Accounting Research Paper

Accounting inquiry Paper Dr. common pepper Snapple root word vs. The coca dumbbell caller-out Amanda Herring Tarleton State University Declaration Statement I hereby certify that this paper constitutes my own product, that where the language of separates is set forth, acknowledgement marks so indicate, and that appropriate credit is given where I take used the language, ideas, expressions or writings of others. Amanda Herring ID 000078948Zip Code 76707 Table of limit Title Page1 Declaration Statement2 Table of Contents3Abstract4 break up & Objective5 Introduction6 Statement of Problem7 Financial Analysis8 drum Analysis13 Decision16 Implementation & Monitoring17 Conclusion18 Bibliography19 App devastationix21 Abstract This paper allow for discuss the fiscal differences amid the Dr. white pepper Snapple stem and the coca poop federation, twain drink manu positionuring companies. It go forthing take into account all of the financial selective information for 2010 and 2011 for each guild, as strongspring as period swerves found for both of the companies.Financial statements for both companies will be included, as well as analysis of both companies financial situations. A decision will be made at the end to determine which fraternity is best suited to add to an perpet commitment portfolio and an intelligence operation report will be given as to why this fellowship has been elect. Purpose & Objective Dr. rain cats and dogs Snapple Group and The coca pot fellowship were chosen because of their sizes and product lines ar comparatively identical. They ar both drink manu incidenturers with a wide array of contrastive drink products under their label.It is hoped that with this research, maven of these companies has a better trade position than the other so that it can be recommended to the reader as an addition to their enthronement portfolio. Introduction The world is onwards farsighted in a crisis like no other when it come s to the state of the world(prenominal) economy, as is the United States economy. in that location is forever and a day a need to crumple the current situation of companies so that gradeors and company executives know what is going on with the financials and what type of leverage the company currently has, as well as what type of leverage they will vex in the future.There is overly always a need to compargon ones company to that of similar companies who atomic number 18 competitors in the effort. The purpose of this paper is to compare and contrast Dr. black pepper Snapple Group and The coca plant grass follow, both drink manufacturing companies, so that a decision can be made about which one to invest in. The coca plant sess community (NYSE KO) is an American multinational potable tummy and manufacturer, retailer and marketer of non-alcoholic drinkable concentrates and syrups (Wikipedia. org) and was founded and headquartered in capital of Georgia, Georgia (Coope r, Ford, & Stephens, 2007). In 1886, apothecary John Pemberton created the spongy drink coca-Cola by combining soda water, lime, cinnamon, coca leaves, and Brazilian shrub weeds. The drink was originally change in Atlanta in Jacobs Pharmacy for five cents a glass as a soda fountain drink (Cooper, Ford, & Stephens, 2007). Today coca plant-Colas stretchability spreads far beyond Georgia and even the United States the company has sour one of the worlds most recognizable corporations and the coca plant-Cola brand is one of the five most recognized symbols while the company has early four hundred brands in over 200 countries (Cooper, Ford, & Stephens, 2007). The Dr. Pepper Snapple Group (NYSE DPS) is an American soft drink company, found in Plano, Texas that was spun off from Britains Cadbury Schweppes who in 2006 and 2007purchased the Dr Pepper/Seven Up Bottling Group (Wikipedia. org). They are the leading producer of flavored deglutitions in zero(prenominal)th America and the Caribbean with their success creation fueled by more(prenominal) than 50 brands that are synonymous with refreshment, fun and flavor having 6 of the book binding 10 non-cola soft drinks, and 11 of 14 leading brands are No. in their flavor categories (investor. drpeppersnapple. com). Along with their flagship Dr Pepper and Snapple brands, their portfolio includes Sunkist soda, 7Up, A&W, Canada Dry, Crush, Motts, Squirt, Hawaiian Punch, Penafiel, Clamato, Schweppes, gos and Mr & Mrs T mixers (investor. drpeppersnapple. com). Problem Statement The problem is deciding which of the twain companies to invest money in their crease. With so many different crinkles to aim from, there is a need to get the most out of investments these days.In tramp to come up with this decision, research is pertinent. Extensive research must be done by facial expression at both companies financial information in the form of statement analysis, ratio analysis, financial leverage, and relative analysi s, on with a SWOT analysis of both companies and comparing their strategies. The problem is having two really similar companies to choose from, and deciding which is going to be deserving investing in the short and long term. Financial AnalysisCommon Size Income Statements & naiant and Vertical Analysis Table 1 coca plant Cola family Income Statement Analysis (dollars in millions except for per make out data) Year finish Dec 31, 2011 Vertical Analysis 2010 VerticalAnalysis 2009 % counterchange 11/10 % replace 10/09 lolly operate Revenues $46,542 100% $35,119 100% $30,990 33 13 Cost of goods interchange 18,216 39. 1 12,693 36. 1 11,088 44 14 rough amplification 28,326 60. 9 22,426 63. 9 19,902 26 13 piggish Profit margin 60. 9% 63. 9% 64. 2% Selling, general and administrative expenses 17,440 37. 5 13,158 37. 5 11,358 33 16 separate operating charges 732 1. 6 819 2. 3 313 Operating Income 10,154 21. 8 8,449 24. 1 8,231 20 3 Operating rim 21. 8% 24. 1% 26. 6 % Interest Income 483 1 317 0. 9 249 52 27 Interest Expense 417 0. 9 733 2. 1 355 (43) 106 justice income (loss) profit 690 1. 5 1,025 2. 9 781 (33) 31 Other income (loss) mesh 529 1. 1 5,185 14. 8 40 Income Before Income Taxes 11,439 24. 14,243 40. 6 8,946 (20) 59 Income taxes 2,805 6 2,384 6. 8 2,040 18 17 Effective tax rate 24. 5% 16. 7% 22. 8% Consolidated cabbage Income 8,634 18. 6 11,859 33. 8 6,906 (27) 72 Less Net income attri exclusivelyable to noncontrolling occupy 62 0. 01 50 . 001 82 24 (39) Net Income Attributable to packetowners 8,572 18. 4 11,809 33. 6 (27) 73 Net Income per share sanctioned meshing income per share $3. 75 $5. 12 (27) 74 Diluted wampum income per share $3. 69 $5. 6 (27) 73 Retrieved from The Coca Cola Companys 2010 and 2011 10k Reports The Coca Cola Company has seen an increase in tax enhancements since 2009, though they seem to start out higher(prenominal) prices when it comes to selling, administrative, and genera l expenses during the 2011 accounting period. This seems to be the trend passim the world, though, as the economic situation has change by reversal sour over again and prices seem to be rising on all products and services. The cost of goods sold is also higher in the division that has the highest revenue enhancements, though this can be attributed to the economic situation once again.The problem with the cost of goods, selling, administrative, and general expenses organism so high is that net income has turned out lower, for the 2011 year so causing the per share income to be meaning(a)ly lower than that of 2010. Table 2 Dr Pepper Snapple Group Income Statement Analysis (dollars in millions except for per share data) Year Ended Dec 31, 2011 VerticalAnalysis 2010 VerticalAnalysis 2009 % Change 11/10 % Change 10/09 Net Sales $5,903 100% $5,636 100% $5,531 5% 2% Cost of goods sold 2,485 42. 1 2,243 39. 8 2,234 10 0. 5 uncouth Profit 3,418 57. 9 3,393 60. 3,297 1% 3 Gross Pr ofit Margin 57. 9% 60. 2% Selling, general and administrative expenses 2,257 38. 3 2,233 39. 6 2,135 1. 1 4. 4 Depreciation and amortization 126 2. 1 127 2. 3 117 (0. 1) 8 Other operating charges 11 0. 2 8 0. 1 (40) 27 84 Operating Income 1,024 17. 3 1,025 18. 2 1,085 (0. 1) (6) Operating Margin 17. 3% 18. 2% Interest Expense 114 1. 9 128 2. 3 243 (12) (89) Interest Income (3) (0. 1) (3) (0. 1) (4) Loss on early extinguishment of debt - - 100 1. 8 - Other income (loss) net (12) (0. ) (21) (. 04) (22) Income Before Income Taxes & Equity 925 15. 7 821 14. 6 868 13 (5) Income taxes 320 5. 5 294 5. 3 315 8 (7) Income before Equity 605 10. 2 527 9. 4 553 13 (5) Equity in fee of unconsolidated subsidiaries 1 - 1 - 2 Net Income 606 10. 3 528 9. 4 555 13 (5) Net Income per share Basic net income per share 2. 77 2. 19 2. 18 26 (. 01) Diluted net income per share 2. 74 2. 17 2. 17 26 (. 01) Retrieved from Dr Pepper Snapple Group 2010 and 2011 10k ReportsThe Dr P epper Snapple Group definitely sees a significantly lower revenue standard than The Coca Cola Company, which can be seen as a bad issue because it representation their market share isnt near what Coca Cola Companys market share is. Even though these companies are in the same industry, it seems that Dr Pepper Snapple Group just isnt being able to keep up with the larger company that the Coca Cola Company is. Yes, Dr Pepper Snapple Group is also seeing the same added expenses in the cost of goods sold, selling, administrative, and general expenses, but nearly at the percentage rate that he Coca Cola Company is. This means that their net income and their per share net income has grown considerably from 2010 to 2011, but remained most the same the year before that. Comprehensive Financial symmetry Analysis military rating Ratios DPS KO Industry Earnings per share 2. 79 3. 78 P/E Ratio 16. 37 21. 17 20. 9 P/E towering NA NA 2. 6 P/E Low NA NA 0. 8 Price to Book 4. 27 5. 72 5. 51 P rice to Sales 1. 63 3. 87 2. 93 Price to cash in Flow 11. 3 16. 8 15. 4 Market Cap 9. 60B 180. 10B Dividends 1. 21 1. 88 Dividend Yield 2. 98 2. 55 Financial Ratios Current Ratio 0. 92 1. 05 1. 2 Quick Ratio 0. 7 1 0. 8 Leverage Ratio 3. 9 2. 6 2. 9 Book cherish per share 10. 9 14. 34 13. 53 24. 3 17. 08 Total debt to addition 29. 17 35. 72 Lt debt to beauteousness 99. 69 43. 17 Total debt to equity 119. 66 90. 31 108 Operating Metrics Return on avg assets 6. 67 11. 29 8. 9 Return on avg equity 25. 67 27. 37 25. 74 Return on investment 8. 13 15. 77 13. 7 Margins Net profit margin 10. 25 18. 55 14. 16Gross margin 57. 9 60. 86 55. 48 EBITD margin 20. 85 27. 06 Operating margin 17. 35 23. 06 Retrieved from www. google. com/finance & www. investing. money. msn. com The Coca Cola Company has a higher return on investment percentage than Dr Pepper Snapple Group, which means that Coca Cola Company is generating more wealth out of the investments they are qualification. Both companies revenues are maturement, though it seems that Coca Cola Company is again winning out in the growth category because they are growing at a larger percentage.Within the past two years Coca Cola Companys revenue growth has been 13% and accordingly 33%, which seems to mean that even through economically tough times, Coca Cola Company is still able to see larger revenue than the year before. The Coca Cola Company is trading at around four times their price/earnings ratio, which shows that it is a strong company which shareholders expect the price to go up. Although Dr Pepper Snapple Group is trading for around three times their price/earnings ratio, shareholders also agree that they ache a strong company.If you look at all of the analysis ratios, The Coca Cola Company is outperforming the industry in a number of different ratios. These include, but non limited to, the add up return on equity, average return on assets, book value per share, the quick ratio, the lever age ratio, net profit margin, and gross margin, just to name a few. It seems that because of this, barring something unforeseen, The Coca Cola Company will remain the leader in their industry, and a good solid investment for any investor. If you are just looking at these ratios, The Coca Cola Company would definitely be the investment choice you would want to go with.However, there are other factors to be considered still. The Coca Cola Company 5 year Stock valuation Chart Retrieved from www. thecoca-colcompany. com Dr Pepper Snapple Group 5 year Stock Valuation Chart Retrieved from www. nasdaq. com In analyzing the two stock charts above, both are masking results for the past five years, it seems that the trends in both stocks are about the same. There is a drop in October of 2009, which was the financial crisis that made all stocks drop, though both have bounced prickle up. Dr Pepper Snapple Group has seen an extremely higher stock price since before the crisis, though it s sti ll non valued at what The Coca Cola Companys stock price is valued. The Coca Cola Companys stocks have bounced back up, as previously stated, though not at the expansive amount of money Dr Pepper Snapple Group has since the devastating financial crisis. The Coca Cola Company is valued more than the Dr Pepper Snapple Group because although we remember there whitethorn be a better time to dabble in the firms shares based on our DCF process, the firms stock has outperformed the market benchmark during the past quarter, indicating increased investor interest in the company (Why Coca-Cola is expenditure, 2012).However, there is some estimation that if recent goodness price trends hold over the next quarter, Dr. Pepper Snapple (ticker DPS) should demonstrate significant earnings leverage in 2013 well in excess of current Wall Street estimates (Gerberi, Herzog, & Metrano, 2012). SWOT Analysis Strengths Coca-Colas key dodging is its excellence in appear markets. It has secured stron g anchorage in emerging markets and in the event that the American market plummets, it will have a good fallback position (Bazil, 2012).This is a great thing, along with the fact that they are a world(prenominal) company. This gives them a position to be at the forefront of the beverage industry and allows them to see better revenues than others in the beverage industry. Dr Pepper Snapple Group, on the other hand, has a strength in the fact that they have seen a smaller increase in the cost of goods sold and other expenses than The Coca Cola Company. This is a strength because it means that the company has been able to control cost, yet they still have the same choice of beverages they always have. WeaknessesDr Pepper Snapple Group has continued to be an American-centric beverage company and could use a more spherical outlook to add to acquire and up their stock performance. This is a weakness because The Coca Cola Company is already out in the global market and has become the whole tone of the beverage industry from the United States. They are well known, and if Dr Pepper Snapple Group cant keep up with this, they will never be able to achieve the same financial situation that The Coca Cola Company has. The Coca Cola Company has seen a weakness in the fact that they havent been able to control costs throughout the economic down recently.They are seeing more revenues, but revenues are not all that matter in the business world. The Coca Cola Company should try to maintain a lower cost social organization so that they have a better advantage, and a larger net income. Opportunities Dr Pepper Snapple Group has a huge opportunity to go global with their beverages. They are currently thinking relatively small in the venerable scheme of things and could use a global perspective to raise revenues and become a more comparative competitor to The Coca Cola Company. The Coca Cola Company has the opportunity to try to control costs.They need to be able to do this s o they can see a larger net income and save money during these economically hard times. Companies that are not able to control costs will eventually not be able to make it in the business world because they will be paying prices that they sales cannot keep up with. Threats The Coca Cola Company has a big threat that could potentially affect them in the long run. If more of their competitors enter the global market, they could see huge competition in this market than ever before.They are the main beverage company that has a large global presence, but other beverage companies will be looking, if they already arent, into getting into the global market so that they compete with The Coca Cola Company revenue wise, and see the same larger revenue that global companies start see when they branch out to different areas of the world. Dr Pepper Snapple Group could see a threat of all others within the beverage industry catching on to their cost controlling methods. These methods would help ot her companies be able to compete better because they will be frugality money and hopefully seeing higher revenues as well.This cost controlling, though now a competitive advantage, could very well become an industry norm in the future. Decision I feel that both companies should be invested in. There seems to be a relatively good stock market valuation for The Coca Cola Company and Dr Pepper Snapple Group, as well as good return on investment percentages relative to the beverage industry average. I think that half should be invested in The Coca Cola Company because it has a global presence and sees higher revenue and has a larger stock valuation, as well as a larger per share net income because of the larger revenues than that of Dr Pepper Snapple Group.I also think that the other half should be invested in Dr Pepper Snapple Group. I feel that this manufacturer only has greater heights to attain, seeing as they have yet to have a huge global presence since they are centered on their United States market. I feel that investing in their stock now, before they truly go global (which will take on because every company should start thinking on a global scale), would be the best case scenario because once they do start making a larger revenue due to global sales, they will belike see a higher return on investment, as well as a higher stock valuation.Implementation & Monitoring To implement this, you should intimacy your financial advisor. Your financial advisor will able to help you merely assess the situation which I have laid out in this report. They will also be able to connect you with a stock broker, if you already do not have one. The stock broker will then help you invest your money in the way I have explained above. Then it would be advisable, in order to monitor your investment, that you also use your financial advisor who can better monitor the communicate of your stock investment.If this is too expensive, then you could monitor the stock yourself thr ough websites much(prenominal) as www. investing. money. msn. com, www. google. com/finance, or www. finance. yahoo. com. These, plus many more websites, are very helpful in monitoring your investment in the stock market. It is up to you whether you want to monitor it every day, once a week, twice a week, or once a month. Whichever you choose, make sure that you keep up with it and dont fret when stock prices take a unconvincing drop. Pulling money out too early, or when the stock is currently falling is never a good plan. ConclusionsWith this paper, I have lettered that, contrary to my belief, The Coca Cola Company are not comparative in size when it comes to revenue, or even the amount of different beverages they sell. They both, though, have comparative ratio analysis. They both are around the industry average, sometimes one is a itty-bitty above and the other is a little below and vice versa, but for the most part they are relatively close to the industry average. It seems t hat Dr Pepper Snapple Group has been able to control costs a little more effectively than The Coca Cola Company, but The Coca Cola Company has seen better revenues than the Dr Pepper Snapple Group.Both of these companies are on upwards trends in the stock market, even though they are not comparable by price. There is definitely a need to invest in both of these companies because each has their unique competitive advantage. The Coca Cola Companys competitive advantage is the fact that they are the leaders in the global beverage market, while Dr Pepper Snapple Groups competitive advantage is that is able to control costs more efficiently. They each have a large product line and could both usefulness from learning from the other in different aspects of the business.Bibliography Bazil, M. (2012). Coca-Colas secret weapon. Retrieved from http//www. gurufocus. com/news/183815/cocacolas-secret-weapon. Coca Cola Company Form 10k, 2010. (2011). Retrieved from www. sec. gov. Coca Cola Compan y Form 10k, 2011. (2012). Retrieved from www. sec. gov. Cooper, L. , Ford, W. , & Stephens, W. (2007). Coca-Cola case study An ethics incident. The Archive of Marketing Education. Retrieved from www. marketingpower. com. Dr Pepper Snapple Group. (n. d. ). Retrieved from www. wikipedia. org.Dr Pepper Snapple Group Form 10k, 2010. (2011). Retrieved from www. sec. gov. Dr Pepper Snapple Group Form 10k, 2011. (2012). Retrieved from www. sec. gov. Gerberi, J. , Herzog, B. , & Metrano, B. (2012). flagellation the global heat with Dr. Pepper Snapple. Retrieved from http//online. barrons. com/article/SB50001424053111903857104577462982562697696. html interpret Data. (2012). Retrieved from www. google. com/finance. Graph Data. (2012). Retrieved from www. investing. money. msn. com. Graph Data. (2012). Retrieved from www. hecoca-colacompany. com. Graph Data. (2012). Retrieved from www. nasdaq. com. Graph Data. (2012). Retrieved from www. yahoo. com. Investors. (n. d. ). Retrieved from www. i nvestor. drpeppersnapple. com. The Coca Cola Company. (n. d. ). Retrieved from www. wikipedia. org. Why Coca-Cola is worth $70 per share. (2012). Retrieved from http//seekingalpha. com/article/755581-why-coca-cola-is-worth-70-per-share? source=marketwatch Appendix A Accounting Research Paper Supporting Files PDF Files Word/Rich Text Files