Since the mid-1980s, many of us have become familiar with the terms "the cola wars" (Wikipedia, 2010). Coca Cola and Pepsi have long been the world's two main competitors when it comes to soft drinks. What makes these companies successful? What allows them to thrive for years across the world? For this project, I analyzed the 2003 to 2005 financial statements of both companies to better understand these and other questions. By examining and then analyzing the data, it becomes visible that these two companies remain strong in a market still dominated by each other. To begin, we'll look at three ratios for each company. The first ratio is a liquidity ratio. Liquidity focuses on the reliability or availability of a borrower to repay the loan they have borrowed. A common measure of liquidity is the current ratio. The current ratio measures a company's ability to repay its obligations or short-term debts. We get this calculation by taking current assets and dividing by current liabilities. For example, PepsiCo's current ratio equals current assets in 2005 (10,454) divided by current liabilities in 2005 (9,406), which equals 1.11:1. Their ratio current in 2004 was 1:28:1. (Current assets for 2004/current liabilities for 2004; 8639/6752). Coca Cola's current ratio for 2005 was calculated by calculating its current assets for 2005 (10,250) and dividing by its current liabilities for 2005 (99,836), which equates to a ratio of 1.04:1. In 2004, Coca' Cola's current ratio was equal to current assets for 2004 of 12,281 divided by current liabilities for 2004 of 11,133, a total of 1.10:1. means that for every dollar of current liabilities, Coca Cola has $1.04 worth of paper and soft drinks. They have ventured into non-carbonated drinks like iced tea and juices, but now need to move into the food market. My final recommendation for Coca Cola is to stick with their product. One of Coca Cola's biggest setbacks occurred when they introduced their "new Coke" in the 1990s. (Wikipedia, 2010) This new formula was not well received by their consumers and they were forced to quickly stop new production of Coca-Cola. In conclusion, I think both companies are stable and strong. Clearly, both companies are capable of competing on a global scale, which in itself speaks volumes. Each company has its strengths and minor weaknesses, but their overall financial success has been proven. Their ability to remain the only two competitors in the soft drinks sector is a strong indicator of their future potential..