Corporate Finance: The Coca Cola Company

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Corporate Finance, The Coca Cola Company

Résumé du document

This paper is a summary of corporate missions in the Coca Cola Company and an analysis of the financial statements by the ratios for the years 2008, 2009, 2010 and 2011. There is also a quick comparison with some of Pepsi results. The objective is to make an overlook of the company and dive into it to analyze by the ratio how this company continues to improve its system. The Coca Cola Company is one of the oldest and greatest international beverage firm. The product was invented by a pharmacian, John S. Pemberton in 1886. In 1888, Asa Candler begins to acquire personal control of the Coca-Cola formula and patents from John Pemberton
and his partners. He founded The Coca-Cola company in 1892 in Atlanta, Georgia (1).

The company has grown to become quickly a national firm and a global firm. They have based their reputation based on a strong marketing policy. The annual advertising budget has passed from $11,000 in 1892 to a budget of 1 millions USD in 1911 (2). Some advertising are very famous around the world like the one with Santa, that help to create the modern interpretation of St Nick

Extraits

[...] (See under the table of current ratio over the last 4 years) The acid test ratio is more accurate that the current ratio, taking count of Cash, Marketable Securities, Accounts Receivable and Short-term Notes Receivable. If we analyze the results, we see that Coke is doing better that what we think in 2011. The ratio has always been superior to 1. That means they can finance quickly the short-term debts. www.oboolo.com Corporate Finance: The Coca Cola Company We can also analyze the Inventory Turnover Ratio, which indicate the liquidity of inventory. It is also a proof of operating efficiency that helps determine management's ability to maintain overhead costs low. [...]

[...] In 2011, they have higher profit margin and lower assets turnover www.oboolo.com Corporate Finance: The Coca Cola Company 15 As we seen before, the Cash Turnover Ratio can also be considered as a profitability measure. It indicates how profitable a company is in term of immediate cash coming from sales. It proves that the company is highly profitable because the amount of cash is increasing over the years. The Accounts Receivable Turnover is a ratio that indicates what part of sales is turn into credit or collecting in debt for customers. [...]

[...] "The New Coke." www.oboolo.com Corporate Finance: The Coca Cola Company 7 Despite all that Pepsi remains the major competitor for Coca-Cola. Often called the Cola Wars, the competition between these two companies has always been subject to an extensive press coverage. So I will compare some ratios of both companies in the last part of this analysis to determinate which company has performed well over the last 4 years. C. Economic climate and outlook Except made for the Chinese market, the world and particularly Europe and United States are currently experiencing an economic recession. [...]

[...] www.oboolo.com Corporate Finance: The Coca Cola Company 8 III. Corporate Ratios Analysis A. Overview The Coca Cola Company is one of the world's biggest corporations, selling its famous soda drink in over 200 countries. In a financial point of view the company is really stable with an increase in its dividends during the last 50 years. One of their goals is to maximize growth and profitability in order to redistribute to the shareholders They have always implemented their business model and marketing strategy: finding new products, packaging and creative advertising. [...]

[...] Maybe they change their approach by the end of 2009 and they can be considered now like a moderate or conservative company. This may also be a way to detach itself from the competition, including Pepsi and thus consolidate a leading position in the soft drink industry. B. Summary In a nutshell, we can affirm that Coca-Cola is a wealthy company. Leader in their market for more than 50 years, they adopted a business model really efficient and they keep trying to improve it. That is the major advantage of an international firm, which want to keep the lead. [...]