The improvement in times interest earned comes in the face of a significant increase in long-term debt at PepsiCo. The company's debt ratio increased to 50.2% from 48.6%. This was largely a consequence of a nearly 65% increase in long-term debt.
Pepsi's operating margin is 18.1%, down slightly from 18.5% in 2006 and 18.37% in 2005. The company's ability to maintain margin stability illustrates strong managerial control over the company's cost structure. This is because Pepsi has little control over costs in the ultra-competitive segments in which they operate. They also have little control over factor costs such as high fructose corn syrup, the cost of which is based on commodity costs. The company's net margin declined slightly in 2007 to 14.3% from 16.05% in 2006, but up from 12.5% in 2005. The company improved its earning per share slightly in 2007. Overall, profitability has been steady at Pepsi. The company has been able to grow sales without adding extra costs to their operations.
In terms of managerial efficiency, Pepsi's return on assets decreased to 16.3% from 18.8%. The return on equity declined to 32.3% from 36.5%. The decline in return on equity relates to the upward shift in leverage at Pepsi. The decline in the return on assets is more disappointing, as it confirms that managerial efficiency has declined slightly at PepsiCo in the past year. However, the company remains more efficient that Coca-Cola Corporation.
As an Equity Investment
At the end of 2007, Coke was trading at 61.37, for a P/E of 23.69 (MSN Moneycentral, 2009). PepsiCo was trading at 75.90, for a P/E of 21.81. Pepsi's quarterly dividend had risen to 75 cents per share; Coke's was now at 68 cents per share. Thus, Pepsi's dividend yield was 3.9% while Coke's dividend yield was 4.4%.
Therefore, PepsiCo is a more prudent equity investment. The company's financials are stronger in most respects. Pepsi has better product diversification. Pepsi has stronger cost controls. The dividend yield is lower, but the P/E is lower and Pepsi's cost controls give them greater opportunity to enjoy sustained, controlled earnings growth. In terms of broad strategy,...
Investing Capital Mutual fund Investing is important for it ensures that at the end of a certain period you can benefit out of your invested money. Investing can be done through investment funds. Investing funds are collective investment schemes that require investor to create a pool of capital and in return the investor enjoys wide diversification, professional management, and lower costs that would have been otherwise impossible using a small amount of
Investing in a New Production Facility The automobile industry is increasingly taking advantage of the optimistic automobile market through producing more technologically sophisticated and luxurious motor vehicles. The vehicles despite targeting the wealthy in the society have been received positively by the automobile market. Particularly the four-wheel-drive model has become popular for two major reasons, image and up-country drive particularly on complex landscape. Having identified its personal interest areas, ABC Company
Company's Compensation And Benefit Package A number of factors determine how a company compensates its employees. These factors may include economics, psychology and even sociology. To an economist compensation is viewed as a labor market determinant (Filer, Hammermesh, & Rees, 1996). As a human resource manager for Vanguard Industries I have been entrusted with the responsibility of explaining to the Chief Executive Officer (CEO) that guided my development of the company's
Investing in Walt Disney Company Characteristics of its bonds Apparently, Disney's bonds seem to be in an enticing situation. After a dip during the past years, Disney's bonds seem to be in great demand. In June of this year -- little less than 3 months ago - it offered a 3.75% banking 10-year paper with over $25mm. This was the hot-shot then, specially in a time when post-holiday trade was lax, and
Yahoo is definitely facing difficult challenges in the near future. Consumption is probably going down, but that is not something that will only affect Yahoo! The competition will also be seriously shaken. Another aspect that the firm's managers should consider is the more personalized approach proposed by Google. The G-mail service will be tailored to fit the desires of each and every user. The needs of each person, as manifested
For life changing events and complicated financial matters, they suggest turning to the financial advisors at TMF Money Advisor, due to their reputable handlings of finances. After all is set to invest, the next step is to plan out your attack. Set exact amounts and do research on market trends to find which is the best place for your money. Next, the fools discuss where to get started in actually
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now