2013 2013
8.56
6.02
9.53
6.41
Accounts Payables Turnover
KEY RATIO’S
TURNOVER RATIO’S
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2014 2014 2013 2013
75.16
25.94
13.41 15.22
Working Capital Turnover
Coca-Cola Vs PepsiCo – Where To Invest??
In order to decide which company we would like to invest in, we are
considering two factors –
• Current Profitability Ratios
• Company’s Business Strategies
PROFITABILITY RATIOS
0
10
20
30
40
50
60
70
Gross Margin OperatingMargin
Pretax Margin Net Margin ROA ROE Return on TotalCapital
Return onInvestedCapital
60.99
22.91 20.315.45
7.8
22.36
9.9713.96
53.52
15.22 13…9.7 8.73
31.1
12.98 14.46
Current Profitability Ratios
Coca-Cola PepsiCo
Business Strategies – What’s Working And What’s Not!
COCA COLA
• Due To Sluggish Global
Economy Major Business
Drivers Are Not Helping
• Coca-cola Is Losing Its Mojo
• Coca-cola Is Throwing More
Money Into Investments That
Is Not Working In Their Favor
• Coca-cola Stock Growth Woes
PEPSICO
• New Markets For Expansive
Growth
• North American Job Growth
Equals More Consumer
Spending
• PepsiCo Is Thinking Outside
The Box
• PEP Produces Consistently
Higher Dividends
• Fast Growth In Developing
Countries
Coca-Cola Vs PepsiCo – Whom To Lend??
In order to decide which company we would like to lend money to, we
have considered two factors –
• Liquidity Ratio
• Company’s Business Strategies
FINANCIAL STRENGTH RATIOS
0
20
40
60
80
100
120
140
160
180
Current Ratio Asset turnoverratio
ReceivablesTurnover
Inventory Turnover
Quick Ratio Cash ratio Total Debt toTotal Equity
Total Debt toTotal Assets
coke pepsi
RATIO ANALYSIS FOR CREDITING
1) DEBT TO EQUITY RATIO
ANALYSIS:
• Since the inventory turnover ratio PepsiCo is higher than that of Coca-Cola. PepsiCo
is more efficient in producing and selling its inventory and also their product is in
more demand than Coca-Cola's.
2) INVENTORY TURN OVER RATIO
ANALYSIS:
• Since the Inventory turnover ratio Pepsi is higher than that of Coca-Cola. PepsiCo is
more efficient in producing and selling its inventory and also their product is in more
demand than that of Coca-Cola’s.
Coke Pepsi
137.68 164.39
Coke Pepsi
6.11 8.6
OUR CONCLUSION AS A CREDITOR
• The ratios analysis of both the companies shows different perspective of one
company when compared to other. So we can’t base our decision as a creditor
only on the ratio analysis.
• Keeping in consideration both ratio analysis and the current market factors
(which are not in favor of Coca-Cola), we believe lending money to PepsiCo will
be a wise decision. PepsiCo is currently performing well and will perform better
in the coming years. Hence we choose PepsiCo.
HOW MUCH LEVERAGE?
• As creditors we would be gauging the level and riskiness of PepsiCo's cash flows
to decide how much we can lend. The specification of minimum threshold and
maximum shortfall probability can be used to define the maximum amount of
leverage the firm's cash flows will support.
• As creditors of PepsiCo we can make sure that we recoup the credit amount
along with the interest receivable so that we don’t bear a loss. (Just in case
market situation changes due to some reasons).
CONCLUSION
THANK YOUGROUP 8
ROLI BHATNAGAR
SANGAMITRA NAGARAJ
SONAM PANDITA
SWATI GHULE
Top Related