Liquidity
The current P/E Ratio for Coca-Cola is 27.54, the P/E Ratio 5-Year High for the company is 40.84 (“MSN Money,” 2022). The P/E Ratio 5-Year Low is at 26.30; the Price/Sales Ratio and Price/Book Value have values of 6.95 and 11.66, respectively. The current P/E Ratio for PepsiCo is 29.78, the P/E Ratio 5-Year High for the company is 30.20. The P/E Ratio 5-Year Low is at 12.59; the Price/Sales Ratio and Price/Book Value have values of 2.91 and 14.43, respectively. The current P/E Ratio for the industry is 29.78; the Price/Sales Ratio and Price/Book Value have values of 3.75 and 5.11, respectively.
When evaluating liquidity, it is important to take into account not only price action, but also management effectiveness. The return on equity % for Coca-Cola is 46.20, the return on assets and the return on capital have values of 10.79 and 13.69, respectively. If taking into account the time interval in the 5-year average, the return on equity% for Coca-Cola is 39.57, and the return on assets and the return on capital have values of 8.71 and 12.41, respectively. Indicative are such values as income/employee and inventory turnover, which for Coca-Cola are equal to 123.09 and 4.60.
The return on equity % for PepsiCo is 52.94, the return on assets and the return on capital have values of 8.49 and 11.62, respectively. If taking into account the time interval in the 5-year average, the return on equity% for PepsiCo is 62.38, and the return on assets and the return on capital have values of 10.28 and 14.05, respectively. Indicative are such values as income/employee and inventory turnover, which for PepsiCo are equal to 26.23k and 8.70.
The return on equity % for the industry is 10.87, the return on assets and the return on capital have values of 6.21 and 6.00, respectively. If taking into account the time interval in the 5-year average, the return on equity% for the industry is 14.15, and the return on assets and the return on capital have values of 5.69 and 7.71, respectively. Indicative are such values as income/employee and inventory turnover, which for the industry are equal to 36.59 k and 3.38. Thus, it can be concluded that Coca-Cola has higher liquidity than PepsiCo, which is demonstrated by the Price Ratio charts exceeding the industry averages and more effective management.
Solvency
Coca-Cola’s financial health indicators consist of various ratios. The debt/equity ratio is 1.66, the current ratio is 1.13, the quick ratio has reached the level of 0.96, and the leverage ratio is 4.10. At the same time, the book value/share for Coca-Cola has a value of 5.32. PepsiCo’s financial health indicators consist of various ratios. The debt/equity ratio is 2.25, the current ratio is 0.83, the quick ratio has reached the level of 0.67, and the leverage ratio is 5.76. At the same time, the book value/share for PepsiCo has a value of 11.60. The debt/equity ratio for the industry of sweet beverages is 0.86, the current ratio is 1.26, the quick ratio has reached the level of 0.93, and the leverage ratio is 2.63. At the same time, the book value/share for PepsiCo has a value of 0.98.
Considering the trading statistics for Coca-Cola, the following significant indicators can be identified. The payout ratio is 74.22, and the dividend date is set for 2/17/2022. The previous dividend payment took place on 3/14/2022, and the last split factor is 2:1. Considering the trading statistics for PepsiCo, the following significant indicators can be identified. The payout ratio is 75.51, and the dividend date is set for 2/2/2022. The previous dividend payment took place on 3/3/2022, and the last split factor is 2:1.
Based on the above data, it can be concluded that both companies producing sugary drinks have high opportunities to pay their obligations. The values of the components of the coefficient are quite high in both cases, so companies do not depend on borrowings, but can dispose of a larger share of assets without regard to current liabilities. Thus, the solvency of both Coca-Cola and PepsiCo lies in the range of regulatory significance for the industry.
Profitability 319
Assessing the growth of Coca-Cola, it is worth evaluating the performance over the past year, sales (revenue) amounted to 9.91, and net income was equal to 26.13. The five-year growth indicators for Coca-Cola had the following values: sales fell by -1.58, and net income reached 8.40. Assessing the growth of PepsiCo, it is worth evaluating the performance over the past year, sales (revenue) amounted to 12.44, and net income was equal to 9.66. The five-year growth indicators for PepsiCo had the following values: sales reached by 4.82, and net income was 4.31. Assessing the growth of the industry, it is worth evaluating the performance over the past year, sales (revenue) fell to -1.75, and net income was equal to 16.28.
Evaluating the profitability of Coca-Cola directly, it is worth highlighting profit margins. Gross margin was 60.27, pre-tax margin and net profit margin have values of 32.14 and 25.36, respectively. If considering the five-year period, the average gross margin and average pre-tax margin reached the levels of 60.88 and 26.79. Evaluating the profitability of PepsiCo directly, it is worth highlighting profit margins. Gross margin was 53.39, pre-tax margin and net profit margin have values of 12.36 and 9.90, respectively. If considering the five-year period, the average gross margin and average pre-tax margin reached the levels of 54.54 and 13.61.
Profit margins for the industry are as follows: gross margin was 49.00, pre-tax margin and net profit margin have values of 13.07 and 8.76, respectively. The current P/E Ratio for Coca-Cola is 27.54, the P/E Ratio 5-Year High for the company is 40.84. The current P/E Ratio for PepsiCo is 29.78, the P/E Ratio 5-Year High for the company is 30.20. Thus, the profitability of the Coca Cola company increases the profitability of PespiCo, although both of them have significantly exceeded the industry norm over the past five years.
Reference
MSN Money. (2022). Web.