Comparative Analysis Case
The Coca-Cola Company and PepsiCo, Inc.

Both Coca-Cola Company and PepsiCo, Inc. used a comparative report format, that list the sections one above the other, on the same page, to present their balance sheets.
For a measure of both a company’s efficiency and its short-term financial health, the working capital is calculated as: Working Capital = Current Assets – Current Liabilities. At the end of 2007, the Coca-Cola Company has a negative working capital of $1,120 million from the current assets of $12,105million and the current liabilities of $13,225 million. The Coca-Cola Company’s negative working capital might be impacted by the effects of transactions occurred in 2007. Trade accounts receivable, inventories, prepaid expenses and other assets were increased to $730 million, $579 million and $637 million respectively. It was primarily due to 2007 acquisitions, including glaceau, 18 German bottling and distribution operations. Because of these acquisitions, accounts payable and accrued expenses were increased to $1,860 million. Additionally its loans and notes payable of $2,684 million were increased primarily due to net borrowings of commercial paper and short-term debt during 2007 to fund acquisitions.
It seemed not that the Coca-Cola Company was unable to meet its short-term liabilities with its current assets but it seemed that the increases of current liabilities were much higher than that of current assets. On the other hand, PepsiCo, Inc. had a positive working capital of $2,398 million from the current assets of $10,151 million and the current liabilities of $7,753 million. Meanwhile, the PepsiCo, Inc. was able to pay off its short-term liabilities.
The most significant difference in the asset structure of the two companies was that the Coca-Cola Company had an Equity Method Investments section which had several