Pepsi And Coca-Cola

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Financial ratios are valuable indicators to determine a company’s performance and financial situation. Ratios can be calculated from the data provided by the financial statements. Financial ratios are used to compare the company’s financials to those of its competitors and to analyze trends. Ratios can also predict future bankruptcy of a company, a useful tool for loan officers and investors. Ratios determine liquidity, profitability, and solvency of a company. The purpose of this report is to compare two popular brands in regard to their financial health. Each company’s information will be analyzed vertically, horizontally, and their current ratios calculated. The following paragraphs will provide a brief description of both companies. PepsiCo Synopsis Pepsi-cola is the invention of Caleb Bradham, a pharmacist, in 1898. He created the drink out of carbonated water, a unique mixture of Kola nut extract, vanilla, and rare oils ("Andy's Pepsiholic Haven", 2002).In December 1902, Bradham launched the Pepsi-Cola from the back room of his pharmacy. By 1910, there were 250 franchises in 24 states. The company ran 17 years successfully before encountering price fluctuations in sugar prices during World War I. After sugar prices fell, he was left with a large inventory of overprices sugar, bankrupting the company in 1923. The assets of the company were then sold to Craven Holding Corporation for just$30,000. Frito-Lay Inc. merged with the company in 1961("PepsiCo", 2012). The company also owns many other brands including Sierra Mist, Slice, Tropicana, Ocean Spray, Mountain Dew, Mug Root Beer, No Fear, Seattle’s Best Coffee, Tazo, SoBe, Aquafina, and has a partnership with Starbucks and Lipton. In 1970 PepsiCo had sales exceeding one billion dollars and passed the two billion mark by 1974. The company has experienced substantial growth with successful brand recognition.

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