Coca-Cola Financial Analysis

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A financial analysis for Coca-Cola:

company profile, financial statement, liquidity ratio, current ratio, cash ratio, quick ratio, profitability, efficiency, short term activity, long term activity, solvency, DuPont analysis and historical enterprise value (HEV).

Done By Elie Obeid and Isabelle Khalil

Published in: Economy & Finance, Business
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Coca-Cola Financial Analysis

  1. 1. Elie Obeid & Isabelle Khalil
  2. 2. • • • • • • Name: Coca-Cola Co. Ticker: KO Exchange: New York Stock Exchange (NYSE) Number of shares of common stock outstanding: 4,415,922,733 Industry: Consumer Goods Country:`United States
  3. 3. 12 months ended Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Net operating revenues 48,017 46,542 35,119 30,990 31,944 Cost of goods sold -19,053 -18,216 -12,693 -11,088 -11,374 Gross profit 28,964 28,326 22,426 19,902 20,570 Selling, general and administrative expenses -17,738 -17,440 -13,158 -11,358 -11,774 Other operating charges -447 -732 -819 -313 -350 Operating income 10,779 10,154 8,449 8,231 8,446 Interest income 471 483 317 249 333 Interest expense -397 -417 -733 -355 -438 Equity income (loss), net 819 690 1,025 781 -874 Other income (loss), net 137 529 5,185 40 39 Income before income taxes 11,809 11,439 14,243 8,946 7,506 Income taxes -2,723 -2,805 -2,384 -2,040 -1,632 Consolidated net income 9,086 8,634 11,859 6,906 5,874 Net income attributable to noncontrolling interests -67 -62 -50 -82 -67 Net income attributable to shareowners of The Coca-Cola Company 9,019 8,572 11,809 6,824 5,807 Source: Coca-Cola Co., Annual Reports
  4. 4. Coca-Cola Co., liquidity ratios Current ratio Quick ratio Cash ratio Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 1.09 1.05 1.17 1.28 0.94 0.77 0.78 0.85 0.95 0.62 0.59 0.58 0.61 0.67 0.38
  5. 5. Coca-Cola Co., profitability ratios Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Return on Sales Gross profit margin Operating profit margin Net profit margin 60.32% 22.45% 18.78% 60.86% 21.82% 18.42% 63.86% 24.06% 33.63% 64.22% 26.56% 22.02% 64.39% 26.44% 18.18% 27.51% 10.47% 27.10% 10.72% 38.09% 16.19% 27.52% 14.02% 28.37% 14.33% Return on Investment Return on equity (ROE) Return on assets (ROA) Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center
  6. 6. Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
  7. 7. Coca-Cola Co., short-term (operating) activity ratios Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Turnover Ratios Inventory turnover Receivables turnover Payables turnover Working capital turnover 14.71 10.09 24.39 19.15 15.05 9.46 21.43 38.34 13.25 7.93 18.61 11.44 13.16 8.25 21.98 8.09 14.61 10.34 23.32 – 25 36 61 15 46 24 39 63 17 46 28 46 74 20 54 28 44 72 17 55 25 35 60 16 44 Average No. of Days Average inventory processing period Add: Average receivable collection period Operating cycle Less: Average payables payment period Cash conversion cycle Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center
  8. 8. Average inventory processing period Add: Average receivable collection period Operating cycle Less: Average payables payment period Cash conversion cycle Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center 25 36 61 15 46 24 39 63 17 46 28 46 74 20 54 28 44 72 17 55 25 35 60 16 44
  9. 9. Coca-Cola Co., debt and solvency ratios Debt to equity Debt to capital Interest coverage Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 0.99 0.90 0.76 0.48 0.45 0.50 0.47 0.43 0.32 0.31 30.75 28.43 20.43 26.20 18.14
  10. 10. Coca-Cola Co., two-component disaggregation of ROE Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 ROE = 27.51% 27.10% 38.09% 27.52% 28.37% ROA × 10.47% 10.72% 16.19% 14.02% 14.33% Source: Based on data from Coca-Cola Co. Annual Reports Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center Leverage 2.63 2.53 2.35 1.96 1.98
  11. 11. The primary reason for the increase in Return on Equity (ROE) over 2012 year is the increase in Financial Leverage.
  12. 12. Coca-Cola Co., EV calculation No. shares of common stock outstanding Share price (USD $) Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 4,456,717,996 4,526,408,442 4,588,633,662 4,610,247,876 4,629,316,324 38.45 34.59 31.96 26.36 20.54 USD $ in millions Common equity (market value) Add: Equity attributable to noncontrolling interests (per books) Total equity Add: Loans and notes payable (per books) 171,361 156,568 146,653 121,526 95,086 378 171,739 16,297 286 156,854 12,871 314 146,967 8,100 547 122,073 6,749 390 95,476 6,066 Add: Current maturities of long-term debt (per books) Add: Long-term debt (per books) Total equity and debt Less: Cash and cash equivalents Less: Short-term investments Less: Marketable securities Enterprise value (EV) 1,577 14,736 204,349 8,442 5,017 3,092 187,798 2,041 13,656 185,422 12,803 1,088 144 171,387 1,276 14,041 170,384 8,517 2,682 138 159,047 51 5,059 133,932 7,021 2,130 62 124,719 465 2,781 104,788 4,701 – 278 99,809 Stock Analysis on Net (www.stock-analysis-on.net) Copyright © 2014 EBIT Financial Analyses Center
  13. 13. Coca-Cola Co.'s enterprise value increased from 2010 to 2011 and from 2011 to 2012, therefore it is safe to invest in this company.

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