The Coca Cola Company Financial Statement Analysis

Company Profile
The Coca Cola Company
One Coca Cola Plaza  Atlanta, GA 30313

Website: www.thecoca-colacompany.com
Exchange/symbol: NYSE / KO
Total shares outstanding: 99.87 billion
            The purpose of this report is to analyze and the financial position and discuss the strengths and weaknesses of the financial operations of The Coca Cola Company,  one of the largest manufacturers, distributors, and marketers of non alcoholic soft drinks, concentrates and syrups.  The primary activity is selling concentrates and syrups to bottling partners who convert these to finished, canned and/or bottled, soft drink products for retail and wholesale distribution. 
The company owns more than 450 brands including Sprite, Fanta, and Dasani, has 30 manufacturing facilities,  and maintains majority ownership in 136 partner facilities that operate in more than 200 countries.
Financial Overview 2008
Sales                                                    $31.9 billion
Income                                                $ 5.8 billion
Market capitalization                          $99.87 billion
Earnings per share (EPS)                    $ 2.49
Revenue per share                               $13.67
Book value per share                           $ 8.58
Key Financial Ratios
Coca Cola Company
Industry Average 1
Liquidity/Solvency
Quick ratio
0.60
0.80
Current ratio
0.94
1.00
Current liabilities/net worth
0.63
0.41
Current liabilities/inventory
5.94
4.85
Total liabilities/net worth
0.98
0.81
Fixed assets/net worth
0.41
0.44
Efficiency/Asset Management
Collection period
35.31
32.1
Sales/inventory
14.61
21.0
Assets/sales
1.27
6.97
Sales/net working capital
-39.34
12.6
Accounts payable/sales
0.19
0.08
Accounts receivable/sales
0.10
0.109
Financial Leverage
Total debt/total assets
0.49
0.60
Total debt/total equity
0.98
EBIT/interest (times interest)
15.98
Profitability
Gross profit margin(gross profit/sales)
0.64
0.594
Net profit margin (net income/sales)
0.18
0.14
Return on sales
0.18
Return on assets (ROI)
0.14
0.108
Return on net worth (ROE)
0.28
0.166
Marketability/Price
Price/earnings (P/E)
17.2
16.5
Price/book value
4.82
4.11
Price/sales
3.09
2.59
Price/cash flow
14.00
12.40
1 Industry averages taken from MSN Money and Dun & Bradstreet
Analysis of Financial Ratios
            Based on the current ratio Coca Cola must convert each dollar of current assets into at least $1.06 in cash in order to meet its obligations.  The current sales level provides $2.63 for each dollar of assets in service.  The current ratio, excluding inventory, is in line with the industry average.  Current liabilities in relation to inventory and net worth comprise a higher proportion compared to industry averages.  The average collection period and receivables-to-sales are in line with industry averages.  However, most of Coca Cola’s efficiency ratios are cause for concern.  The level of accounts payables to sales is more than twice the industry average.  The company’s current liabilities exceed the current assets by  $81.2 billion.  Sales to net working capital is negative and raises issues about the company’s working capital management policies and represents the company’s primary weakness.  Debt represents the largest factor affecting shareholder equity.  The company’s profitability ratios all exceed industry averages which is it’s primary strength.
Recommendations
            It is important to note the structure of the company’s asset base.  Equity investments in bottling enterprises represent 14.3% of total assets.  Intangible assets including trademarks and goodwill represent more than 35% of total assets.  There is no need to change these factors because these investments with manufacturing and marketing partners combined with patents, trademarks, and name recognition account for the better than average profitability ratios.
            Coca Cola would benefit from a reduction in short term debt.  Accounts payable and accrued expenses.  Accounts payable and accrued expenses represent 47.7% of current liabilities.  The current level of accounts payable and accrued expenses exceeds the current level of total equity investments, combined cash and marketable securities, and combined accounts receivable and inventories, taken individually.  The company should reduce the level of accounts payable and accrued expenses to a level where the company’s equity investments exceed them.
Conclusion
            Coca Cola’s current assets are effectively being converted into sales revenues.  Liquidity is in line with industry averages.  Solvency is within a reasonable range with industry averages but better management of working capital, specifically current liabilities is indicated.  The company’s net working capital position is negative and must be brought to positive levels.  Coca Cola is highly leveraged, however the company continues to be profitable.  As opposed to attempting to further increase the company’s asset base, which would likely involve employment of additional debt, Coca Cola should reduce the level of accounts payable and accrued expenses and the level  of loans and notes payable to a levels that can be covered by the existing levels of cash, accounts receivables, inventories, and equity investments. Read also Johnson and Johnson financial analysis
References
Beverages Industry Profile: Global. (2009, March). Beverages Industry Profile: Global, Retrieved March 23, 2009, from Business Source Premier database.
The Coca Cola Company. 2008 Annual Report on Form 10-k.  Retrieved March 23, 2009 from http://ir.thecoca-colacompany.com/phoenix.zhtml?c=94566&p=irol-financials
The Coca Cola Company. Item 8: Financial Statements and Supplementary Data. Retrieved March 23, 2009 from http://www.thecoca-colacompany.com/investors/pdfs/10-K_2008/Coca-Cola_10-K_Item_08.pdf
Dun & Bradstreet. SIC:2086, Bottled and Canned Soft Drink, All Asset Ranges.  Retrieved March23, 2009 from Key Business Ratios database.
MSN Money. Coca-Cola Co: Key Ratios.  Retrieved March 23, 2009
                           from http://moneycentral.msn.com/companyreport?Symbol=KO
 

Don't use plagiarized sources. Get Your Custom Essay on
The Coca Cola Company Financial Statement Analysis
Just from $13/Page
Order Essay
My Essay Gram
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Live Chat+1(405) 367-3611Email