Together, both PepsiCo and Coca Cola are both companies known worldwide for their products. For decades now, these companies have been competing against each other to “do better” than each other, in what some would call the “cola wars.” They individually offer an assortment of non-alcoholic drinks; regular, diet, caffeine-free and many other options for the public to choose from. Both companies also have several entities (or descendants) of their own company, such as bottled water, energy drinks, and juice. Individually both PepsiCo and Coca Cola; better known as Pepsi and Coca-Cola, they produced goods for every income group. Within this essay we will take a look at the two largest competing companies in the soft drinks industry; Coca Cola and PepsiCo. Using the financial data provided from 2004 to 2005, we will be able to use financial analysis, both vertical and horizontal, to test the financial differences between the two companies. We should be able to provide appropriate suggestions and recommendations with the audit of both individual companies, income statements and balance sheets. The soft drink industry is one of the largest and most diverse industries in the world; consumption in the United States alone is estimated at 95%. Together, Pepsi and Coca-Cola have dominated the soft drink industry, staying ahead of any other competition for decades. They not only dominated the domestic market, but also dominated the global market. Pepsi and Coca-Cola have triumphed over many obstacles, so much so that they can produce and distribute products in most countries in the world. Both use a strategy called the “follow-up strategy.” When one launches a new product or service, the other is not far behind with a similar sales unit. This will help Pepsi eliminate competition with all private label companies and keep them in the forefront with Coca-Cola. Coca Cola believes in reinvesting in its infrastructure and does not operate a franchising system. In terms of numbers, Pepsi seems to have more advantages (other entities), while Coca-Cola is getting better numbers. This doesn't mean that neither company is better than the other, it shows that there is strong competition between both companies and both are trying to outdo the other. Works CitedPepsiCo.com. (2009). Retrieved: April 15, 2011 http://www.pepsico.com/index.html#/flash/pepsico_slide.swfWeygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial Accounting (6th ed.). Hoboken, NJ: Wiley.The Coca Cola Company. (2009). Retrieved on: April 15, 2011 http://www.thecoca-colacompany.com/