Essay Coca-Cola vs Pepsi - 1046 Words

Coca-Cola vs. Pepsi Co 2 1. Using the current ratio, discuss what conclusions you can make about each company’s ability to pay current liabilities (debt). The current ratio measures the company’s ability to pay its short term obligations with its short term assets. Between Coca Cola and PepsiCo, PepsiCo has a higher current ratio implying that is more capable of paying its obligations. The debt management policies of Coca-Cola in conjunction with share repurchase program and investment activity resulted in current liabilities exceeding current assets. From the ratio Pepsi Co suddenly had to pay all its short-term†¦show more content†¦Therefore, Coca-Cola is delivering a higher value to shareholders than Pepsi Co. Pepsi-Co’s ensures partnerships and acquisitions add significantly to the shareholder value. Profitability Ratios | Coca-Cola | Pepsi Co. | Return on Equality | 85.10% | 35.17% | Return on Assets | 4.45 | 14.92 | 3. Using the cash flow indicator and investment valuation ratios, discuss which company is more likely to have satisfied stockholders. The dividend payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. This is well evident with Pepsi Co’s dividend payout ratio of 45.95% as compared to Coca-Cola’s 20.11%. A low dividend payout is always better as it leaves more room for the company to increase dividend payouts in the future while a high ratio means there is less room. Coca-Cola vs. Pepsi Co 4 Therefore, for a long term investor, Coca-Cola would be an attractive stock compared to Pepsi Co. Price earnings ratio is a valuation ratio of a companys current share price compared to its per-share earnings. Coca-Cola has a lower P/E ratio than Pepsi Co. The industry average for P/E ratio is 21.1. This means neither of the companies beat the industry average ratio. Between theShow MoreRelatedCoca Cola Vs. 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