Example Of Essay On Financial Analysis

Based on the financial statement analysis, the company I would love to work for is Coca Cola. The current ratio of Pepsi is 1.24 while that of Coca Cola is 1.31. This means that Pepsi has a better liquidity management than that of Coca Cola. It is in a better position to pay those obligations that are due or recurrent such as wages.
However, Coca Cola has a debt to equity of 2.53 while that of Pepsi is 4.78. This means that Coca Cola has a lower bankruptcy risk. We are more sure about the financial sustainability and going concern of Coca Cola compared to Pepsi. Gearing ratio is more important than the current ratio because the current ratio can easily be adjusted though a change of strategy. On the contrary, the debt level cannot be changed easily. Besides, a high gearing ratio could be an indicator of financial problems. Companies often resort to excessive debt if they are making losses. Therefore, the do not have adequate cash flows to finance operations and they cannot raise equity through issue of shares because they will underperform as their shares are unattractive. Therefore, Coca Cola is more attractive as an employer since there is more job security based on the fact that the company is more stable.
Coca Cola also has a profit margin that is almost twice that of Pepsi. Therefore, Coca Cola is in a better position to pay higher wages and other financial benefits to its employees. This is because it has higher revenues that can be used to provide employees with benefits. Besides, there are higher chances of receiving performance bonus for good performance of the company.