Accounting

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?