The main purpose of my report is to analyze and determine which company is stronger as it relates to investment opportunities and performance

- PepsiCo or Coca Cola. The two have dominated the soft drink industry for decades both in the United States and in foreign countries. According to statistics, PepsiCo has recently taken the lead in the market against Coca Cola, who has been leading the market for many years. I will attempt to compare the two by using comparative statistics and financial data to include balance sheet comparisons, profitability ratios, cash flow indicators and investment valuation ratios. Based on the information reviewed, noted and documented, I will select which company I would invest in if I were an investor. Coca Cola is amongst the largest manufacturers of non-alcoholic drinks and the largest in manufacturer and distributor of concentrates and syrups in the world. In 2009 they generated over $8 billion dollars in cash from their operations, reinvested $2 billion back into their businesses and repurchased $1.5 billion in company stock and paid $3.8 billion to its shareholders through dividends. Its been noted that consumer taste in flavored waters and healthy drinks have caused a significant decrease in Coca Colas market. PepsiCo on the other hand is a leader in the snack and beverage industry. They manufacture and sell a range of snacks, drinks and foods in over 200 countries outside of the United States. They generate revenues from four different businesses - Frito-Lay North America, PepsiCo International, PepsiCo Beverages North America and Quaker Foods North. The big difference in the two companies is that 80% of Coca Colas revenue comes from beverages where only 20% of PepsiCos is beverage products. Page 2 1. Using the current ratio, discuss what conclusions you can make about each companys ability to pay current liabilities (debt). Although both companies have the ability to pay its current debt, financial records show PepsiCos shows the likelihood to stay afloat because their short term debt and current portion of long term debt is more than six times greater. PepsiCo would have less time converting to cash than Coca Cola. Coca Cola PepsiCo Current Assets$ 17.55 Billion $ 12.57 Billion Current Liabilities $ 13.72 Billion $ 8.76 Billion Working Capital $ 3.83 Billion $ 3.81 Billion Current Ration1.2 1.43 SOURCE: http://www.dailyfinance.com Page 3 2. Using the profitability rations discuss what conclusions you can make about each companys profits over the past three years.

Profit Margin Ratio: Coca Colas profit margin ratio Coca Cola is 0.22 while PepsiCos is 0.14 which means in terms of generating profits, Coca Cola generates 22 cents on each dollar of sales while PepsiCo generates 14 cents, making Coca Cola. Asset Turnover Ratio: PepsiCos asset turnover ratio is 1.22 times where Coca Cola's is .79 times giving PepsiCo the ability to operate more efficiently while generating more sales on the dollar invested in its assets. Return on Assets Ratio: In looking at the total percentage of net income generated with each dollar invested in company assets, PepsiCos ratio is 18% and Coca Colas is 16%. Return on Common Stockholders' Equity: in measuring the profitability of the two companies from a stockholders stand point, PepsiCo is still on top with 35% to Coca Colas 31%. Investors would be definitely be more interested in PepsiCo from a profitable stance. Page 4 PepsiCos Income Statement - 3 Year Summary (in Millions) Sales Depreciation Total Net Income (%) 09 43,232. 1,563. 5,946. 14 08 43,251. 1,486. 5,142. 12 07 39,474. 1,362. 5,658. 14 Coca Colas Income Statement - 3 Year Summary (in Millions) Sales Depreciation Total Net Income (%) 09 30,990. 1,068. 6,824. 22 08 31,944. 1,047. 5,807. 18 07 28,857. 991. 5,981. 21 Page 5 3. Using the cash flow indicator and investment valuation ratios, dicuss which company is more likely to have satisfied stockholders. Based on the net cash from operating activities divided by net sales on the income statements for 2009 for both companies, they end with Coca Cola at 26 cent on a dollar of operating cash flow on every sales dollar made and Pepsi with roughly 16 cent on a dollar respectively. In answering this question, I used PepsiCo and Coca Colas net cash flow from operating activities and their net sales from their income statement. PepsiCos ability to consistently generate and improve their percentages make them inviting to stockholders. PepsiCo has a long history of delivering strong financial growth to its shareholders. 4. As an investor, discuss which company you would choose to invest in and provide a rationale for your decision. Profit Margin Ratio

Profit Margin Ratio

As an investor, I would select PepsiCo to invest my personal funds based on their ability to consistently meet its cash flow needs, its predicted rate of returns over the next 5-10 years is much greater than Coca Colas. PepsiCos earnings per share is 3.97. Page 6 5. Discuss what non-financial criteria you would consider when choosing between these two investment options? I would select PepsiCo for its diversity, its economic impact and achievements in sustainability - human, talent and environment. Their performance with purpose involves delivering sustainable growth by investing in people and the planet for a healthier future. They offer healthier foods and beverages for healthier lifestyles; help keep the earths natural resources by putting money into innovations for more effective use of land, water and energy; and by investing in their employees to help them build upon their skills and successes which ultimately helps a company grow through welcoming creativity. They are very community oriented as community involvement is important to them - making donations to support national, state and local charitable organizations. I was impressed with their partnership with the local YMCAs in our area. According to my research on Yahoo finance, PepsiCos stock prices have been increasing constantly each year. Diversity has been PepsiCos key to success. When they acquired companies like Frito Lay and Quaker Oats, their revenues increased consistently especially during the years 2003 through 2008. Page 7 REFERENCES: Understanding the Income Statement: http://investopedia.com/artices/04/022504.asp Reading the Balance Sheet: http://investopedia.com/articles/04/031004.asp PepsiCo: www.Pepsico.com Coca Cola Company: www.coca-cola.com MSN Money: www.moneycentral.msn.com