The document provides a comprehensive corporate valuation overview of The Coca-Cola Company, including SWOT analysis and Porter's Five Forces framework. It highlights the company's strengths, weaknesses, opportunities, and threats alongside financial metrics such as ratio analysis and WACC. The conclusion recommends buying Coca-Cola stock at the current market value, considering its stability and potential as a long-term investment amid industry risks.

1. The Coca-Cola Company Corporate Valuation

2. Overview
 The Coca-Cola Company
 SWOT & Porter’s 5 Forces
 DuPont Analysis
 Ratio Analysis
 Analysis of Firm Risk
 WACC
 Gordon Dividend Model
 Recommendations

3. The Coca-Cola Company
From 1886 to 2011

4. CSD Market Share - 2010

5. SWOT Analysis: Strengths
 Strong brand identity
 Highest Market Share in CSD
 Large distribution network
 Various product lines
 Globalization

6. SWOT Analysis: Weaknesses
 Brand failures
 Product recalls
 Destocking of products

7. SWOT Analysis: Opportunities
 Potential growth outside US
 Increased bottled water
consumption
 Acquisition of CCE
 New product penetration
 NARTD market growth
(Non-alcoholic ready-to-drink)

8. SWOT Analysis: Threats
Porter’s Five Forces

9. Porter’s 5 Forces: New Entrants
 Brand Loyalty
 Advertising Ability
 Access to Distribution Channels
 Supplier Availability

10. Porter’s 5 Forces: Substitute
Products
 Pepsi
 Gatorade
 Budweiser
 Coffee/ Tea Brands

11. Porter’s 5 Forces:
Bargaining Power of Buyers
 Fast Food Chains
 Vending Machines
 Convenience Stores
 Super Markets

12. Porter’s 5 Forces: Bargaining
Power of Suppliers
 Low Cost of Raw Materials
 High Volumes of Raw Materials
 Low Switching Costs

13. Porter’s 5 Forces: Competitor
Rivalry
 Advertising/ Marketing Strategies
 Differentiated Products
 Consumer Control
 Expansion Opportunities

14. Ratio Analysis - DuPont
 Helps to determine the financial strength of
a company
 Examines trends and causes of ROE
 ROE is calculated as:
Net Profit Margin (NPM) × Asset Turnover Ratio
(AT) × Equity Multiplier Ratio (EM)

15. Ratio Analysis - DuPont

16. Ratio Analysis - DuPont
 The components of ROE:
 Net Profit Margin – operating efficiency
 Net Income ÷ Sales
 Asset Turnover – asset use efficiency
 Sales ÷ Total Assets
 Equity Multiplier – financial leverage
 Total Assets ÷Total Equity

17. Ratio Analysis - DuPont

18. Ratio Analysis - DuPont

19. Ratio Analysis - DuPont

20. Total Debt Ratio & D/E Ratio

21. Net Working Capital &
Current Ratio

22. Analysis of Firm Risk
 Calculation of Altman Z-Score
Z > 2.99= Strong
 2.99 > Z > 1.81= “Grey Zone”
 Z < 1.81= Weak
Z = 1.2( WC÷TA) + 1.4(RE÷TA) + 3.3(EBIT÷TA) + 0.6(MVE÷TL) + 0.999(Sales÷TA)
4.07 1.2(3,071,000÷ 1.4(49,278,000÷ 3.3(8,449,000÷ 0.6(153,043,480÷ 0.999(35,119,000÷
72,921,000) + 72,921,000) + 72,921,000) + 41,604,000) + 72,921,000)

23. Analysis of Firm Risk


24. WACC (Weighted Average Cost of Capital)


25. WACC Variables


26. WACC Calculation


27. Gordon Dividend Model
Stock Price (Constant required rate of return)
Lower than expected growth (5.4%) = 0 = 1.88 1 + 0.054 / 0.0899 − 0.054 = $55.20
Lower than expected growth (6.0%) = 0 = 1.88 1 + 0.060 / 0.0899 − 0.060 = $66.64
Expected growth (6.4%) = 0 = 1.88 1 + 0.064 / 0.0899 − 0.064 = $77.23
Higher than expected growth (7.4%) = 0 = 1.88 1 + 0.074 / 0.0899 − 0.074 = $126.99
Stock Price (Constant growth rate at 6.4%)
Lower cost of capital (7.99%) = 0 = 1.88 1 + 0.064 / 0.0799 − 0.064 = $125.81
Expected cost of capital (8.99%) = 0 = 1.88 1 + 0.064 / 0.0899 − 0.064 = $77.23
Higher cost of capital (9.40%) = 0 = 1.88 1 + 0.064 / 0.0940 − 0.064 = $66.68
Higher cost of capital (9.99%) = 0 = 1.88 1 + 0.064 / 0.0999 − 0.064 = $55.72

28. Conclusion/ Recommendations
 Risks: Emerging Competition, Changing
Consumer Preferences, Exchange Rate
Fluctuations
 Buy Coca-Cola Stock at Current Market
Value ($66.31)
 Hold Coca-Cola Stock if GR lower than 6%
or Expected Cost of Capital is above 9.45%
 Coca-Cola is fairly stable and would be an
excellent Long-Term Investment

29. Questions?
The Coca-Cola Company Corporate Valuation