Dr Pepper Group Coca Cola copmany financial comparison

Document Type:Thesis

Subject Area:Accounting

Document 1

The main products that the company is producing are Dr Pepper, Snapple, RC Cola, A&W, 7 Up United States, Sunkist, Canada dry, Big red, Mott’s Vernon, Nehi, Hawaiian Punch among others beverages. Dr Pepper Snapple Group has some subsidiaries companies (Del, Manganelli, and De 2016, July). For instance, Bai Brands, Big Red, Inc. The American Bottling Company, and Canada Dry Motts. The next company is Coca-Cola Company which is an American company, retailers, manufacturers, and the marketers for the non-alcoholic syrups and beverage concentrates. The headquarter of the company is situated in Harrison, New York. The company operates in the beverages and Food processing. The primary competitor is the Coca-cola Company in the beverage industry and market. The products are Cheetos, Quaker Foods, Gatorade, Aquafina, Pepsi Max, and Fritos among many others (Wahlen, Baginski, and Bradshaw, 2014).

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  Ratio Analysis Ratio Formula Coca-Cola Company Keurig Dr Pepper Inc. 413 and 0. 453 respectively. That shows that Coca-Cola Company is utilising their asset more efficiently compared to the other competitors. Account Receivable Turnover is one of the efficiency ratios which measures the way business can convert the account receivable into cash within the stipulated period. It shows how efficient in collecting the account receivables, therefore, the higher the ratio, the better. 56 and lastly the PepsiCo Company with a ratio of 10. Gross profit margin is one of the profitability ratios which compares the net sales to the gross margin of the company. It is calculated by dividing the net sales which are the cost of goods sold by the gross margin. A high ratio is favourable compared to a low ratio.

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Coca-Cola Company has the highest ratio of 16. It is calculated by dividing the current assets by the current liability. The higher the ratio, the better for the company since it is an indication that the company can pay the short term financial obligation through the current asset. PepsiCo has a ratio of 1. 5 followed by Coca-Cola 1. 2 and Dr Pepper at 0. The other two companies and like Coca-Cola Company and Dr Pepper Company are also using the allowance method (Leahy, Ratliff, Riedt, and Fulgoni, 2017). Straight line: depreciation technique uses the allocation of the equal amount of depreciation that is allocated through the useful asset life. Double-declining balance: applies the constant rate to each year asset to book value, the net income will be high initially then it would start declining annually (Alamri, and Syntetos, 2018).

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Units of Production: it shows the useful life of as total units that the asset can produce. It is applicable for the depreciation of machines. Intangible Assets are the asset that does not have physical presences or existence such as Goodwill, patents, brands, copyrights, permits, corporate intellectual property among others. The PepsiCo Company does not recognise the charges on an intangible asset like goodwill. Coca-Cola uses the goodwill for testing for the impairments yearly, and they account for it using acquisition techniques. Dr Pepper uses customer relationship and distribution rights as goodwill or intangible asset (Del, Manganelli, and De 2016, July). Recommendation I recommend that the investors to consider investing in Coca-Cola and PepsiCo companies since they are both profitable with a high level of liquidity.

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