Comparative Analysis of PepsiCo and Coca-Cola. Business Essay

Financial Analysis
Author Name
Institution Affiliation
The two companies I have chosen for this project are Coca Cola and PepsiCo. Coca Cola was founded in 1886 by chemist John Pemberton. While a significant number of stories exist, most of the records agree that John tried to create the anesthetic syrup in the beginning, but his plan did not work, and Pemberton actually invented a combination of kola nut and coca leaf, which was of no health benefit. While customers had no interest in this combination when John added some water to it to create a soda, they enjoyed the taste, and this is how a soft drink came into being under the brand name Coca Cola. PepsiCo, on the other hand, has always given tough competition to Coca Cola and other food and beverage companies (Brick et al. 2017). The recipe for the soft drink Pepsi was first developed in 1880 when Caleb Bradham, an industrialist, and pharmacist from North Carolina registered a patent for his recipe. He had a specific recipe to prepare syrup, and he was not satisfied with the quality. So, the pharmacist decided to use the company’s laboratories to reformulate it (Friedrichsdorf, 2014). The original formula of Pepsis used a number of flavors and spices, such as caramel, nutmeg, lemon oil, and sugar, but Caleb Bradham wanted to make it healthier and more delicious.
As far as the reputation of the two brands is concerned, Coca Cola and PepsiCo have spent years in the food and beverage industry, and they know how to defeat their rivals and stand out of the crowd. In order to stay competitive, the two food and beverage companies have established production units and selling points in all big and small cities of the world.
Comparative Analysis of PepsiCo and Coca-Cola
Liquidity Ratio
The current ratio is determined using the following formula:
112839576200
Current Ratio= Current Assets
Current Liabilities


Coca-Cola













Years

2015

2016

2017


2018










Current Assets

$6,640,100,000

$6,380,100,000

$6,230,100,000


$6,230,100,000










Current

$9,421,100,000

$9,653,100,000

$9,523,100,000


$9,131,100,000


Liabilities







Current










0.72

0.65

0.69


0.63


Ratio


























PepsiCo













Years

2015

2016

2017


2018










Current Assets

$6,520,100,000

$6,100,200,000

$6,160,100,000


$6,250,100,000










Current

$9,300,100,000

$9,523,100,000

$9,511,100,000


$9,132,100,000


Liabilities







Current










0.67

0.65

0.64


0.62


Ratio
























The current ratio of PepsiCo is decreasing as compared to the current ratio of Coca-Cola. For instance, in 2015, the current ratio of Coca Cola was 0.72 and PepsiCo’s current ratio in the same year was 0.67, which is a matter of great concern for this food and beverage company.
Quick Ratio
The quick ratio of the two companies can be determined using the following formula:
Quick Ratio= Current Assets- Investment
Current Liabilities


Coca Cola

















Years

2015


2016


2017


2018














Current Assets

$6,630,100,000


$6,100,200,000


$6,150,100,000

$6,520,100,000













Investments

$1,063,100,000


$1,036,100,000


$2,033,400,000

$1,035,300,000













Current

$7,100,000,000


$6,323,100,000


$7,211,200,000

$3,116,100,000


Liabilities










Quick Ratio













0.618


0.523


0.558


0.564





PepsiCo

















Years

2015


2016


2017


2018














Current Assets

$6,240,100,000


$6,580,100,000


$7,281,110,000


$6,440,100,000













Investments

$5,001,000,000


$2,056,100,000


$2,043,100,000


$1,145,200,000













Current

$9,331,100,100


$9,466,100,000


$7,211,100,000


$8,150,100,000


Liabilities










Quick