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BusIness Report A

nalysis
I
N
• Coca-Cola is the world largest soft- D
drink company in the world U
S
• The firm makes or licenses more than T
3,000 drinks under 500 brand names R
in some 200 nations Y
O
V
E
R
V
I
E
W
I
N

Othe
D
U

r
S

9%
Pepsi T
Dr R
.Pe
pp 31% Y
er
15
%
O
V
E
R
V
Coke I
44% E
W
Current CEO
Muhtar Kent

CEO &
• Mr Kent Joined the company in 1978

• He left in 1999 and become the president and CEO of


the Efes Beverage Group.

• He returned back to Coca-Cola and was named CEO.

• He become the chairman of the Board of Directors on


April 23, 2009
• The Big 4 Auditors
• World largest
professional services
A
firms
U
D
“In our opinion, the financial statements
referred to above present fairly in all
I
material respects, the consolidated financial
position of The Coca-Cola Company and T
Fair and
subsidiaries at December 31, 2009 and

Effective
2008. The Coca-Cola Company and
subsidiaries maintained, in all material
O
respects, effective internal control over
financial reporting as of December 31, R
2009, based on the COSO criteria. “ (10-k)
Report
Operations
• Net operating revenue decreased
• Selling, general and administrative expenses decreased
• Equity Income increased
• A decrease in expenses and in increase in equity income mostly
accounted for an increase in Net Income attributable to the
stockholders
Gross Margin Percentage
=

Operations
(Revenue – Cost of Goods Sold)/Revenue

2009 – 64.2%
2008 – 64.4%
2007 – 63.9%
Industry – 59%

ALL DATA IS BASED ON 2009 10K Report


UNLESS OTHERWISE STATED
<Inventory Management>

Operations
 Coke uses Average Cost and FIFO Method
 Inventory is valued at lower cost or market value

Inventory Turnover Ratio


=
Cost of Goods Sold/Average Inventory

• Coke (2009): $11,088,000,000/ $ 2,354,000,000


= 4.71
• Coke (2008): $11,374,000,000/ $ 2,187,000,000
= 5.20
• Industry Average : 6.4 (2010 Q1)
<Receivables
Management>

Operations
Receivables Turnover Ratio
=
Net Credit Sales/Average Net Receivables

• Coke – 9.2 (2010 Q1)


• Industry – 10.2 (2010 Q1)

Allowance for doubtful accounts for 2009 : $55 million

• Coke believes they are not exposed to credit risk because they are
geographically diverse. They aren’t afraid of not collecting bad
debt because their operations are spread out globally and not
specific to one area.
Corporation’s Investing
Performance
(in millions)

• Decrease in acquisition and investments on


trademarks
• Increase in purchase of investments
• Increase in purchase of property, plant and
• Increase in Cash
• Increase in Inventories
• Depreciation expense total approximately $1,005 million in
2009, $993 million in 2008 and $958 million in 2007.
• Amortization expense total approximately $18 million in
2009, $19 million in 2008 and $21 million in 2007
• Coca Cola’s acquisition and
investment=$300 million in 2009
• Coca Cola has intention to acquire
the rest of Fresh Trading Ltd.
Between 2010 to 2014
• Coca Cola plans to build new
factories in foreign countries
Corporation’s Financial
Performance
Assessment of Coca-Cola’
Financial Performance
 Financing Assets:
– Issued 24799 million shares of common stocks to raise
$6199.75 million ($0.25 par value)
– $ 41,537,000 in retained earnings
 Debt & Equity Financing:
– Total current liability is $13721 million
– Coca-Cola owns 21.9 million of its own common stocks. They
announced a plan(2006 plan) , that company can purchase up to 300
million shares of company’s common stock
 Leverage Ratio:
Total Liabilities
Debt-Total Assets Ratio =
Total Assets
– Coca Cola: 48%
– Industry Median: 74%

 Solvency Ratio:

Cash + Short-term + Net Current


investments receivables
Acid-Test Ratio =
Total Current Liabilities
– Quick Ratio (Acid Test): 0.9
– Industry Median: 0.9
Current Assets
Current
 Liquidity Ratio: Ratio = Current Liabilities

–Coca-cola current ratio is 1.28


–Industry’s current ratio average is 1.30

 Interest & Dividends:


–In fiscal year 2009 coca-cola earned $249million of interest income
compare to $333million in 2008, there is a 25% of change.
–Historically, coca-cola pays dividend to stockholders. In 2009, coca-cola
pay cash dividend of $1.64 million.
–Dividend Payouts Chart
Recommendati
on
Return on Equity is the amount of net
income returned as a percentage of
shareholders equity. It equals
Net Income
Shareholder's Equity
Coca-Cola’s Return on Equity =
176.57%
Compared to Pepsico Inc = 41.13%
A dividend yield shows how much a
company pays out in dividends each
year relative to its share price, and
equals

Annual Dividends Per Share


Price Per Share

Coca-Cola’s Dividend Yield = 3.26


Compared to Industry Dividend
Yield = 2.62
Dividend Payout Ratio shows how well
earnings support the dividend
payments, and equals
Dividends
Net Income
Coca-Cola’s Dividend Payout Ratio =
54.40
Compared to Industry = 12.32
www.reuters.com
A presentation
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Oygul
Ringo
KC
Kaina
Mike
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