Write a comparative financial statement analysis of Coca-cola and PepsiCo. In this analysis, you will discuss the financial health of these companies with the ultimate goal of making a recommendation to other investors. The Coca-Cola Company: Form 10-K (Links to an external site.) – Financial statements and notes start on page 60. Accounts receivable, page 81 Inventories, page 82 Depreciation, page 96 Goodwill, page 83 Keurig Dr Pepper Annual Report (Links to an external site.) Click on the 2018 Annual Report Accounts receivable, page 72 Inventories, page 72 Depreciation, page 73 Goodwill, page 74 PepsiCo Annual Report (Links to an external site.) – Financial statements and notes start on page 79. Accounts receivable, page 124 Inventories, page 89 Depreciation, page 95 Goodwill, page 88 Here is a breakdown of the sections within the body of the assignment (Use paragraph headings to indicate each section): Company Overview Provide a brief overview of the three companies (at least two pages). What industry is it in? What are its main products or services? Who are its competitors? Where is the company located? Ratio Analysis Calculate the current ratio, quick ratio, gross profit percentage, inventory turnover, accounts receivable turnover and asset turnover ratios for all three companies for the current year. Note: Cash includes cash and cash equivalents and short term investments. Explain how the ratio is calculated and discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of the three companies. Comparison of Accounting Methods In your paper, ascertain from the notes of the financial statements the following: Explain the difference between the allowance method and the direct write off method for accounts receivable. Document the method used for each of the three companies. Explain the difference between the straight line, double declining balance and the unit-of-production depreciation methods. Document the method used for each of the three companies. Explain the difference between LIFO and FIFO and document the method used for each of the three companies. Explain the different categories of intangible assets and document the method used for each of the three companies. Recommendation Based on your analysis, would you recommend an individual invest in these companies? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company, as long as you provide support for your position.
