Accounting

Part 2

Profitability Ratios	Your Company (Pepsi)		Competitor (Coca-Cola)
	Most Recent Year	Prior Year	Most Recent Year	Prior Year
Return on Shareholders’ Equity
Return on Assets
Leverage (defined as ROE – ROA)
Profit Margin
Gross Profit Margin
Asset Turnover

1. How successful is your company in using its business strategy to generate profits? Compare to competitor. This should be an in-depth analysis, and one of the most significant sections of the paper.

2. Explain the major reasons that net income changed from the prior year. Make sure to read the company-provided MD&A (which is management’s explanation), and refer to the vertical/horizontal income statement you prepared in Assignment 1 in developing your answer to this question.

3. Do you think profits will continue at the same level or rise/decline next year? Why?