JOY Zhou Lin

EVA Xiong Jing

Economic Analysis
----Pepsico & Coca-Cola

Final Report
 2009-2010

REPORT CONTENTS
1.Introduction 3
1.1. General Introduction 3
1.2.Short Description 3
2.Data from Internet 4
2.1.Pepisco 4
2.2.Coca-Cola 5
3.Structural anaysis 10
3.1. Total assets structure 10
3.2 Total liabilities structure 11
3.3 Mixed structure 13
4. Income Statement analysis 14
5. Profitability analysis 16
6. Liquidity analysis 18
7.Activity analysis 20
8.Summary 22

1. Introduction
1.1 General Introduction:
This report is connected with our class: Economic Analysis. We were learning some

knowledge about how to analysis the company’s economic situation. And we used our
knowledge which we have learned during our lecturer to analysis two companies(They

are competitors).What’s more, we use the company’s income statement, balance

sheet, liabilities to calculate Structural analysis, Income Statement analysis,

Profitability analysis, Liquidity analysis, Activity analysis. we made many conclusions

about those two companies. Through those conclusions, we know about the economic

situation of those companies.

1.2. Short Description:

Pepsi is a carbonated soft drink produced and manufactured by PepsiCo. The drink

was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North

Carolina. The brand was trademarked on June 16, 1903. There have been many Pepsi

variants produced over the years since 1898.

Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending

machines internationally. The Coca-Cola Company claims that the beverage is sold in

more than 200 countries. 1

1 http://zh.wikipedia.org/zh-cn/Wikipedia:%E9%A6%96%E9%A1%B5
2. Data from Internet:
2.1.Pepisco:

INCOME STATEMENT 2008 2007 2006

Net revenues $43,25 $39,47 $35,13

1 4 7

Cost of sales 20351 18038 15762

Selling, general and administrative expenses 15901 14208 12711

Amortization of intangible assets 64 58 162

Operating Profit 6935 7170 6502

Bottling equity income 374 560 553

Interest expense -329 -224 -239

Interest income 41 125 173

Income before Income Taxes 7021 7631 6989

Provision for Income Taxes 1879 1973 1347

Net Income $5,142 $5,658 $5,642

Net Income per Common Share 　 　 　

Basic $3.26 $3.48 $3.42

Diluted $3.21 $3.41 $3.34

　 　 　 　

BLANCE SHEET 2008 2007 2006

ASSETS 　 　 　

Cash and Equivalents $2,064 $910 $1,651

Restrictable Cash 　

Marketable Securities 213 1571 1171

Receivables 4683 4389 3725

Inventories 2522 2290 1926

Prepaid Expenses 1324 991 657

Current Deferred Income Taxes 　

Other Current Assets 　 　 　

Total Current Assets 10,806 10,151 9,130

Gross Fixed Assets 22,552 2,290 1926

Accumulated Depreciation -10889 -10668 -9371

Net Fixed Assets 11663 11228 9687

Intangibles 1128 2044 1849

Cost in Excess 5124 5169 4594

Non-Current Deferred Income Taxes 　

Other Non-Current Assets 7273 6036 4670

Total Non-Current Assets 25188 24477 20800

Total Assets 35994 34628 29930

　 　 　 　

Liabilities 2008 2007 2006

Accounts Payable 8273 2562 2102

Short Term Debt 369 274

Notes Payable 　

Accrued Expenses 　

Accrued Liabilities 2894 2587

Deferred Revenues 　

Current Deferred Income Taxes 　

Other Current Liabilities 145 2297 1897

Total Current Liabilities 8787 7753 6860

Long Term Debt 7858 4203 2550

Deferred Income Tax 226 646 528

 Other Non-Current Liabilities 6879 4792 4624

Minority Interest 　

Capital Lease Obligations 　

Preferred Securities of Subsidiary Trust 　

Preferred Equity Outside Stock Equity 　 -91 -79

Total Non-Current Liabilities 14963 9550 7623

Total Liabilities 23750 17303 14483

Preferred Stock Equity 41 　

Common Stock Equity 12203 17325 15447

Total Equity 12244 17325 15447

Total Liabilities & Stock Equity 35994 34628 29930

2.2 Coca-Cola
2006 2007 2008
ASSETS

cash & equivalents 2,440.00 　 4,701.00

restricted cash 0 0 0

marketable securities 150 215 278

accounts receivable 2,587.00 3,317.00 3,090.00

loans receivable 0 0 0

other receivable 0 0 0

receivables 2,587.00 3,317.00 3,090.00

inventories, raw materials 923 1,199.00 1,191.00

inventories, work in progress 0 0 0

inventories, purchased 0 0 0

components

inventories, finished goods 548 789 706

inventories, other 170 232 290

inventories, adjustments & 0 0 0

allowances

inventories 1,641.00 2,220.00 2,187.00

prepaid expenses 1,623.00 2,260.00 1,920.00

current defered income taxes 0 0 0

other current assets 0 0 0

total current assets 8,441.00 12,105.00 12,176.00

land and improvements 495 731 657

building and improvements 3,020.00 3,539.00 3,408.00

machinery, furniture & 7,889.00 9,752.00 10,335.00

equipment

construction in progress 507 422 0

other fixed assets 0 0 0

total fixed assets 11,911.00 14,444.00 14,400.00

gross fixed assets 11,911.00 14,444.00 14,400.00

accumulated depreciation 5,008.00 5,951.00 6,074.00

net fixed assets 6,903.00 8,493.00 8,326.00

intangibles 3,732.00 7,963.00 8,476.00

cost in excess 1,403.00 4,256.00 4,029.00

non-current deferred income 0 0 0

taxes

other non-current assets 9,484.00 10,452.00 7,512.00

total non-current assets 21,522.00 31,164.00 28,343.00

total assets 29,963.00 43,269.00 40,519.00

inventory valuation method 8 8 8

EQUITY & LIABILITIES

accounts payable 929 1,380.00 1,370.00

notes payable 3,235.00 0 6,066.00

short-term debt 33 6,052.00 465

accrued expenses 4,126.00 5,535.00 0

accrued liabilities 567 258 4,835.00

deferred revenues 0 0 0

current deferred income taxes 0 0 0

other current liabilities 0 0 252

total current liabilities 8,890.00 13,225.00 12,988.00

long-term debt 1,314.00 3,277.00 2,781.00

capital lease obligations 0 0 0

deferred income taxes 608 1,890.00 877

other non-current liabilities 2,231.00 3,133.00 3,401.00

minority interest liability 0 0 0

preferred secur. of subsid. trust 0 0 0

preferred equity outside stock 0 0 0

equity

total non-current liabilities 4,153.00 8,300.00 7,059.00

total liabilities 13,043.00 21,525.00 20,047.00

preferred stock equity 0 0 0

common stock equity 16,920.00 21,744.00 20,472.00

common par 878 880 880

additional paid-in capital 5,983.00 7,378.00 7,966.00

cumulative translation -984 591 0

adjustments

retained earnings 33,468.00 36,235.00 38,513.00

treasury stock -22,118.00 -23,375.00 -24,213.00

other equity adjustments -307 35 -2,674.00

total capitalization 18,234.00 25,021.00 23,253.00

total equity 16,920.00 21,744.00 20,472.00

total liabilities & stock equity 29,963.00 43,269.00 40,519.00

2006 2007 2008

INCOME STATEMENT

operating revenue 24,088.00 28,857.00 31,944.00

total revenue 24,088.00 28,857.00 31,944.00

adjustments to revenue 0 0 0

cost of sales 7,226.00 9,243.00 10,146.00

cost of sales with depreciation 8,164.00 10,406.00 11,374.00

gross margin 15,924.00 18,451.00 21,798.00

gross operating profit 16,862.00 19,614.00 21,798.00

Research & Development (R&D) 0 0 0

Expense

Selling, General & Administrative 9,616.00 11,199.00 11,774.00

(SG&A) Expense

advertising 0 0 0

operating income 6,308.00 7,252.00 8,446.00

EBITDA 7,246.00 8,415.00 10,024.00

depreciation 938 1,163.00 1,228.00

depreciation (unrecognized) 0 0 0

amortization 0 0 0

amortization of intangibles 0 0 0

operating profit after 6,308.00 7,252.00 8,796.00

depreciation
interest income 193 236 333

earnings from equity interest 102 668 -874

other income net 195 173 -378

income, acquired in process r&a 0 0 0

Income, Restructuring and M&A 0 0 0

other special charges 0 0 0

special income charges 0 0 0

EBIT 6,798.00 8,329.00 7,877.00

interest expense 220 456 438

pre-tax income 6,578.00 7,873.00 7,439.00

income taxes 1,498.00 1,892.00 1,632.00

minority interest 0 0 0

pref. securities of subsid. trust 0 0 0

income before income taxes 6,578.00 7,873.00 7,439.00

net income (continuing 5,080.00 5,981.00 5,807.00

operations)
net income (discontinued 0 0 0

operations)

net income (total operations) 5,080.00 5,981.00 5,807.00

extraordinary income/losses 0 0 0

income from cum. effect of acct. 0 0 0

change

income from tax loss carryforward 0 0 0

other gains/losses 0 0 0

total net income 5,080.00 5,981.00 5,807.00

normalized income 5,080.00 5,981.00 5,807.00

net income available for common 5,080.00 5,981.00 5,807.00

preferred dividends 0 0 0

excise taxes 0 0 0

Basic EPS (Continuing) 2.16 2.59 2.51

Basic EPS (Discontinued) 0 0 0

Basic EPS from Total 2.16 2.59 2.51

Operations

Basic EPS (Extraordinary Items) 0 0 0

Basic EPS (Cum. Effect of Acct. 0 0 0

Change)

Basic EPS (Tax Loss Carry 0 0 0

Forward)

Basic EPS (Other Gains/Losses) 0 0 0

Basic EPS - Total 2.16 2.59 2.51

Basic EPS - Normalized 2.16 2.59 2.51

Diluted EPS (Continuing) 2.16 2.57 2.49

Diluted EPS (Discontinued) 0 0 0

Diluted EPS from Total 2.16 2.57 2.49

Operations
Diluted EPS (Extraordinary) 0 0 0

Diluted EPS (Cum. Effect of Acct. 0 0 0

Change)

Diluted EPS (Tax Loss Carry 0 0 0

Forward)

Diluted EPS (Other Gains/Losses) 0 0 0

Diluted EPS - Total 2.16 2.57 2.49

Diluted EPS - Normalized 2.16 2.57 2.49

Dividends Paid Per Share (DPS) 1.24 1.36 1.52

INCOME STATEMENT (YEAR-TO-DATE)

Revenue (YTD) 24,088.00 28,857.00 31,944.00

Net Income from Total Operations 5,080.00 5,981.00 5,807.00

(YTD)

EPS from Total Operations (YTD) 2.16 2.57 2.49

Dividends Paid Per Share (YTD) 1.24 1.36 1.52

operation expense 0 0 55
3.Structural analysis
3.1. Total assets structure

Share of fixed assets in total assets

Interpretation:
 Pepsico:
✔ The share of fixed assets increased from 69.50% to 69.98% ,which is the

increase by 0.48% percentage points .And the share of currents assets

decreased from 30.50% to 30.02%,which is the decrease by 0.48

percentage points.

 Coca-Cola:
✔ The share of fixed assets decreased from 39.75% to 35.54% ,which is the

increase by 4.21% percentage points .And the share of currents assets

decreased from 28.17% to 30.05%,which is the increase by 1.88 percentage

points. The equity increased 29% from 2006 to 2007; it means the company

issued additional stock to finance the growth of the company. But it was

decrease as 6% from 2007 to 2008.Share of currents assets in total

assets

Interpretation:
 Pepsico:
✔ The fixed assets were increasing faster than current assets.

✔ The structure of total assets shows that the company is

inelastic(inflexible)----they have more fixed assets than current assets.

 Coca-Cola:
✔ The share of current assets increased from 28.17%to 30.05 % which is the

increase by 1.88 percentage points The reason of above conclusion is that

the The fixed assets were increasing faster than current assets.

✔ The structure of total assets shows that the company is

inelastic(inflexible)----they have more fixed assets than current assets.

3.2 Total liabilities structure

Share of current liabilities in total

Share of long term in total capital

 Share of equity in total capital

Interpretation:
 Pepsico:
✔ In 2006 the main source of financing the company was equity(The share of

equity in total capital was 51.61%,and the share of current liabilities in total

capital was 22.92%).

✔ In the last year of analyses ,we can see that the share of equity in total

capital decreased to the level of 34.02%,and the share of long term in total

capital increased to the level of 41.57%.

✔ Comparing the last year to the first year of analyses---the share of equity

in total capital decreased by 18 percentage points ,and the share of long

term in total capital increased by 16 percentage points. Because the value

of credits were increased much faster than value of equity.

✔ The structure of total liabilities is the optimal structure from the point of

view of risk and profit.

 Coca-Cola:
 ✔ In 2006 the main source of financing the company was equity(The share of

equity in total capital was 56.47%,and the share of current liabilities in

total capital was 68.16%).

✔ In the last year of analyses ,we can see that the share of equity in total

capital decreased to the level of 50.52%,and the share of long term in total

capital increased to the level of 35.21%.

✔ Comparing the last year to the first year of analyses---the share of equity

in total capital decreased by 28 percentage points ,and the share of long

term in total capital decreased by 5.95 percentage points. Because the

value of credits were increased much faster than value of equity.

3.3 Mixed structure

Pepsico 2008 2007 2006

Share of current liabilities in current assets 81.32% 76.38% 75.14%

Share of equity in fixed assets 48.61% 70.78% 74.26%

Share of equity and long term liabilities in fixed assets 108.02% 109.80% 110.91%

Coca-Cola 　 　 　 2008 2007 2006

Share of current liabilities in current 　 106.67% 109.25% 105.32%

assets
 Share of equity in fixed assets 　 　 142.17% 150.54% 142.05%

Share of equity and long term liabilities in fixed 191.19% 208.00% 176.92%

assets

Interpretation:
 Pepsico:
✔ In 2006,the share of equity and long term liabilities in fixed assets was

110.91%.It means we have many equities and long term liabilities in fixed

assets.

✔ Comparing the last year to the first year of analyses—the share of equity

and long term liabilities in fixed assets decreased by 3 percentage points,

and the share of equity in fixed assets decreased by 26 percentage points.

The share of current liabilities in current assets increased by 6 percentage

points.

✔ Total assets are increasing. And the company is inelastic(they have more

fixed assets than current assets.

 Coca-Cola:
✔ In 2006,the share of equity and long term liabilities in fixed assets was

176.92%.It means we have many equities and long term liabilities in fixed

assets.
 ✔ Comparing the last year to the first year of analyses—the share of equity

and long term liabilities in fixed assets decreased by 14.27%, and the share

of equity in fixed assets decreased by 0.12 percentage points. The share of

current liabilities in current assets increased by 1.35 percentage points.

✔ Total assets are increasing. And the company is inelastic(they have more

fixed assets than current assets.

4. Income Statement analysis

Pepsico:

THE
GROWTH

2006 2008 Dollar %

I.Net revenues 35137 43251 8114 23.09

II.Operating Profit 6502 6935 433 6.66

III.Income before 6989 7021 32 0.46
Income Taxes

IV.Provision for 1374 1879 505 36.75

Income Taxes

V.Net Income 5642 5142 -500 -8.86

Interpretation:
 Pepsico:
✔ Net revenues increased by 23.09% between 2006 and 2008.because the

cost of sales, selling, general and administrative expenses ,and amortization

of intangible assets were increasing year by year.

✔ Operating Profit increased by 6.66%. Because the bottling equity income,

Interest expense, Interest income are decreased.

✔ Income before income taxes increased by 0.46%.

✔ Provision for income taxes increased by 36.75%.

✔ Net income decreased by 8.86%.

Coca-Cola:
THE GROWTH

2006 2008 Dollar %

15,924.00 20,570.00
I.Net revenues 4,646.00 29%

II.Operating Profit 6,308.00 8,446.00 2,138.00 34%

6,578.00 7,506.00
III.Income before Income Taxes 928.00 14%

1,498.00 1,632.00
IV.Provision for Income Taxes 134.00 9%

5,080.00 5,807.00
V.Net Income 727.00 14%

Interpretation:
 Coca-Cola:
✔ Operating Profit increase by 34% ,because other operating expenses

increased about 55 times while the other operating revenues(income)

increased by bigger than half .

 ✔ Gross profit from sales increases by 20% between 2006 and 2008.This

increase is smaller than the Net sales 33%.

✔ Profit from sales increased 29%which gross operating profit increase the

same because Selling, General & Administrative (SG&A) Expense increase in

the same level.

✔ Net revenues increased by 33% between 2006 and 2008.because the cost

of sales, selling, general and administrative expenses ,and amortization of

intangible assets were increasing.

5. Profitability analysis

Interpretation:
 Pepsico:
✔ ROE=38.96% which means that each 100 dollar of equity generated 38.96

dollar of net profit. So this is profitability of our own capital(equity).

✔ ROA=18.85% which means that each 100 dollar of total assets generated

18.85 dollar of net profits. So this ratio is telling about the ability of total

assets to generate the profits.

✔ ROS=18.50% which means that from each 100 dollar of operational

revenues the company received 18.50 dollar of operational profits. So this

ratio is telling about the profitability of the production(operational part of

the company)

✔ ROS2=19.89% which means that from each 100 dollar of total revenues the

company received 19.89 dollar of gross profits. So this ratio is telling about

the profitability of operational and financial activities of the company.

✔ ROS2 is bigger than ROS by 1.39 percentage point because the financial

revenuse is bigger financial expenses. So the financial activites increased

the profitability of the company.

✔ ROS3=3.83% which means that from each 100 dollar of total revenues the

company received 3.83 dollar of net profits. The difference between ROS3

is the taxes the company has to pay.

✔ ROS decreases from 18.50% to 16.03% because:

a) the operating expenses are

increasing

faster than other operating income.

 b)cost of sales increased fast as the

cost

c）net revenues were increasing not

of products were increasing

✔ ROS2 decreases from 19.89% to 16.21% because: a) The interest income

decreased about 4 times-from 173 thousands of dollar to the leavel of 41

thousands of dollar. Interest expense it is the interest rate which they need to

pay from taken bank credits.

✔ ROE decreased from 38.96% to 21.65% because net profits decreased and the

equity increased (formula for ROE=net profits/equity). Why the net profits

decreased = the answer is in the conclusions number 7 and 8 in this analysis.

✔ ROA decreased from 18.85% to 14.29% because total assets increased and net

profits decreased (formula for ROA=net profits/total assets). Why the net

profits decreased = the answer is in the conclusions number 7 and 8 in this

analysis.

Interpretation:
 Coca-Cola:
✔ ROE=30.2% which means that each 100Dollars of equity generated 30.2

Dollars of net profit .So this is profitability of our own capital.

✔ ROA=16.95% which means that each 100Dollars of total assets generated

16.95 Dollars of net profit .So this ratio is telling about.the ability of total

assets to generate the profits.

✔ ROS1=26.19% which means that each 100Dollars of operational revenues

the company received 26.19 Dollars of optional profits.So this ratio is

telling about.the profiability of the production.

✔ ROS2=70.00% which means that each 100Dollars of total revenues the

company received 70 Dollars of gross profits.So this ratio is telling

about.the profiability of operational and financial activities of the company.

✔ ROS2 is bigger than ROS1 by 43.81 percentage point because the financial

revenues is bigger than financial expenses.So the financial activities

increase d the profitability of the company.

✔ ROS3=21.09% which means that each 100Dollars of total revenues the

company received 20.09 Dollars of net profits.The difference between

ROS3 and ROS2 is the taxes the company has to pay.

✔ ROS1 increase from 26.19% to 27.54% because

 　 other operating income are increasing much faster than other operating

expense net revenues were increased by 33%,cost of sales increase

increased almost 2times.

✔ ROS2 decreases from 70% to 68.24% because gross profit increase less

than total revenue

✔ ROE decreases from 30.2% to 28.37% because total revenue increase two

times bigger than net profit.

✔ ROA decreases from 16.95% to 14.33% because total assets increased

bigger than net profit

✔ The increase in the gross profit margin was attributable to favorable price

and product mix across the majority of our operating segments.

6. Liquidity analysis

　 　 P2008 C2008 P2007 C2007 P2006 C2006

Current ratio 0.33 0.94 0.92 0.29 0.95

 Quick ratio 0.26 0.77 0.75 0.22 0.76

Cash ratio 0.12 0.53 0.5 0.09 0.47

Table Chart

Bar chart

Interpretation:
 Pepsico:
✔ In 2006 the overall liquidity is optimal for all three ratios. So it means that

in 2006 the company had optimal level of all current assets and short term

liabilities.

✔ In 2006 and 2008,the Current ratio ,Quick ratio and Cash ratio are too big.

It means that they have too much current assets liquid current assets

comparing to short term credits.

✔ In the last year of analysis, the overall liquidity of the company decreased.

They did not have enough current assets to cover short term credits. They
 also did not have enough cash resources to cover short term obligations. It

is negative and dangerous.

 Coca-Cola:
✔ In 2006 the overall liquidity is optional for all three ratios.So it means that

that in 2006 the company had optional level of all current assets and short-

term liabilities.

✔ In 2008 quick ratio and cash ratio is optional but current ratio was little.

So it means the company does not have enough resources to cover short-

term liabilities.

✔ Coca-cola’s Current Ratio is below 2for those years but its ratio increased

from 2007 to 2008. They are more able to pay back their short term

debts.

✔ In the last year of analysis, the overall liquidity of the company increase.

Means they not have liquid current assets to cover short-term credits.

They also have cash resources to cover short-term obligations. It is

negative but not dangerous.

7.Activity analysis
 P06 C06 P07 C07 P08 CO8

Inventories 18.24 14.68 17.24 13.00 17.15 14.61

turnover

Days' 20.01 24.87 21.17 28.08 21.28 24.99

inventories

Trade 9.43 9.31 8.99 8.70 9.24 10.34

Receivables
Turnover

Days' 38.69 39.20 40.58 41.96 39.52 35.31

receivables

Trade 2.3 0.81 2.33 0.70 2.32 0.78

Payable
Turnover
Days' 158.8 449.0 156.88 522.25 157.6 467.24
Payables 6 5
Table chart

Bar chart

Interpretation:
 Pepsico:
✔ Days’ inventories=20 days(in 2006) which means that every 20 days that

company was renewing the inventories. In the next years they made similar

with this cycle. In 2007 this ratios equals 21 days. So it means non-

improvement for the company. The renew the inventories are the same. For

the Pepsico company it is general result.

✔ Days ’receivables=39 days (in 2006) which means that every 39 days the

company is collecting short term receivables(they collect cash).But in the

next year it got much longer. In 2008 it take them 40 days .It almost the

same as 2006.

✔ Days ’payables=158 days (in 2006) which means that every 158 days the

company paid back the short term credits .But in the next it got shorter, in
 2007 it took 157 days and 2008 it took 158 days for the company to pay

back the short term credits. It is general trend.

✔ Days’ payables got similar in the process. Because the company have similar

day with collecting receivables (days receivables about 38 days during

2006~2008).So they will not have problem with paying back the credits.

✔ In general it is said that its better first to collect money and then to repay

back the credits(so days’ receivables< days’ payables)As we can see that

this company as it said. It’s a good result for the company.

 Coca-Cola:
✔ Inventory Turnover in 2008 decreased slightly compared to 2007,but is

still the industry’s leader.

✔ Day’s inventories=25which means that every 25days that company was renewing the

inventories. In the next year they made faster this cycle in 2007.However in 2008 return in

25.

✔ Day’s receivable=40 days ( in 2006) which means that every 40day the company is collecting

short-term receivables(They collect cash),but in the next year it got much longer 42day.In

2008 it took them 40 again.

✔ Receivable Turnover : 2006:9.31 times ,2008:10.34 times There is a small

difference in turnover, an increase means it takes less time for the company to

collect outstanding payments.

✔ These averages are related to Receivable turnover, the company can collect

payments every 35.31 days on average.

✔ Day’s payables=449(in 2006) which means that every 449days the company is paid

back short-term credits but in the next two year it got much longer 465day.It

negative trend.

✔ Day’s payables got longer in the process because the company started to have

problems with collecting receivables(days receivables increased to42 but later back

to 40 again).

✔ In general it is said that it’s better first to collect money and then to repay back

the credits(so days receivables<days payable)

8.Summary
 As that it should be said that both companies seem to be well management. While

Pepsico is in all ratios worse than Coca-Cola but still a suitable and safe company .

In Pepsico the company is inelastic(they have more fixed assets than current assets.

➢ Conclusions
This conclusions made by interpreting and financial data and ratios in the previous

parts of this report and summarized in following 3 conclusive statements:

I.Pepsico is less profitable than its direct competitor Coca-Cola

II.Coca-Cola is more liquid than Pepsico.

III.Both companies have very safe financial structures and both are not facing

bankruptcy problems.