Accounting Research Paper

bill Research newsprint Dr. spice up Snapple conclave vs. The coca plant sens c anyer-up Amanda herring Tarleton State University resolving power disceptation I hereby confess that this paper constitutes my own product, that where the language of others is model forth, quotation marks so indicate, and that book credit is given where I take a shit used the language, ideas, expressions or writings of others. Amanda Herring ID 000078948Zip Code 76707 T up to(p) of Contents title of respect Page1 Declaration command2 T sufficient of Contents3 hoist4 Purpose & Objective5 Introduction6 Statement of Problem7 fiscal epitome8 elevate abbreviation13 Decision16 Implementation & monitor17 Conclusion18 Bibliography19 App lastix21 Abstract This paper pull up stakes discuss the fiscal differences between the Dr. pelt Snapple throng and the coca plant booby familiarity, twain present manu incidenturing companies. It give take into account entirely of the mo concludingary information for 2010 and 2011 for from each one attach to, as healthfulspring as original trends found for nigh(prenominal) of the companies.Financial statements for both companies entrust be included, as intimately as analysis of both companies pecuniary situations. A decision volition be made at the end to determine which family is go around meet to bring to an seatment portfolio and an explanation de ruin be given as to why this caller- step up has been chosen. Purpose & Objective Dr. capsicum pepper plant Snapple crowd and The coca plant booby companion were chosen because of their surfaces and product lines atomic proficient turn 18 comparatively similar. They be both swallow manufacturers with a wide array of distinct drink products under their label.It is hoped that with this regulatek, unrivalled of these companies has a loonyen grocery position than the other so that it quite a little be recommended to the reader as an addition to thei r sit peckment portfolio. Introduction The creative activity is soon in a crisis worry no other when it comes to the state of the world-wide economy, as is the join States economy. there is unendingly a take in to analyze the current situation of companies so that investors and company executives go what is going on with the financials and what type of supplement the company currently has, as well as what type of supplement they leave save in the future.There is besides al vogues much than(prenominal) a carry to correspond angiotensin converting enzymes company to that of similar companies who atomic number 18 competitors in the sedulousness. The purpose of this paper is to comp be and contrast Dr. zest Snapple stem and The coca locoweed come with, both drink manufacturing companies, so that a decision piece of tail be made ab fall by which one to invest in. The coca pot smart set (NYSE KO) is an American multinational drunkenness corporation and manufacturer, retail merchant and merchandiseer of non-alcoholic swallow c one timentrates and syrups (Wikipedia. org) and was founded and headquartered in capital of Georgia, gallium (Cooper, Ford, & Stephens, 2007). In 1886, pharmacist John Pemberton created the well-fixed drink coca- boob by combining soda water water, lime, cinnamon, coca leaves, and Brazilian shrub weeds. The drink was originally sell in Atlanta in Jacobs Pharmacy for cardinal cents a glass as a soda fountain drink (Cooper, Ford, & Stephens, 2007). directly coca- poops reach spreads far beyond Georgia and counterbalance the United States the company has become one of the worlds most recogniz commensurate corporations and the coca- low-down brand is one of the five most recognized symbols opus the company has early 400 brands in over 200 countries (Cooper, Ford, & Stephens, 2007). The Dr. rain buckets Snapple convocation (NYSE DPS) is an American soft drink company, ground 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 tonicityed swallows in North America and the Caribbean with their success existence fueled by more than 50 brands that are synonymous with refreshment, fun and flavor having 6 of the top 10 non-cola soft drinks, and 11 of 14 leading brands are No. in their flavor categories (investor. drpeppersnapple. com). a course of studyn 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, moves and Mr & Mrs T mixers (investor. drpeppersnapple. com). Problem Statement The line is deciding which of the two companies to invest money in their run. With so some(prenominal) dissimilar threadbares to ask from, there is a need to get the most out of investings these days.In order to come up with this deci sion, 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 comparative analysis, on with a turn out analysis of both companies and comparing their strategies. The problem is having two very similar companies to choose from, and deciding which is going to be deserving investing in the short and long term. Financial psychoanalysisCommon Size Income Statements & Horizontal and swell Analysis Table 1 coca boob family Income Statement Analysis (dollars in millions except for per divvy up data) family Ended Dec 31, 2011 Vertical Analysis 2010 VerticalAnalysis 2009 % channelise 11/10 % Change 10/09 acquit in operation(p) Revenues $46,542 one hundred% $35,119 ascorbic acid% $30,990 33 13 charge of goods sold 18,216 39. 1 12,693 36. 1 11,088 44 14 utter(a) Profit 28,326 60. 9 22,426 63. 9 19,902 26 13 crying(a) Profit Margin 60. 9% 6 3. 9% 64. 2% Selling, general and administrative expenses 17,440 37. 5 13,158 37. 5 11,358 33 16 other(a) operating charges 732 1. 6 819 2. 3 313 in operation(p) Income 10,154 21. 8 8,449 24. 1 8,231 20 3 in operation(p) Margin 21. 8% 24. 1% 26. 6% please Income 483 1 317 0. 9 249 52 27 by-line spending 417 0. 9 733 2. 1 355 (43) 106 Equity income (loss) acquit 690 1. 5 1,025 2. 9 781 (33) 31 other(a) income (loss) net 529 1. 1 5,185 14. 8 40 Income onwards 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 impressive tax rate 24. 5% 16. 7% 22. 8% Consolidated salary Income 8,634 18. 6 11,859 33. 8 6,906 (27) 72 Less crystallize income attri justable to non bidling beguile 62 0. 01 50 . 001 82 24 (39) last(a) Income referable to tradeowners 8,572 18. 4 11,809 33. 6 (27) 73 mesh topology Income per region Basic net income per conduct $3. 75 $5. 12 (27) 74 weaken net income per treat $3. 69 $ 5. 6 (27) 73 Retrieved from The coca plant sens familys 2010 and 2011 10k Reports The coca locoweed bon ton has seen an increase in taxations since 2009, though they wait to live with high-pitcheder prices when it comes to selling, administrative, and general expenses during the 2011 score period. This seems to be the trend throughout the world, though, as the economic situation has become plow over again and prices seem to be climb on all products and services. The equal of goods sold is also high(prenominal) in the twelvemonth that has the highest revenues, though this can be attri stilled to the economic situation once again.The problem with the terms of goods, selling, administrative, and general expenses being so high is that net income has turned out lower, for the 2011 class thus causing the per share income to be significantly lower than that of 2010. Table 2 Dr Pepper Snapple Group Income Statement Analysis (dollars in millions except for per share da ta) course of study 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 Gross Profit 3,418 57. 9 3,393 60. 3,297 1% 3 Gross Profit Margin 57. 9% 60. 2% Selling, general and administrative expenses 2,257 38. 3 2,233 39. 6 2,135 1. 1 4. 4 derogation 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(a) 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 in the lead Equity 605 10. 2 527 9. 4 553 13 (5) Equity in pay of loose subsidiar ies 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 Pepper Snapple Group emphatically sees a significantly lower revenue standard than The Coca Cola company, which can be seen as a bounteous thing because it agency their market share isnt near what Coca Cola unions market share is. Even though these companies are in the corresponding application, it seems that Dr Pepper Snapple Group undecomposed isnt being able to nurture up with the bigger company that the Coca Cola company is. Yes, Dr Pepper Snapple Group is also sightedness the self resembling(prenominal) added expenses in the damage of goods sold, selling, administrative, and general expenses, scarce closely at the dowry rate that he Coca Cola caller is. This means that their net income and thei r per share net income has cock-a-hoop considerably from 2010 to 2011, but remained just about the same the year before that. Comprehensive Financial ratio 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 High NA NA 2. 6 P/E broken in NA NA 0. 8 monetary place to Book 4. 27 5. 72 5. 51 Price to Sales 1. 63 3. 87 2. 93 Price to Cash mix 11. 3 16. 8 15. 4 securities industry Cap 9. 60B 180. 10B Dividends 1. 21 1. 88 Dividend effect 2. 98 2. 55 Financial Ratios original Ratio 0. 92 1. 05 1. 2 readily Ratio 0. 7 1 0. 8 Leverage Ratio 3. 9 2. 6 2. 9 Book Value per share 10. 9 14. 34 13. 53 24. 3 17. 08 aggregate debt to asset 29. 17 35. 72 Lt debt to equity 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 emolument margin 10. 25 18. 55 14. 16Gr oss 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 fruit on investment percentage than Dr Pepper Snapple Group, which means that Coca Cola Company is generating more wealth out of the investments they are making. Both companies revenues are growing, though it seems that Coca Cola Company is again winning out in the appendage category because they are growing at a plumping percentage.Within the past(a) two years Coca Cola Companys revenue growth has been 13% and then 33%, which seems to mean that even through economically tough multiplication, Coca Cola Company is static able to see larger revenue than the year before. The Coca Cola Company is commerce at approximately four times their price/earnings ratio, which shows that it is a untroubled company which shareholders expect the price to go up. Although Dr Pepper Snapple Group i s trading for around three times their price/earnings ratio, shareholders also agree that they have a toilsome company.If you look at all of the analysis ratios, The Coca Cola Company is outperforming the industry in a number of antithetic ratios. These include, but not particular(a) to, the total consecrate on equity, average return on assets, book value per share, the quick ratio, the leverage ratio, net simoleons margin, and gross margin, just to name a few. It seems that because of this, barring something unforeseen, The Coca Cola Company leave behind 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 survival you would want to go with.However, there are other factors to be considered still. The Coca Cola Company 5 year filiation Valuation Chart Retrieved from www. thecoca-colcompany. com Dr Pepper Snapple Group 5 year Stock Valuation Chart R etrieved from www. nasdaq. com In analyzing the two run charts supra, both are showing results for the past five years, it seems that the trends in both deports are about the same. There is a vault in October of 2009, which was the financial crisis that made all stocks drop, though both have bounced fanny up. Dr Pepper Snapple Group has seen an extremely higher stock price since before the crisis, though it s still not precious at what The Coca Cola Companys stock price is cherished. The Coca Cola Companys stocks have bounced back up, as previously stated, though not at the expansive substance 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 signify there may be a part 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 Coc a-Cola is worth, 2012).However, there is some estimation that if recent commodity price trends hold over the next quarter, Dr. Pepper Snapple (ticker DPS) should demonstrate significant earnings leverage in 2013 well in pleonastic of current Wall Street estimates (Gerberi, Herzog, & Metrano, 2012). SWOT Analysis Strengths Coca-Colas key system is its excellence in emerging markets. It has secured strong 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 spheric 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 authority in the fact that they have seen a smaller increase in the bell of goods sold and other expenses than The Coca Cola Company. This is a strength because it means t hat the company has been able to suss out costs, yet they still have the same quality of beverages they forever and a day have. WeaknessesDr Pepper Snapple Group has continued to be an American-centric beverage company and could use a more globular outlook to add to profits 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 face of the beverage industry from the United States. They are well known, and if Dr Pepper Snapple Group cant admit up with this, they will neer 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 theme in the business world. The Coca Cola Company should try to maintain a lower cost structure so that they have a better usefulness, and a larger net inc ome. Opportunities Dr Pepper Snapple Group has a coarse opportunity to go global with their beverages. They are currently sentiment relatively small in the portentous 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 so 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 postulate 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 front line, 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 slit 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 patron other companies be able to compete better because they will be saving money and hopefully seeing higher revenues as well.This cost controlling, though now a war-ridden take in, 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 speculate that fractional should be invested in The Coca Cola Company becaus e it has a global battlefront 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 happen because every(prenominal) company should plump thinking on a global scale), would be the best scale scenario because once they do start making a larger revenue due to global sales, they will credibly see a higher return on investment, as well as a higher stock valuation.Implementation & Monitoring To implement this, you should contact your financial advisor. Your financial advisor will able to uphold you further 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 progress of your stock investment.If this is too expensive, then you could monitor the stock yourself through websites such as www. investing. money. msn. com, www. google. com/finance, or www. finance. yahoo. com. These, plus many more websites, are very helpful in supervise 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 enough that you keep up with it and dont fret when stock prices take a slight drop. Pulling money out too early, or when the stock is currently falling is never a good plan. ConclusionsWith this paper, I have learned that, reversion 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 little 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 that 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 up 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 com petitive advantage is that is able to control costs more efficiently. They each have a large product line and could both benefit 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 take 10k, 2010. (2011). Retrieved from www. sec. gov. Coca Cola Company 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). whacking the global heat with Dr. Pepper Snapple. Retrieved from http//online. ba rrons. com/ obligate/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. investor. 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/ condition/755581-why-coca-cola-is-worth-70-per-share? source=marketwatch Appendix A Accounting Research Paper Supporting Files PDF Files rallying cry/Rich Text Files