Financial statement analysis of Coca-Cola

Résumé du document

The objective of this paper is to identify, classify and type Coca-Cola's strengths and weaknesses, which means the areas in which the company is performing well or the problem areas. Some tools have been given to us during the course of Analysis Financial Statements; we may then use the accounting tools we learnt to manipulate, to analyze the Coca-Cola's financial situation. Once these strengths and weaknesses identified, we will find some points that management of Coca-Cola may use to improve its productivity.

In this assignment, we will first demonstrate how the company is working, by describing it, the whole industry and the environment in which Coca-Cola is evolving. Then, we will evaluate the financial statement of the company, sometimes comparing them to the results of Pepsico financial statements, to indicate if Coca-Cola is financially wealthy or not, and if investors can trust the company.

Extraits

[...] EVALUATE FINANCIAL STATEMENTS 8 a. Overview 8 b. Liquidity 9 c. Solvency 15 d. Profitability 17 e. Market indicators 20 IV. CONCLUSION 22 REFERENCES 22 I. INTRODUCTION a. Objective of the paper The objective of this paper is to identify, classify and type Coca-Cola's strengths and weaknesses, which means the areas in which the company is performing well or the problem areas. [...]

[...] We need to figure out if it is really efficient, as a deliberate choice from the company to keep their stock longer, for their production or supply chain strategy. We understand that by acting that way, Coca-Cola is more likely to foresee any inventory problem. RECEIVABLE TURNOVER RATIO The receivables turnover ratio helps to quantify the efficiency of a firm, with credits and more debts. This ratio is an activity one, in order to know how the company uses its assets, and if it is efficient. [...]

[...] We can compare these figures with some of Pepsico datas. In 2010, the average collection period for Pepsico was 365 / 10,57 = 35 days, whereas in 2009 it was 365 / 9,29= 39 days. We can therefore find out that Pepsico has to wait less time to be paid back, even if Coca-Cola improved its figures. CASH TURNOVER The cash turnover is a tool to measure how many times a year a company will meet its cash balance with its sales revenue[4]. [...]

[...] LONG TERM DEBT TO EQUITY Long term debt to equity = total liabilities / total equity 2011: 13656 / = 0,43 2010: / = 0,45 2009: / = 0,20 2008: / = 0,13 The amount of long term debt is important for a company, because it represents the money owed by the firm, which is not expected to be paid off the next year. It includes mortgages, business loans etc. For Coca-Cola, the ratio is generally increasing, which is not a good point because the company can find itself overwhelmed with interest payments or not enough working capital. [...]

[...] Income statement: The income statement is a financial statement that measures the company's financial performance over a specific accounting period. It is a summary about how the company occurs its expenses and revenues. Il also figures out the net profit for a given accounting period[1]. Balance sheet: The balance sheet is a summary of the financial condition of the company at a specific moment of time, by showing the assets, liabilities and net worth. We can therefore find the productive assets owned by a company, and also liabilities and shareholders' equity[2]. [...]