This website uses cookies to ensure you have the best experience. Learn more

Xacc280 Essay

1055 words - 5 pages

As an aspiring accountant I would be remised if I did not mention the importance of understanding what makes a company financial stable, and how to identify opportunities in a struggling company. Moreover, having an extensive knowledge of GAAP standards. For this assignment I will analyze two different company’s financial statements – PepsiCo and Coca-Cola, using three components: profitability, solvency, and liquidity. Furthermore, I will include both a vertical and horizontal analysis of said companies. Ultimately, I will address key concerns with both entities and potential solutions.
Arguably, the first step in effective financial analysis is a keen understanding of key concepts and ...view middle of the document...

Solvency is a great point of reference to determine a company’s stability within a given industry. Unlike many other statistics, you want a low(er) ratio for solvency. Whereas for liquidity, the higher the ratio the better.
Profitability is a much more common term. Profitability references the amount of profit an entity makes in contrast to their cost-of-goods. For these ratios you always want a high(er) number. An ROA ratio of 1:1 would indicate that for every dollar of Net Revenue is equal to 1 dollar of assets you hold. Depending on the exact formula used, a ratio of 1:1 can be bad, especially if inventory is considered in there. This could mean you are not drawing much of a profit on widgets being sold, if the item cost you a dollar and you made a dollar selling it.
Vertical Analysis
We will start with a Vertical Analysis, comparing PepsiCo and Coca-Cola ending the calendar year of 2005. According to “Ready Ratios” (2011), “Vertical analysis of financial statements is a technique in which the relationship between items in the same financial statement is identified by expressing all amounts as a percentage {to the} total amount. This method compares different items to a single item in the same accounting period.” A financial statement prepared using this method is often titled “Common-Size.”
In our case, we have dissected our balance sheet into two different sections, assets and liabilities, refer to exhibit 1-A for a Vertical Analysis of PepsiCo and Coca-Cola for the period ending December 2005. In this analysis you will notice there are no number representing actual financials, only percentages. Each category in contrasted to the compartment total, either Total Assets or Total Liabilities. Comparing PepsiCo to Coca-Cola we see some drastic difference; Cash, Investments and Property immediate stands out. Of Coca-Cola’s $29.4B, 16% of that is held in cash, as compared to PespsiCo’s 5.4%. Furthermore, PepsiCo holds just over 27% of total assets in Property, Plant & Equipment, whereas Coca-Cola only holds 19.7%. From an investor’s standpoint, this is something that is neither here-nor-there. It simply means PepsiCo holds more assets in Property and Equipment, and less in cash. Ironically enough, even though the two companies...

Other Papers Like Xacc280

Hate Crime Laws Essay

2348 words - 10 pages On June 7, 1998, 49-year-old James Byrd Jr. of Texas accepted a ride from three white men, who then beat him severely, urinated on him, chained him by his ankles to the back of their pick-up truck, dragged him for three miles into the countryside, and dumped his corpse in front of an African-American cemetery (Graczyk). A little over a year later, a jury sentenced ring leader John King to death by lethal injection (“Man Executed for Dragging

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages Rational Emotional Behavior Therapy Case Study of Sarah: A Conceptualization and Treatment Plan Rational emotive behavior therapy, REBT, was developed by Albert Ellis and holds the central belief that the events in our lives do not cause our disturbances but that they are instead caused by our view of the events (Murdock, 2009). Murdock (2009) states that “people are seen as responsible for their behavior” (p. 279) but, because they are

Holidays In Albania

1636 words - 7 pages Have you ever thought about having exciting and incredibly cheap vacations? Albania might be the right choice. According to My Travel Guide, Albania is ranked the fourth among ten places worth visiting in Eastern Europe (“Top 10 Eastern European Destinations”). One can encounter three kinds of vacations in this Mediterranean country: winter, summer, and cultural. The ideal places to spend your winter vacations are the Albanian Alps. They are

A Heart Of Darkness

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

The Aspects Of Vulnerability Among The Exploited In Medical Research

2287 words - 10 pages Essentially, everyone is in some state of vulnerability. However, some of us are more susceptible to harm due to our vulnerabilities. The susceptible are the individuals with the greatest risk. These individuals risk the loss of their autonomy, and maybe even their lives. Vulnerable populations can be found in every subset of society. However, as previously mentioned, there are some vulnerable populations that are at an even greater risk than

The Hitchhiker’S Guide To The Galaxy

1171 words - 5 pages The Hitchhiker’s Guide to the Galaxy As the human race makes life-changing discoveries, it is made apparent that there is always more to learn as the universe, instead of becoming familiar, is becoming absurd. The Hitchhiker’s Guide to the Galaxy, written by Douglas Adams, as well as the 2005 film adaption, portrays absurdity to be an all-encompassing system in the universe. Through the introduction and attempt to understand lack of reason, the

The Ford Motor Company Wage Increase Of 1914 And The Theory Of Incentives And Efficiency Wages

1252 words - 6 pages ‘It’s not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages’ (Henry Ford, cited in Johnson and Weinstein 2004, p. 2). When the Ford Motor Company announced that it would more than double the wages of its workers in January 1914 to a ‘five-dollar day’ minimum, was this a contradiction to Henry Ford’s statement? If customers are actually the ultimate payers of wages, then more than

Historical Analysis Of The Economical Breakthroughs Of The Industrial Revolution

1396 words - 6 pages A Historical Analysis of the Economical Breakthroughs of the Industrial Revolution During the Industrial Revolution, many elements of society experienced huge breakthroughs that would change the way they functioned forever. Economics were definitely one of them. With many new inventions and many factories appearing, many, many, more resources were being created than ever before. Also, all of the revenue from these resources was being given to

Leadership Portrayed in Monologue from Shakespeare’s Henry V

1214 words - 5 pages Leadership is defined as a socially constructed process and which also affect organizational future outcomes. Leader is someone at high position who have overall duty for an organization, she or he decide what to do and the way how to achieve it. (Carter and Greer, 2013)The role of leader is extremely important for an organization, leader use their own power to influence the followers though many different ways such as motivation in order to

Cuba Civil Rights

1906 words - 8 pages Picture a country that has limits on how much you can make random government imprisonments and more what do you do. That is the situation for the eleven million seventy-five thousand two hundred forty-four people of Cuba since the takeover of Fidel Castro. The US is opposed to Castro taking control of Cuba. Castro managed to ease the United States nerves when he said that Cuba was against all forms of communism. According to Lana Wylie the Union

US Freight System

1273 words - 6 pages General Environment Each American requires the movement of approximately 40 tons of freight per year across the freight network. This includes everything from shirts to lawn mower to orange juice. • As the U.S. population expands, the U.S. freight system will be called upon to meet the demands of a larger population • Between 2010 and 2035, the system will experience a 22 percent increase in the total amount of tonnage it moves • By 2050, with

Related Essays

Xacc280 Week8 Internal Controls Essay

711 words - 3 pages Organization’s financial and business policies and procedures are classified as Internal Controls. These controls consist of all measures by providing protection for the organization by ensuring accurate and reliable data, securing policies and evaluating performance. By providing Internal Control this information they can protect the assets of the organization from fraud, theft or any other criminal activities. Internal Control also enhances

Xacc280 Appendix D Essay

2537 words - 11 pages |[pic] |SYLLABUS | | |School of Business | | |XACC/280

Internal Controls Essay

908 words - 4 pages Internal Controls XACC280 Internal Controls Internal controls are implemented for protection. There are two goals that are important aspects of internal controls to keep the company protected. Assuring that the company’s assets are protected is one goal of internal controls. Some examples would be: stealing, embezzlement, and misrepresentation. The next reason that internal controls are implemented would be to make sure all accounting

Freedom And Responsibility Essay

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were