Before investing in any company, you should first take the time to review and study the company's financial records. I had the opportunity to review the financial records of two large companies; Pepsi Co and The Coca Cola Company and decided which company was financially stronger. In order to make the best choice, I will look at all three analyzes of each company's financial statements and compare them. The three financial statement analysis tools I will review are horizontal analysis which evaluates a series of financial statement data over a period of time. time. The purpose of this analysis is to determine the increase or decrease that has occurred. Vertical analysis that evaluates financial statement data by expressing each item in a financial statement as a percentage of a base amount. Vertical analysis shows the relative size of balance sheet categories. It can also show the percentage change in individual assets, liabilities and equity items. Finally, ratio analysis which expresses the relationship between selected elements of financial statement data. The relationship is expressed as a percentage, rate or proportion (University of Phoenix, Axia College, 2009). We will first calculate the horizontal analysis for both companies. We look at the percentage change in Pepsi Co's current assets between 2004 and 2005. The percentage change was $10,454/8,639 = 1.21% or 10,454-8,639/8,639 = 21% increase . We will then look at the percentage change in Coco Cola's current assets between 2004 and 2005. The percentage change was $10,250/12,281 = 0.83% or 10,250-12,281/ 12,281 = 16.5% of decrease. Based on these calculations, Pepsi Co increased its cur...... middle of paper ......see these figures also. Another number that has increased is the cost of software. I recommend them to find cheaper software because the price has gone from 181 million to 327 million. Some recommendations I would make to Coca Cola are to reduce the number of outstanding shares of common stock they have and to decrease some of their operating costs. After reviewing the financial records of both companies, if I had the chance, I would invest in both because there is potential with both. Coca Cola appears to be the most financially sound company. If Coca Cola continues to follow the same pattern, I think it will be very profitable in the future because between 2004 and 2005 the company really made changes in the right direction. If Pepsi Co decreases the spending I recommended, I can see them becoming more profitable than Coca Cola.