On the surface, Coca-Cola and PepsiCo have very similar business models. If the businesses are dependent on large machinery in their operations, look closely at ratios that focus on assets.
However, Coca-Cola has more focus within the beverage industry, allowing it to make key investments and communicate key messaging with consumers. Delivered twice a week, straight to your inbox. PEP are very similar businesses in terms of industry, ideal consumers and Comapring similar businesses products.
There are many types of ratios, but some of the most important include the net profit ratio and the return on assets ratio.
In addition, both companies offer ancillary products such as consumer packaged goods. These more efficient operations help both companies increase the price per share given it should result in higher earnings per shareor EPS, even if sales remain flat.
What is interesting to note is that Time Magazine also reports that the energy drink segment of the beverage industry has captured year-over-year growth over the past 10 years. Keeping with the theme of diversification and product complements, Coca-Cola bought a large Comapring similar businesses in Monster Energy inand PepsiCo decided to start its own energy drink: Even though Coca-Cola may have an advantage with a more focused business model, PepsiCo created a scenario where one product the company owns may induce a consumer to purchase a second product the company also owns.
You should consult with a CPA or financial analyst to help you with the comparison.
For example, net sales are usually reported as gross sales, less customer discounts, whereas some companies report net sales as gross sales, less discounts, and cost of goods sold. Also, verify that the numbers reported are from the same accounting period such as January through December.
However, both companies have made a push into the energy drink category. Since every large market has been fully tapped by the beverage industry, the remaining smaller markets require efficient operations to turn a profit and make a lucrative investment, since the sales volume felt in countries such as the U.
Efficient Business Operations With both companies facing market saturation, Coca-Cola and PepsiCo have made strong commitments to more efficient operations in The net profit ratio is arrived at by taking the net, pre-tax profit shown near the bottom of the profit and loss and dividing it by the nets sales.
The same ratio should be performed both statements. Trading Center Want to learn how to invest? The other important ratio is the return on assets ratio.
Compare the various ratios of each company to see which is more or less profitable or efficient in its operation. In contrast, Coca-Cola only focuses on a diversified product portfolio within the beverage industry and has few products outside of that industry.
In contrast, Coca-Cola has made efforts to dominate the beverage industry almost exclusively and shied away from the cross-promotion of multiple products in multiple industries.
As potential investors dig deeper, however, they find key differences and key similarities between the two business models that make the companies what they are as of If the business relates more on commission- sales based on service, look closer at payroll to sales-related ratios.
In that case, the future results may not be as valid, because the prior results were based on the dependence of the key person. This push highlights the fact that sales volume for Diet Pepsi and Diet Coke has declined steadily over the past 10 years, according to Time Magazine.
To ensure accuracy, it is usually best if both statements have been audited by a certified public accountant, or CPA. According to Information Resources, Inc.
There are not many new or emerging markets that remain untapped for either company. A ratio analysis looks at various numbers in the financial statements such as net profit or total expenses to arrive at a relationship between each number. KO and PepsiCo, Inc. Get a free 10 week email series that will teach you how to start investing.
This allows both companies to take advantage of the few new and emerging markets left. Diversified Business Model PepsiCo is a company known for a highly diversified product portfolioboth within the beverage industry and in other industries such as the consumer packaged goods industry.
Compare the statements such as the profit and loss to see if the results are reported in a similar fashion. This is determined by dividing the net, pre-tax profit by the total assets shown on the balance sheet.
In a scenario where the beverage industry declines in overall revenue, PepsiCo is positioned to take advantage of the situation, while Coca-Cola may falter. Ensure that both financial statements have been audited or at the very least prepared by a neutral, third-party accounting firm, to help ensure the integrity and accuracy of the reported numbers.This report is in order to indicate the different performance of the two companies in the same business area.
The analysis will be divided into. Learn what ratio analysis is, how investors can compare companies within the same sector using ratio analysis and how ratios can simplify evaluating stocks.
Comapring Similar Businesses Essay Comparing Two Similar Businesses: mi-centre.com and Borders Books Jennifer Kleinfield Alethia Gardner BUS 7/26/ Comparing Two Similar Businesses mi-centre.com and Borders Books are two companies who had very different outcomes after years of business.
Step four: Sustainable competitive advantages The last step in figuring how to compare companies is a little less exact than the first three. One of the most effective ways to compare two businesses is to perform a ratio analysis on each company’s financial statements.
A ratio analysis looks at. Comparing and Contrasting What this handout is about This handout will help you first to determine whether a particular assignment is asking for comparison/contrast and then to generate a list of similarities and differences, decide which similarities and differences to focus on, and organize your paper so that it will be clear and effective.Download