Create A 10- To 12-Slide Presentation That Addresses Each Qu

Create a 10- to 12-slide presentation that addresses each question within the Comparative Analysis Case, pp. . Coca-Cola Company and PepsiCo, Inc.

Use the companies' financial information to answer the following questions: (a) What is the par or stated value of Coca-Cola's and PepsiCo's common or capital stock? (b) What percentage of authorized shares was issued by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014? (c) How many shares are held as treasury stock by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014? (d) How many Coca-Cola common shares are outstanding at December 31, 2014? How many PepsiCo shares of capital stock are outstanding at December 31, 2014? (e) What amounts of cash dividends per share were declared by Coca-Cola and PepsiCo in 2014? What were the dollar amount effects of the cash dividends on each company's stockholders' equity? (f) What are Coca-Cola's and PepsiCo's return on common/capital stockholders' equity for 2014 and 2013? Which company gets the higher return on the equity of its shareholders? (g) What are Coca-Cola's and PepsiCo's payout ratios for 2014? (h) What was the market price range (high/low) for Coca-Cola's common stock and PepsiCo's capital stock during the fourth quarter of 2014? Which company's (Coca-Cola's or PepsiCo's) stock price increased more (%) during 2014?

Sample Paper For Above instruction

Introduction

The comparison between Coca-Cola and PepsiCo presents an insightful analysis of two leading beverage corporations with diverse financial and operational strategies. This paper aims to dissect various financial metrics and stock performance data as of December 31, 2014, to provide a comprehensive understanding of their financial health, shareholder returns, and market performance during 2014.

Par or Stated Value of Capital Stock

According to Coca-Cola’s fiscal data, the common stock has a par value of $0.25 per share, while PepsiCo also reports a similar par value for its capital stock. Par value is a nominal value assigned to shares and does not necessarily reflect market value; rather, it sets a legal minimum to protect creditors and shareholders (White, 2019). For both companies, understanding the par value aids in analyzing issued share capital and treasury stock transactions.

Percentage of Authorized Shares Issued

At December 31, 2014, Coca-Cola issued approximately 4.87 billion shares out of an authorized total of 11.2 billion shares, which corresponds roughly to 43.4% of its authorized shares. Similarly, PepsiCo issued around 1.774 billion shares from an authorized 10.9 billion, amounting to approximately 16.3%. This indicates Coca-Cola’s higher utilization of its authorized share capital, possibly reflecting strategic financing or share repurchase policies (SEC, 2014).

Treasury Stock Holdings

Coca-Cola held about 2.67 billion shares in treasury at year-end 2014, representing approximately 23.9% of outstanding shares. PepsiCo held roughly 551 million shares as treasury stock, representing about 31% of its outstanding shares. Treasury stock reduces the number of shares outstanding, impacting earnings per share and shareholder equity, and often signals share repurchase initiatives (Brigham & Houston, 2021).

Shares Outstanding

The number of Coca-Cola’s common shares outstanding at December 31, 2014, was approximately 4.87 billion, adjusting for treasury stock held. PepsiCo’s outstanding shares were approximately 1.774 billion, net of treasury stock. These figures are essential for calculating earnings per share and dividend per share metrics (Fess & Franklin, 2019).

Dividends Declared and Effect on Shareholders' Equity

In 2014, Coca-Cola declared a cash dividend of $1.22 per share, totaling approximately $5.35 billion in dividends paid, leading to a reduction in retained earnings reflected in the equity section. PepsiCo declared a dividend of $1.12 per share, totaling about $1.99 billion. Dividends decrease retained earnings and, consequently, stockholders’ equity but are viewed as a sign of financial stability and shareholder value distribution (Lara et al., 2020).

Return on Equity (ROE)

Coca-Cola’s ROE for 2014 was approximately 20.1%, calculated as net income divided by average shareholders’ equity. PepsiCo’s ROE was around 24.3%, indicating higher efficiency in using equity to generate profits during the same period (Investopedia, 2021). The higher ROE suggests PepsiCo’s superior leverage or operational efficiency compared to Coca-Cola.

Payout Ratios

The payout ratio, representing dividends paid as a percentage of net income, was approximately 80% for Coca-Cola and about 65% for PepsiCo in 2014. A higher payout ratio can indicate a mature company with stable earnings, while a lower ratio may suggest reinvestment for growth (Damodaran, 2012).

Market Price Range and Stock Price Increase

During the fourth quarter of 2014, Coca-Cola’s stock fluctuated between a low of $39 and a high of $45. PepsiCo’s stock ranged from $90 to $105 in the same period. During 2014, PepsiCo’s stock price increased by approximately 4.5%, significantly higher than Coca-Cola’s decrease of about 2%. This reflects market perceptions of growth prospects and financial performance during that year (Yahoo Finance, 2014).

Conclusion

In summary, while Coca-Cola exhibits a larger market capitalization and share volume, PepsiCo’s higher ROE and stock appreciation demonstrate stronger operational efficiency and market confidence during 2014. Investors should consider these variables alongside broader economic factors when assessing their portfolio allocations.

References

  • Brigham, E. F., & Houston, J. F. (2021). Fundamentals of Financial Management. Cengage Learning.
  • Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. Wiley Finance.
  • Fess, P. E., & Franklin, A. (2019). Financial Accounting. Pearson.
  • Investopedia. (2021). Return on Equity (ROE). Retrieved from https://www.investopedia.com/terms/r/roe.asp
  • Lara, J., et al. (2020). Profitability and Dividends: An Empirical Analysis. Journal of Financial Economics, 135(2), 487-505.
  • SEC. (2014). Form 10-K Annual Report for Coca-Cola. Retrieved from https://www.sec.gov/
  • White, G. I. (2019). Principles of Financial Accounting. McGraw-Hill Education.
  • Yahoo Finance. (2014). Coca-Cola and PepsiCo Stock Data. Retrieved from https://finance.yahoo.com/

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