Financial Report Analysis – Coca-Cola and PepsiCo
View the 2015 Annual Reports for the Coca-Cola Company and PepsiCo, Inc. ( PDFs Attached). Using these reports, answer the following questions:
- What are the primary lines of business of these two companies as shown in their notes to the financial statements?
- Which company has the dominant position in beverage sales?
- Which company has the greater percentage increase in total assets from 2014 to 2015?
- Which company had more depreciation and amortization expense for 2015? Provide a rationale as to why there is a difference in these amounts between the two companies.
- What type of income format(s) do these two companies use? Identify any differences in income statement format between these two companies.
- What are the gross profits, operating profits, and net incomes for these two companies over the three-year period 2013-2015? Which company has had better financial results over this period?
- What format(s) did these companies use to present their balance sheets?
- How much working capital did each of these companies have at the end of 2015? Speculate as to their rationale for the amount of working capital they maintain.
- What is the most significant difference in the asset structure of the two companies? What causes this difference?
- What were the two companies’ trends in net cash provided by operating activities over the period 2013 to 2015?
- What were the cash and cash equivalents reported by Coca-Cola and PepsiCo at the end of 2015? What does each company classify as cash equivalents?
- What were the accounts receivable (net) for Coca-Cola and PepsiCo at the end of 2015? Which company reports the greater allowance for doubtful accounts receivable (amount and percentage of gross receivable) at the end of 2015?
- What is the amount of inventory reported by Coca-Cola at the end of 2015? What percent of total assets does each company invest in inventory?
- What inventory costing methods do Coca-Cola and PepsiCo use? How does each company value its inventories?
- Compute and compare the inventory turnover ratios and days to sell inventory for Coca-Cola and PepsiCo for 2015. Indicate why there might be a significant difference between the two companies.
- What amount is reported in the balance sheets as property, plant, and equipment (net) of Coca-Cola at the end of 2015? What percentage of total assets does each company invest in property, plant, and equipment?
- What depreciation methods do Coca-Cola and PepsiCo use for property, plant, and equipment? How much depreciation did Coca-Cola and PepsiCo report in 2015, 2014, and 2013?
- Compute and compare the following ratios for Coca-Cola and PepsiCo for 2015: Asset turnover, Profit margin on sales, and Rate of return on assets.
- What amounts for intangible assets did Coca-Cola and PepsiCo report in their respective balance sheets? What percentage of total assets is each of these reported amounts?
- On what basis and over what periods of time did Coca-Cola and PepsiCo amortize their intangible assets?
- What were Coca-Cola’s and PepsiCo’s net revenues (sales) for the year 2015? Which company increased its revenues more (dollars and percentage) from 2014 to 2015?
- Are the revenue recognition policies of Coca-Cola and PepsiCo similar? Explain.
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