When looking at the financial position of PepsiCo, Inc. and Coca-Cola, each dollar amount in each column has some significance. To know what these amounts represent, a financial comparison of the two companies is necessary. By using financial analysis tools such as vertical analysis, horizontal analysis and ratio analysis, one can get a clearer picture of each company's financial situation. Horizontal AnalysisWhen evaluating financial statement data for a specific time period, we use a technique called horizontal analysis. This method will show whether there has been an increase or decrease in the financial position of PepsiCo, Inc. and Coca-Cola. Comparing these two companies, I evaluated net revenue and net profit for the period 2003 to 2005, with 2003 being the base year and 2005 being the current year. The formula I used will show the change in net income and net income for that time period. The formula for calculating the change from the base period is the current year amount minus the base year amount divided by the base year amount. COCA-COLA (dollar amounts in millions) Net income 23,104 (2005) – 20,857 (2003) divided by 20,857 (2003) = 2,247 divided by 20,857 = 10.77% of net income 4,872 (2005) – 4,387 (2003) divided by 4,387 (2003) = 485 divided by 4,387 = 11.0% PEPSICO, INC. Net income 32,562 (2005) – 26,971 (2003) divided by 26,971 (2003) = 5,591 divided by 26,971 = 20.73% Net income 4,078 (2005) – 3,568 (2003) divided by 3,568 (2003) = 14.29%The balance sheet of PepsiCo, Inc. showed an increase in assets and liabilities, and shareholders' equity for the period from 2003 to 2005. These increases suggest that "the company has expanded its asset base and financed it primarily by retaining middle of paper ...... offering a stock option to employees. This would help increase both employee productivity, which in turn would increase sales, as well as total equity. Coca-Cola could also offer stock options to its employees, which would also increase productivity and total equity. They could also reduce their long-term debt, which would reduce their liabilities. Both companies have a long history and reputation that will help them continue to be profitable. With a declining economy, they both continued to generate considerable revenue, which helped make them the leading beverage companies in the United States. Their dedication to excellence has been rewarded with continued sales and profits. If one had to decide which company to invest in, there would be no bad choice. Both of these companies have a large following and their sales continue to boom..