Accounting Final

When comparing the two companies of Coca-Cola and Pepsi there are many techniques that need to be conducted in order to understand the how financial statements show the information needed to make an accurate decision. These include a vertical analysis, also known as a common- size ratio; this expresses each transaction in a financial statement as a percentage comparing a base amount. The bases for assets are total assets; for liabilities and the stockholders’ equity, the base is the total liabilities and stockholders’ equity. Just as obvious as these the income statement accounts have a base of either the net sale or the total revenues.

Next there is the horizontal ratio, this is used for evaluating a series of different financial statements of date over a period of time; this can be a fiscal year or a quarterly period of time. This makes it easier to understand where either the increase or the decrease has happened and as to why it has happened. As we all know this can be stated as an amount or a percentage; the financial statements can be set up either way which makes it much easier for others to understand.

After reviewing the information from the financial statements I have come to the conclusion that both companies are not doing an overall bad job at making profits. However, with this said I would also like to state that my investments at this time would have to be done with Pepsi Cola instead of Coca-Cola. I have made this conclusion by seeing that there has been an increase in the vertical and horizontal ratios of the current assets. Even though the liabilities of this company has had a 39% increase the short term obligations of the company are only at a 9% increase; making it very possible for the liabilities to be overcome.

With the Coca-Cola company however, it seems there has been a decrease in the horizontal ratio that shows a 16.5% decrease in assets; as well as showing there is a 11.6% decrease in liabilities. Even though there is a decrease in...