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 biggest soft drink competitors. What determines the success of these companies? What gives them the ability to thrive for years across the globe? For this project I analyzed the 2003 through 2005 financial statements of both companies to gain insights into these and other questions. By reviewing and then analyzing the data it becomes evident that these two companies are still strong in a market that is still dominated only by each other. To start we'll look at three ratios for each company. The first ratio is a liquidity ratio. Liquidity focuses on the creditworthiness or willingness of a borrower to repay the loan borrowed. A common liquidity metric is the current ratio. The current ratio measures a company's ability to repay short-term obligations or debts. We get this calculation by taking current assets and dividing them by current liabilities. For example, PepsiCo's current ratio is equivalent to current assets in 2005 (10,454) divided by current liabilities in 2005 (9,406) which equals 1.11:1. Their current ratio in 2004 was 1:28:1. (Current assets for 2004/current liabilities for 2004; 8639/6752). Coca Cola's current ratio for 2005 was taken by calculating its current assets for 2005 (10,250) and divided by its current liabilities for 2005 (99836), which equated to a ratio of 1.04:1. In 2004, Coca' Cola's current ratio was equal to 2004 current assets of 12,281 divided by 2004 current liabilities of 11,133, for a total of 1.10:1. This means that for every dollar of current liabilities, Coca Cola has $1.04 worth of... paper halves... and soft drinks. They have ventured into the non-carbonated beverage market such as iced tea and juices, but now they have to move into the food market. My final recommendation for Coca cola is to stick with their product. One of Coca Cola's biggest failures occurred when it introduced its "new Coke" in the 1990s. (Wikipedia, 2010) This new formula did not please consumers and they were forced to quickly stop production of the new Coca-Cola. In conclusion, I think both companies are stable and strong. Obviously both companies are capable of competing globally, which in itself says a lot. Each company has its strengths and small weaknesses, but their overall financial success has been proven. Their ability to remain the only two competitors in the carbonated beverage industry is a strong indicator of their future potential.