Analysis Of The Financial Statements Of Coca Cola Finance Essay

The house and the outside suppliers of the capital that is the investors and the creditors will all take the fiscal statements into considerations.The Investor in the companys will be interested in the present and future expected earning of the company. As a consequence the investoes will be interested in the profitableness of the company normally this will be their focal point of their analysis. They are besides concerned with the steadfast ability of the house to pay dividends

Internal direction will besides use fiscal analysis for the undermentioned grounds:

Better intent of internal control

Management demand to set about fiscal analysis in order to be after and command efficaciously

The fiscal director is peculiarly concerned with the return on investing provided by assorted assets of the company.

Fiscal statements

Fiscal analysis is the art of transforming informations from fiscal statement into information that is utile for determination devising.

Balance sheet: A sum-up of a steadfast fiscal place on a given information that shows entire assets =total liabilities + proprietor ‘s equity

INCOME STATEMENT: – A sum-up of a houses grosss and disbursals over a specified period stoping net income or loss for a period.

Cash flow statements: – Is a fiscal Statements that shows how alterations in the balance sheet histories and income affects hard currency and hard currency equivalents and interrupt the analysis down to runing puting and finance activities.



Balance sheet

Cash Flow Statement



The coca Cola company is the universe ‘s largest green goodss of non alcoholic drinks dressed ores and syrups.This company is based in atalnta, gerogia which makes concentrated signifier of drinks and sells them to the retail merchants. The company has its operation in more that 200 states and sells about up to 100 different trade names.Coca Cola is now one of the universe ‘s largest co-operation with a planetary workforcw of 90000. Over the old ages the trade name equity of Coca Cola trade grade, the green goodss trade names, has established the company a outstanding figure in the non alcoholic industry and allowed comapnay to keep high gross and net incomes.

The Coca-Cola Company ‘s major offerings include such as coca -cola, fairy, Fanta, coke zero etc.


Liquidity ( Appendix A )

Current Ratio: The current ration from the old ages 2007 to 2009 ( Appendix A ) has been increasing but when compared to the standard ration 2:1 these ratios are much lower which shows short term liquidness effencicy and inefficient usage of resources.Some disciplinary steps should be taken by the direction to keep the resources.

Acid trial ratio: This show the ability of the house to pay its current duty more rapidly without sing the stock list and per-paid disbursals. From the ratios ( Appendix A ) the house has no problem in run intoing its current duty ; there is an slope in the ratio and the company has the ability to run into the current duty.

working capital: The working capital of the company ( Appendix A ) when seen from 2007 to 2008 the net working capital was negative and the state of affairs was alarming.The ablity of the house to run into its current disbursals for twenty-four hours to twenty-four hours operation shows a restraint. But in 009 the working capital shows a positive impact.

Receivables Employee turnover: In Coca cola the figure of times receivables are converted into hard currency has showed uninterrupted varation from 2007 to 2009. In 2007 the histories receivables turnover showed incline but once more in 2008 due to the fiscal crisis it has showed a diminution. So betterment has been made in 2009 in aggregation of histories receivables. So overall state of affairs is rather satisfactory.

Average COLLECTION Time period: In coca cola the figure of yearss requires to roll up receivables have increased over the clip ; it shows the uneffective direction of the recognition section. So this ratio shows the negetive tendency as efficiency has non improved

Dayss gross revenues in stock list: In coca cola the figure of yearss requires to roll up receivables have increased over the clip ; it shows the uneffective direction of the recognition section. So this ratio shows the negetive tendency as efficiency has non improved.

Inventory turnover: In coca Cola hard currency were increased in 2007 and 2009. This was indicant of negative tendency. However betterment has been made in 2008.

Leverage ( Appendix A )

Leverage ratios measure the grade of protection of providers of long term financess. The

degree of purchase depends on a batch of factors such as handiness of collateral, strength of

operating hard currency flow and revenue enhancement interventions. Therefore, investors should be careful about

comparing fiscal purchase between companies from different industries.

In Coco cola The sum of financess provided by creditors in relation to entire assets has been the same from 2007 to 2009. Debt- to – entire -asset ratio it is obvious that sum of financess provided by creditors to buy entire assets are continuously staying the same. As in last 3 old ages the more than 25 % of the entire assts are being financed by creditors, so the current state of affairs is rather dismaying. Operating hard currency flow that show a great per centum addition which the providers and the investors should see.

Profitability ( Appendix A )

It is this ratio analysis which would give an penetration into the prfotability of the house, as it would assist the investors analysi the combined consequence of the liquidness of the house, its dividend output Earning pershare, gross growing and the are all of import for the endurance of the house. This would state how the company has been using its resources in bring forthing net incomes and stockholders value.

GROSS PROFIT Margin: In coca cola the gross net income border of the organisation has showed a uninterrupted increased from 2007 to 2009. But the above clip serious analysis clearly inexplicit, that the ability of the organisation to bring forth net income is bettering. The direction has taken sensible every bit good as enormous attempts to better profitableness.

Net Net income Margin: In coca Cola although there was little diminution in 2007 from 2008 due to the fiscal crisis cyberspace net income border, but in 2009 serious analysis clearly inexplicit, that the ability of the organisation to bring forth net income is bettering. This showed that the direction is pull offing it selling and admin disbursals expeditiously and efficaciously with increasing gross revenues net income to add more to net net incomes. Net income coevals capableness is demoing positive tendency over the old ages.

Operating Income border: In coca Cola operating net income was increased in 2009 from 2008. It was decreased in 2008 as compared to old twelvemonth. However in 2009 a considerable increased has occurred. Operating net income has increased well. So the overall state of affairs is rather satisfactory.

Tax return on Equity: The Return on Equity was maximum in 2008 but decreased in 2009 and went down more in 2007. This once more may hold happened due to the issue of more long-run debt recession.

Tax return on investing: The overall tendency is positive over the timeperiod. The return on investing has increased well from 2007 to 2009, which indicates that financess are being utilised efficaciously to bring forth gross.

Investor ANALYSIS ( Appendix A )

DEGREE OF FINANCIAL LEVERAGE: The grade of fiscal purchase is fluctuating over the clip period. It was improved in twelvemonth 2009 and 2007 but, in 2008 one time once more it indicate a negative tendency. The loan is non being utilized expeditiously to do more net incomes available toshareholders. So the above tendency needs disciplinary action.

Gaining Per Share: Earning per portion has been increased continuously. It is obvious, that gaining capacity of the organisation is bettering continuously with the clip. Gaining made on each portion of the shareholders equity is increasing. This showed that the stockholders fund is being used expeditiously and efficaciously to maximise the stockholders wealth.

Price / Earning Ratio: Price/earning ratio has been diminishing continuously over the three old ages. It has decreased well in 2008. It reflects a really bad indicant on the monetary value of the portion. It is rather dismaying for the marker monetary value of the stock. Corrective action should be taken instantly.

Dividend Output: Dividend output which shows dividend per portion in relation to market monetary value per portion. It was diminishing from 2008 to 2009. Dividend output showed betterment in 2008 as compared to old 3 old ages. So the above analysis shows that some betterment has been made.

Book Value per Share: It relates the shareholder ‘s equity to the figure of portions outstanding, giving the portions a natural value. Comparing the market value to the book value can bespeak whether or non the stock in overvalued or undervalued.

Critical Analysis: ( Appendix A )

The fizz is back in Coca-Cola ‘s stock.

As we can see in the envaluation the company is bring forthing a immense sum of hard currency flow of 44.70 billion and about $ 2.93 per share.It has made a net prfit border of 20.55 % in 2009 and a return on equity of approximately 26.92 % . Any one would state that this is a fabulous company.

The company last twelvemonth saw net income and gross revenues rise following a strong public presentation in the development markets.

Coca-Cola remains financially amazing and its drinks will be sold even if the economic system cools off.

The company has moved into the an emerging consumer market such as China, as now China is taking is firt sip of Coca cola.If the history is any usher, the people of that state will acquire hookied to Coca Cola nicotinamide adenine dinucleotide will go their loyal clients.

Coca Cola has a strong Earning per portion and this would go on turning for the following 2 to 5 old ages. The stock would hit $ 62 within this twelvemonth.

Coca-Cola portions were merchandising at a price-earnings ratio of 19.45

Coca-Cola ‘s stock has gained about 20 % more than the Standard & A ; Poor ‘s 500 Index ( $ INX ) over the past five old ages

Net incomes growing in the past twelvemonth has moved up reasonably compared to net incomes growing in the past old ages. Positive. Coca-Cola ‘s stock really looks like a good investing now that it is get downing to profit from a renewed focal point on sharply revising its merchandise mix.

The coca Cola stock where fluctuating from $ 45-69, the monetary value of Coca Cola stock now is $ 53.61which is really down.

The company is now willing to take hazards on new trade names to capture the strength of hip soft-drink tendencies such as energy drinks and flavored Waterss.

From now on I can see that Coca-Cola is deriving market portion through out the Earth. It ‘s safe for investors to presume that the growing in the most recent old ages is non a sham, but the beginning of a tendency the portions will turn steadily higher.

As of now I guess that the company has a bead in concern in Europe and Latin America Developing markets such as China, Africa and India posted double-digit growing in unit volume – led in portion by carbonated drinks such as Coke and Sprite.

The analysi of coca Cola would non be complete without taking intpo the consideration the trade name recogination because it is one of the billion companies in the universe that people recognize. Its difficult to state the worth of coke trade name but you can be certain that it ‘s an indispensable ingredient lending to the company ‘s on-going success


Pepsico is the compitetos for coca Cola in the non alcoholic beverge industry. It has 31 % of the entire maket shar as when comapered to coke which has 42.8 % .

U.S. non-alcoholic drink market portion, by volume

PEP has many trade names some really good known Mountain Dew Aquafina Tropicana and Lipton Both the companies are working hard to catch a larger portion in the market and for the rubric of the best sodium carbonate manufacturer in the universe, both the companies have a similar gustatory sensation in the investing portfolio.both the companies portion equal powerful trade name names and planetary franchises, but when it comes to gain, gross EPS dididend output and othe footings realeted to investing in their stock both different in different ways.

But during the period of recession both the companies had jobs doing the stock monetary values and the gross incomes, the direction of pepsico was far better as we get to see in the critical analysi of the assignment, Pepsico has a larger gross, due to diversifation of its merchandise lines.


In the receivables country, PepsiCo is in front of coca Cola. Coca-cola is better off with the twenty-four hours ‘s gross revenues in receivables, but well behind either per twelvemonth and history receivable turnover, yearss.

In the stock list country, Coco Cola appears to be in front of PepsiCo. They do hold some what different Inventory methods, which could account for the difference.

Coca-Cola has a somewhat higher operating rhythm, Which favors PepsiCo

Working capital can non be compared.PepsiCo is materially better that Coca Cola

PepsiCo current ratio is materially higher than Coca Cola ‘s. This is needfully bood because the Coca-cola current ratio is really good and PepsiCo perchance has to many stock list.

Coca Cola and PepsiCo acid trial ratio are both rather the same, which is good.

Coca-Cola hard currency on manus is much better than PepsiCo.


PepsiCo did better in debt ratio, debt/equity ratio, and touchable net worth, Cocacola has good ration in these countries.

Coca Cola has a materially better runing hard currency flow/total debt.PepsiCo debt index appears to be materially better than Coca Cola. The Coca-Cola indexs are good.


Coca-Cola has a figure of profitableness indexs that are materially better than PepsiCo. Included here are net net income border, return on investing, return on equity.

PepsiCo has a figure of profitableness indexs that are better than coca cola.In general, PepsiCo ‘s profitableness appears to be materially better than coca Cola.

Investors Analysis

Neither company has a high grade of fiscal purchase, but Coca-Cola is lower.

price/earning ratio is somewhat higher for coca Cola.

Take a note liquidness is better for PepsiCo, long tern debt paying ability was materially better for PepsiCo and the profitableness was materially better for PepsiCo.

The Investors Analysis appears to be better for PepsiCo that that of Coca-Cola.Considering the liquidness, long-run debt paying ability and the profitableness we would anticipate PepsiCo price/earning ratio to be higher than Coca-Cola.

Geting proficient ( Appendix B )

The stock to see them how they have been performed I took a expression at the chart of 4 old ages monetary value of the stock, in the chart for the coca Cola portion we see that Coke has done unusually really good in 2007 but in December 2008 we see that the stock proce has come dwn. even because of this, the stock boasts a entire return, including dividends, of approximately 23 % for the past twelvemonth. But PepsiCo has held its land better

In footings of basicss, Pepsi seems to hold the little advantage. While Coca-Cola does hold the higher figures, Pepsi has the better borders in footings of operating borders, gross, and net income which is more of import for turning companies.

During the 2009 Pepsi had a better EPS in their statements. The past twelvemonth Coca-Cola has merely remain in a five dollar scope, demoing small fluctuation forms for speculators or investors. While this seems to be bad in coca Cola, the value seems to hold increased to its upper limit, but we can besides see a bead in the monetary values of shre of Coca Cola when compared to 2007 and 2009.While pepsico has seen continued growing throughout its term of office in a nice steady growing form. The company is in its prime of its careerand this should be able to transport the stock to high Numberss for at least a decade.By investment now in Pepsi, the investos have an chance to see pepsi rise to near 80-100 points by 2010.and possibility of more by 2015. Such as a procedure is besides favourable with its dividend final payment which allows for reinvestments to increase additions.

Similarly, I give PepsiCo an border on the merchandise side. Both companies have done really good voyaging a drink market that is ever germinating. PepsiCo owns the Gatorade trade name, which is popular with the athletic set ; Coca-Cola purchased the voguish Vitamin Water line in 2007.

Depending on the market state of affairs in tha klast two old ages coke stock trades at 10.8 times the analyst gaining while pepsico 11.3 times, which indicates that pepsico is making better.

My outlook is that coke net incomes would turn to 9 per centum over the following five old ages, but pepsico would turn at 11 per centum, which is behind the forcast. To me, that ‘s an border for PepsiCo, because the company has more room for abroad growing.

This kind of competition supports both companies innovative, aggressive and eager to delight consumers and stockholders.

Pepsi has the border over Coke in monetary value public presentation, with a entire return, including dividends,

Looking at longer-term forms, PepsiCo has a decided border. Over 10 old ages, PepsiCo has an even bigger advantage.


2008 fiscal crisis: Coca-Cola

Coca Cola is selling its merchandises all over the universe and it would be a safe investing for the people if they are purchasing the portions people as I realize that due to the economice crisis investors think twice before they really buy the stock, the monetary values of the shaers are increasing and this indicates that the growing will be more as the yearss base on balls by.

2009 consequences. Despite the economic downswing, the company increased its gross revenues by 2 per centum in the United States and by 3 per centum worldwide.

In India, Coca-Cola ‘s concern grew by 31 per centum between January and March 2009. In 2008, gross revenues gross increased by 7 per centum in Brazil

In the 2008 due to this crisi net income fell 3 per centum to $ 5.81 billion, or $ 2.49 per portion, from $ 5.98 billion, or $ 2.57 per portion, in 2007.

Commodity Cost Fluctuations Affect Margins: . The varaiation in the monetary values of the natural stuffs would straight and indirectly affect the production coas which in bend would impact the profitableness of Coca Cola. Here Coca Cola itself would be straight buying the natural stuffs which are used to do the concertes nad syrups.varation in the monetary values of these would impact the cost of production of as wellas the net income borders

Here besides the alteration in the production cost os the bottler ‘s can besides impact the coca Cola profitableness in and indirect manner though. If the natural stuff becomes more that is necessary for bottling so, the bottler ‘s would be forced to increase the monetary values to counterbalance. Such a nature would ache the profitabitity of the company, in such an competitory nature of the non alcoholic drink company.and would be possible inducement for the consumer ‘s to exchange over to other companie ‘s drinks. The monetary values of these trade goods rose in 2007 and dramatically pressured borders. important rise in Commodities represents a changeless menace to net incomes.

Dollar Affects International Performance: The another factor for the lessening in the net income and gross was the affect in the dollar public presentation. Although the company was based in north America more that 76 % of its grosss was derived from outside north America.Because of this the company is really sensitive to the strength in Dollar price.As the monetary values of the other currencies weaken comparative to dollar, goods that are sold outside the US are deserving back in the US, take downing earmning. Therefore, if the dollar strengthens ( as it did in the 2nd half of 2008 and 2009 ) , it has a negative consequence on Coca cola net incomes. Coca-Cola expect currency fluctuations to adversely runing income by 10-12 % .

The Global Economic Recession Threatens Overall Demand hypertext transfer protocol: // In the 2008 -2009 the planetary economic recession, the recognition crunch had a major impact on the gross revenues and grosss of the COCA COLA company every bit because the consumers where non able to afford the monetary value of coca Cola during that period, the company had besides increased the monetary values of their merchandise because of the addition in the monetary value of their trade good.

Decision and recommendations