COCA-COLAVS

PEPSICO

Coca-Cola at a Glance

Coca-Cola at a Glance

Coca-Cola at a Glance

KEY DRIVERS OF COCA-COLA

• WINNING CULTURE

• “LIVE OUR VALUES”

• FOCUS ON THE MARKET

• WORK SMART

• ACT LIKE OWNERS

• BE THE BRAND

KEY CHALLENGES OF COCA-COLA

• OBESITY

• WATER SCARCITY

• EVOLVING CONSUMER PREFERENCE

• INCREASED COMPETITION AND CAPABILITIES

• PRODUCT SAFETY AND QUALITY CONCERNS

Key Competitors of Coca-Cola & PepsiCo

COCA-COLA’S EVENT TIMELINE

STREET’S POSITION

Coca-Cola - 99% BULLISH

STREET’S POSITION COCA-COLA

Coca-Cola's 3 year trend of stock prices

STREET’S POSITION COCA-COLA

BUSINESS SEGMENTATION COCA-COLA

The Organizational Structure Consists Of The Following Operating Segments:

• Eurasia And Africa

• Europe

• Latin America

• North America

• Asia Pacific

• Bottling Investment Group And

• Corporate.

BUSINESS SEGMENT WISE REVENUE COCA-COLA

EXECUTIVE COMPENSATION STRUCTURE COCA-COLA

Executive compensation is the compensation paid to the company’s CEO, CFO and three other highly compensated executive officers.

EXECUTIVE COMPENSATION STRUCTURECOCA-COLA

SUMMARY OF MOST RECENT EARNINGS CALL: COCA-COLA (THIRD QUARTER 2015)

• Reported Net Revenue Declined 5% And Organic Revenue Grew 3%

• Global Price/Mix Of 3% Reflecting Positive Pricing And Packaging Initiatives Across Key

Markets

• Reported Eps Was $0.33 And Comparable EPS Was $0.51

• Global Volume Grew 3%

• Year-to-date Cash From Operations Increased 5% To $8.4 Billion, Despite Significant

Foreign Currency Headwinds

• Expect Full-year Comparable Currency Neutral Eps Growth Of 5%, In Line With The Range

Laid Out At The Beginning Of The Year

PepsiCo at a Glance

COMPANY PROFILE

PepsiCo at a Glance

Product Portfolio

PepsiCo at a Glance

PROFITS

PepsiCo at a Glance

GEOGRAPHIC MIX

BALANCED GEOGRAPHIC FOOTPRINT

KEY DRIVERS OF PEPSICO

PEPSICO’S VALUES & MISSION

• Performance With Purpose

• Human Sustainability

• Environmental Sustainability

• Talent Sustainability

BUSINESS STRATEGIES

• The Growth of the Middle Class

• Continue to focus on productivity

• The Evolution of the Retail Environment

• Acceleration of Consumer Focus on Health and Wellness

KEY CHALLENGES OF PEPSICO

• IMPOSITION OF NEW TAXES

• UNFAVORABLE ECONOMIC CONDITIONS

• DISRUPTION OF SUPPLY

• PRODUCT CONTAMINATION

• FAILURE TO SUCCESSFULLY NEGOTIATE COLLECTIVE BARGAINING

AGREEMENTS

• PROTECTING INTELLECTUAL PROPERTY

• FAILURE TO INTEGRATE ACQUISITIONS

STREET’S POSITION

PepsiCo - 99% BULLISH

STREET’S POSITION PEPSICO

PepsiCo’s 3 year trend of stock prices

STREET’S POSITION PEPSICO

BUSINESS SEGMENTATION PEPSICO

The organizational structure consists of the following operating segments:

• Frito-Lay North America

• Quaker Foods North America

• PepsiCo Americas Beverages

• Latin America Foods

• PepsiCo Europe

• PepsiCo Asia, Middle East & Africa

BUSINESS SEGMENT WISE REVENUE PEPSICO

EXECUTIVE COMPENSATION STRUCTURE PEPSICO

Executive Compensation is the compensation paid to the company’s CEO, CFO and three other highly compensated executive officers.

EXECUTIVE COMPENSATION STRUCTUREPEPSICO

SUMMARY OF MOST RECENT EARNINGS PEPSICO (Q3 2015)• Organic Revenue Went Up By 7.4%.

• Operating Profit Went Up By 12%.

• Currency Eps Went Up By 14%.

• Core Gross Margin Went Up 120 Basis Points.

• Currency Eps Growth Raised To 9%.

• Productivity Savings Up To $1 Billion.

• Cash Returns To Shareholders $9 Billion.

• Reported Net Revenue Declined By 5%.

• Reported Operating Profit Declined By 50%.

• Reported Eps Declined By 73%.

• Reported Gross Margin Exported 115 Basis Points

HORIZONTAL AND VERTICAL ANALYSISCOKE VS PEPSI

HORIZONTAL ANALYSIS

Horizontal analysis is also called trend analysis, is a technique for

evaluating a series of financial statement data over a period of time.

VERTICAL ANALYSIS

Vertical analysis also called common-size analysis, is a technique

that expresses each financial statement item as a percent of a base

amount.

HORIZONTAL ANALYSIS OF BALANCE SHEETS (2013-2014)

VERTICAL ANALYSIS OF BALANCE SHEETS 2014

VERTICAL ANALYSIS OF BALANCE SHEET 2013

HORIZONTAL ANALYSIS INCOME STATEMENTS (2013-2014)

VERTICAL ANALYSIS OF INCOME STATEMENTS 2014

VERTICAL ANALYSIS OF INCOME STATEMENTS 2013

KEY RATIO’S

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2014 2014 2013 2013

1.02

1.14 1.13

1.24

Curent Ratio

LIQUIDITY RATIO’S

KEY RATIO’S

LIQUIDITY RATIO’S

0.84

0.86

0.88

0.9

0.92

0.94

0.96

0.98

1

1.02

1.04

1.06

2014 2014 2013 2013

0.92

0.97

1.01

1.05

Quick Ratio

KEY RATIO’S

LIQUIDITY RATIO’S

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2014 2014 2013 2013

0.67

0.48

0.73

0.54

Cash Ratio

0.48

0.5

0.52

0.54

0.56

0.58

0.6

0.62

2014 2014 2013 2013

0.61

0.54

0.61

0.53

Gross Margin

KEY RATIO’S

PROFITABILITY RATIO’S

0

0.05

0.1

0.15

0.2

0.25

2014 2014 2013 2013

0.21

0.14

0.22

0.15

Operating Margin

KEY RATIO’S

PROFITABILITY RATIO’S

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

2014 2014 2013 2013

0.15

0.10

0.18

0.10

Profit Margin

KEY RATIO’S

PROFITABILITY RATIO’S

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2014 2014 2013 2013

0.23

0.37

0.260.28

Return on Equity

KEY RATIO’S

PROFITABILITY RATIO’S

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2014 2014 2013 2013

5.77

9.83

5.62

9.16

Inventory Turnover

KEY RATIO’S

TURNOVER RATIO’S

KEY RATIO’S

TURNOVER RATIO’S

9.00

9.20

9.40

9.60

9.80

10.00

10.20

10.40

2014 2014 2013 2013

10.30

10.03

9.62

9.55

Receivables turnover

KEY RATIO’S

TURNOVER RATIO’S

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2014 2014 2013 2013

8.56

6.02

9.53

6.41

Accounts Payables Turnover

KEY RATIO’S

TURNOVER RATIO’S

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

2014 2014 2013 2013

75.16

25.94

13.41 15.22

Working Capital Turnover

Coca-Cola Vs PepsiCo – Where To Invest??

In order to decide which company we would like to invest in, we are

considering two factors –

• Current Profitability Ratios

• Company’s Business Strategies

PROFITABILITY RATIOS

0

10

20

30

40

50

60

70

Gross Margin OperatingMargin

Pretax Margin Net Margin ROA ROE Return on TotalCapital

Return onInvestedCapital

60.99

22.91 20.315.45

7.8

22.36

9.9713.96

53.52

15.22 13…9.7 8.73

31.1

12.98 14.46

Current Profitability Ratios

Coca-Cola PepsiCo

Business Strategies – What’s Working And What’s Not!

COCA COLA

• Due To Sluggish Global

Economy Major Business

Drivers Are Not Helping

• Coca-cola Is Losing Its Mojo

• Coca-cola Is Throwing More

Money Into Investments That

Is Not Working In Their Favor

• Coca-cola Stock Growth Woes

PEPSICO

• New Markets For Expansive

Growth

• North American Job Growth

Equals More Consumer

Spending

• PepsiCo Is Thinking Outside

The Box

• PEP Produces Consistently

Higher Dividends

• Fast Growth In Developing

Countries

Coca-Cola Vs PepsiCo – Whom To Lend??

In order to decide which company we would like to lend money to, we

have considered two factors –

• Liquidity Ratio

• Company’s Business Strategies

FINANCIAL STRENGTH RATIOS

0

20

40

60

80

100

120

140

160

180

Current Ratio Asset turnoverratio

ReceivablesTurnover

Inventory Turnover

Quick Ratio Cash ratio Total Debt toTotal Equity

Total Debt toTotal Assets

coke pepsi

RATIO ANALYSIS FOR CREDITING

1) DEBT TO EQUITY RATIO

ANALYSIS:

• Since the inventory turnover ratio PepsiCo is higher than that of Coca-Cola. PepsiCo

is more efficient in producing and selling its inventory and also their product is in

more demand than Coca-Cola's.

2) INVENTORY TURN OVER RATIO

ANALYSIS:

• Since the Inventory turnover ratio Pepsi is higher than that of Coca-Cola. PepsiCo is

more efficient in producing and selling its inventory and also their product is in more

demand than that of Coca-Cola’s.

Coke Pepsi

137.68 164.39

Coke Pepsi

6.11 8.6

OUR CONCLUSION AS A CREDITOR

• The ratios analysis of both the companies shows different perspective of one

company when compared to other. So we can’t base our decision as a creditor

only on the ratio analysis.

• Keeping in consideration both ratio analysis and the current market factors

(which are not in favor of Coca-Cola), we believe lending money to PepsiCo will

be a wise decision. PepsiCo is currently performing well and will perform better

in the coming years. Hence we choose PepsiCo.

HOW MUCH LEVERAGE?

• As creditors we would be gauging the level and riskiness of PepsiCo's cash flows

to decide how much we can lend. The specification of minimum threshold and

maximum shortfall probability can be used to define the maximum amount of

leverage the firm's cash flows will support.

• As creditors of PepsiCo we can make sure that we recoup the credit amount

along with the interest receivable so that we don’t bear a loss. (Just in case

market situation changes due to some reasons).

CONCLUSION

THANK YOUGROUP 8

ROLI BHATNAGAR

SANGAMITRA NAGARAJ

SONAM PANDITA

SWATI GHULE