Pepsi and Dr. Pepper Snapple Group are a portion of beverage sector in the business world. Both of these highly respected companies use risk analysis to aid in determining the health and viability of their company. While Management Efficiency, Profitability and Leverage ratios alone do not provide concrete answers about the health and viability of a company, they together can raise important questions that will help determine where the company stands in its industry. "Leverage ratios show how heavily the company is in debt; Management Efficiency ratios measure how productively the firm is using its assets; and profitability ratios are used to measure the firm's return on its investment" (Brealey, Myers, Marcus, 2004).
Background on both companiesPepsiCo, Inc. was founded by Donald M. Kendall, president and chief executive officer of Pepsi-Cola and Herman W. Lay, chairman and chief executive officer of Frito-Lay, through the merger of the two companies. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C.
pharmacist. PepsiCo, Inc. serves consumers in two major businesses: beverages and snack foods. The company consists of Pepsi-Cola Company, the world's second largest beverage company, Tropicana Products, Inc. the world's largest marketer and producer of branded juices, and Frito-Lay Company, the world's largest manufacturer and distributor of snack chips. According to their website "PepsiCo brand names are among the best known and our operations reach every corner of the world" (Pepsi, 2008).
The Dr. Pepper Snapple Group is the result of several business reorganizations and restructurings involving Cadbury Schweppes Americas Beverages, Dr Pepper/Seven Up Inc., Snapple Beverage Group, Mott's LLP, and Bebidas Mexico, and other business acquisitions. Some of the company's products include Dr. Pepper, Snapple, 7UP, A&W, Sunkist soda, Hawaiian Punch, Canada Dry, Schweppes, RC Cola, Diet Rite, and Squirt. Today the Dr. Pepper Snapple...