Using the report you wrote in Topic 3 (file attached), create an executive summary presentation of the report (7-9 slides, exclusive of the title and reference slides) with appropriate speaker notes that could be delivered to a C-suite executive in a corporation. Include the following in your presentation:

1. A summary of the industry and companies chosen.
2. An overview of the chosen company’s liquidity ratios relative to the industry averages and to the competitor.
3. An overview of the chosen company’s solvency ratios relative to the industry averages and to the competitor.
4. An overview of the chosen company’s profitability ratios relative to the industry averages and to the competitor.
5. Describe the importance of the budgeting process in an organization relative to these ratios.
6. Prepare a variance report and balanced scorecard for the chosen company, comparative against the industry averages for liquidity, solvency and profitability (C.1.3)
7. Which and how would these ratios impact capital budgeting decisions.
8. A concluding summary of which company based on the analysis is overall better compared to each other and the industry.

Consider the feedback from your instructor on the case study report you completed in Topic 3. 

Instructors Comments:Loren, Solid starting work in the paper. Please be sure to use a formal cover page. Good solid work in the information with liquidity ratios. In other areas, room for additional category ratios to be used and evaluated. A formal conclusion and recommendation is also needed to finalize the paper and select better performing company. 

Be sure to cite three-five relevant sources in support of your content. Utilize the GCU Library and external sources for your research.

Title slide and reference slide are not included in the slide count. Include speaker notes below each content-related slide that represent what would be said if giving the presentation in person. Expand upon the information included in the slide and do not simply restate it. Please ensure the speaker notes include 50-100 words per slide.

Refer to the resource, “Creating Effective PowerPoint Presentations,” located in the Student Success Center, for additional guidance on completing this assignment in the appropriate style.

While APA style is not required for the body of this assignment, solid academic writing is expected, and in-text citations and references should be presented using APA documentation guidelines, which can be found in the APA Style Guide, located in the Student Success Center.

Name:Loren Domingo-Tangco

Course: BUS-317

Date: December 14, 2019

Instructor: Brent Beyer

Coca-Cola

and

PepsiCo

Financial Comparison Report

Coca-Cola is an American company which leads in the beverage industry in the United States as well as many other nations globally. Pepsi

Company

is also in the beverage industry based in the United States. Pepsi Company is also a parent company to Frito-Lay as well as Quaker Oats, hence making it to lead in beverage, snack as well as cereal industries. In this report, I will analyze the liquidity, solvency, as well as profitability of each company in relation to the other and the beverage industry (Li, 2019).

Financial Ratios

The Coca-Cola versus PepsiCo liquidity ratios are usually used in measuring the short-term potentiality of a company in paying its responsibilities as well as meeting their needs for their cash maintenance. Per Cagle, Compbell & Jones (2013), “an assessment of any firm’s liquidity is of great importance since, a decline in liquidity will reflect a greater risk of bankruptcy.” The liquidity can be considered as the depth of any firm which will highlight the standing of the company. The major ratios indicating the liquidity of the company are the current ratio as well as the quick ratio. Also, the profitability of the company is measured via the profitability ratios. These are the ratios which are key in the analysis of the investment levels of the company. The profit margin ratios are the most applicable ratios in profitability analysis (Carroll, 2016). Finally, solvency refers to the potentiality of the firm to meet its long-term debts as well as financial responsibilities.

Solvency

determines whether the company will continue staying in business since it indicates the firm’s ability to continue with its operations in its foreseeable future. Debt to Equity ratio will be used in measuring the company’s solvency.

Financial Ratio Analysis Based on Both Companies

Liquidity

From the financial statements of Coca-Cola Company and PepsiCo, the two ratios measuring the two companies’ liquidity are tabulates as below;

Current Ratio

s

The current ratio is calculated as;

The current ratio to analysis is usually meant to investigate on the current working capital situation by getting the fraction of current assets to the current liability of the company. In repaying the current liabilities, the company’s short-term assets must be readily dispensable. From the above current ratios, it’s clear that both companies are in a dangerous state since their current ratios are below that of the industry, with PepsiCo being better. The fact that the ratios of the companies are below 1, it indicates that they aren’t in a position of fully settling their short-term obligations (Torkornoo, & Dzigbede, 2017).

Quick Ratios

The quick ratio usually screens the current ratio by computing the total of the liquid assets which are simply exchangeable into cash to cover the current debts easily and promptly. From the above quick ratios, PepsiCo is in a better position of catering for its short-term requirements as compared to Coca-Cola. It can be noted that, PepsiCo’s Quick ratio is above that of the industry, while Coca-Cola’s is below that of the industry, hence PepsiCo is in a better position in the market to escape bankruptcy (Renz, & Vogel, 2016).

Profitability

Gross Margin

Company

Coca-Cola

PepsiCo

Industry

The Net Profit Margin Ratio is calculated as;

This ratio tells more on how profitable the products and services of the two companies are. It specifically indicates how much it costs in producing a product. Both of the companies’ net profit margins are above that of the industry with Coca-Cola being at a better position in profitability than PepsiCo (Qin, 2019, July).

Solvency

Debt to Equity Ratio

Company

Coca-Cola

PepsiCo

Industry

The solvency ratio is calculated as;

This ratio is specifically used in measuring the company’s relative proportion of shareholder’s equity as well as debt which is utilized in financing the company’s equity. It is one of the many ratios which is utilized in determining whether if the company can stay solvent. The ratio tells us of the company’s real cash flow rather than its net income. Therefore, this ratio measures the company’s cash flow in relation to the company’s all debts rather than just only short-term liabilities. From the analysis, it’s clear that PepsiCo is utilizing more of the shareholder’s equity as well as debt in financing its assets as compared to Coca-Cola, this indicates that Coca-Cola is in a better position in solvency than PepsiCo (Purkayastha, & Rao, 2017).

References:

Carroll, C. (2016). The Dasani Controversy: A Case Study of How the Launch of a New Brand

Jeopardized the Entire Reputation of Coca-Cola. In The Crisis of Food Brands (pp. 33-44). Routledge.

Li, X. (2019). Financial Analysis of Coca-Cola Company.

Purkayastha, D., & Rao, A. S. (2017). Sustainable development at PepsiCo. In Case Studies in

Sustainability Management (pp. 77-98). Routledge.

Qin, J. (2019, July). Value Investment Based on Data Analysis with Comparison of Three Food

Corporations in the US. In 4th International Conference on Humanities Science, Management and Education Technology (HSMET 2019). Atlantis Press.

Renz, F., & Vogel, J. (2016). Analysis of The Coca-Cola Company.

Torkornoo, H. K., & Dzigbede, K. D. (2017). Sustainability Practices of Multinational

Enterprises in Developing Countries: A Comparative Analysis of Coca-Cola Company and PepsiCo Inc. Journal of Global Initiatives: Policy, Pedagogy, Perspective, 11(2), 3.

Company Coca-Cola PepsiCo Industry

Quick Ratio 0.76 0.85 0.83

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