Running Head: FINANCIAL ANALYSIS 1 FINANCIAL ANALYSIS 7 Financial Analysis Students Name Institutional Affiliation Executive summaryThis report created from the financial statements of The Coca-Cola Company (KO) provides an analysis and evaluation of the actual and the prospective liquidity, profitability and the financial stability of the company. The methods that have been used in the analysis include trend analysis, the vertical analysis and the horizontal analysis. Also we have used certain analysis such as Quick ratio, debt ratio, and the current ratios. More calculations that have been used includes the returns on the owners equity, the earning per share, net operating working capital, total operating capital, net operating capital, net operating profit after taxes, operating cash flow and free cash flow. A result from the data reveals that, all the company ratios are above the industries averages. Comparative performance is good in the area of the liquidity, credit control and inventory management. The report finds that the tidings for the company are positive in the near future. The major areas of weakness highlighted require further investigation and immediate action by management. The recommendations that were provided include; · Improving the average accounts receivable collection period, · Raising/ increasing the inventory turnover and reduction of prepayments in order to have enough operating cash for the subsequent periods. The investigation in this report also had its shortcomings that arose and are highlighted as; The forecasted figures used are estimates that sometimes maybe arbitrate; we also cannot fully provide data on the position of other companies with the data limitation we have experienced. The monthly details would have given us more information from which we could base a proper in year trend analysis, rather than the blanket whole year analysis provided. Though we had the above mentioned strain in preparation of this report, we still great belief that the analysis provided is best suited to show the standing of the Coca-Cola Company (KO). In the financial report below, the strengths, weakness, opportunity and threats have been highlighted as we analyze the various financial sub segments. Identify your company, its industry, and analyze the important segments (percentage of sales or subsidiaries) of your company compared to its industry and its overall business The Coca-Cola Company (KO) is a multinational American Company that has its headquarters at Atlanta Georgia. The company has got its branches in more than 200 countries in the world and majority of its sales is in America, amounting to 40% of the total sales. The company operates in the non alcoholic beverage industry made up of the following companies as the main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi Inc. the company is the best performer in market capitalization compared to competitors with a capitalization of 169.49billion, higher .

1. Running Head: FINANCIAL ANALYSIS
1
FINANCIAL ANALYSIS
7
Financial Analysis
Students Name
Institutional Affiliation
Executive summaryThis report created from the financial
statements of The Coca-Cola Company (KO) provides an
analysis and evaluation of the actual and the prospective
liquidity, profitability and the financial stability of the
company. The methods that have been used in the analysis
include trend analysis, the vertical analysis and the horizontal
analysis. Also we have used certain analysis such as Quick
ratio, debt ratio, and the current ratios. More calculations that
have been used includes the returns on the owners equity, the
earning per share, net operating working capital, total operating
capital, net operating capital, net operating profit after taxes,
operating cash flow and free cash flow. A result from the data
reveals that, all the company ratios are above the industries
averages. Comparative performance is good in the area of the
liquidity, credit control and inventory management.
The report finds that the tidings for the company are positive in
the near future. The major areas of weakness highlighted
require further investigation and immediate action by
management. The recommendations that were provided include;
· Improving the average accounts receivable collection period,
· Raising/ increasing the inventory turnover and reduction of
prepayments in order to have enough operating cash for the

2. subsequent periods.
The investigation in this report also had its shortcomings that
arose and are highlighted as;
The forecasted figures used are estimates that sometimes maybe
arbitrate; we also cannot fully provide data on the position of
other companies with the data limitation we have experienced.
The monthly details would have given us more information from
which we could base a proper in year trend analysis, rather than
the blanket whole year analysis provided. Though we had the
above mentioned strain in preparation of this report, we still
great belief that the analysis provided is best suited to show the
standing of the Coca-Cola Company (KO).
In the financial report below, the strengths, weakness,
opportunity and threats have been highlighted as we analyze the
various financial sub segments.
Identify your company, its industry, and analyze the important
segments (percentage of sales or subsidiaries) of your company
compared to its industry and its overall business
The Coca-Cola Company (KO) is a multinational American
Company that has its headquarters at Atlanta Georgia. The
company has got its branches in more than 200 countries in the
world and majority of its sales is in America, amounting to 40%
of the total sales. The company operates in the non alcoholic
beverage industry made up of the following companies as the
main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi
Inc. the company is the best performer in market capitalization
compared to competitors with a capitalization of 169.49billion,
higher than the industry’s market capitalization of 123.49billion
(Clement, 2013).
The company reported a worldwide volume climb of 1% in the
fourth quarter and a climb of 2% overall in the whole financial
year ended 31st December 2013. The majority of the sales arose
from the main product line with majority of sales being revenue

3. from America at 43%.
The only company that has been able to match the flirtatious
margins by the coca-cola is Pepsi. This development must be
watched to avoid the company slipping into a deep competition
for sales with their main soft drink rival.
Perform a complete financial analysis of your chosen company's
financial statements—horizontal, vertical (Percentage of Sales
and Common-Size), and changes in ratios—for the last two
years.
In the income statement the revenue of 46.85 billion is an
increase as compared to the financial year ended 31st December
2012 where it was at 44.45billion, which is a 5.3% increase.
Such a positive increase is encouraging though it’s not the best
for company since it was raised against the increased net
receivables. Such a situation is a weakness to the company since
growth in sales with increased net receivables will have a
negative impact in the future. Net receivables increase is a
potential for increased bad debt which will be a threat to the
long term operation of Coca Cola Company. The revenue per
share is 10.57 which is higher than previous year but lower than
the revenue per share in nestle stands at 11.57. The negative
revenue growth of -3.60 is a weakness to the company since
decreased growth will mean that the net profits will reduce
(Duncan, 2010).
The gross profit of 28.43 billion is n increase from the previous
year. The earning before interest and taxes of 13.10 billion is
higher than the markets EBITDA but lower than nestles. The
amount being higher than that of the market is strength but it
being lower than that of nestle is a weakness. The balance sheet
show the earning per share of 1.9 that is below the market, more
so its the list EPS in the whole industry. Such a case is a
weakness that must be analyzed by the board. It can be
corrected by the board increasing the amount that is attributable
for dividends and reducing the investment.

4. Compare all ratios to industry averages. Evaluate the company's
ratios against the industry averages
The ratios provided for the market and the specific companies
that are provided are the operating margin, gross margin,
earning per share and price per earning. The gross margin of 0.6
is the highest for the year and for the industry. The margin
being higher than that of the market means that the company has
a greater cushion in terms of profitability and the amount of
loss that can be accommodated is quite large. This is one of the
strength of the company that is highly regarded in terms of
boosting long term earnings.
The earning per share is market low which is a weakness that
the management must analyze and make changes in terms of the
amount attributed to shareholder. The levels of comparison
show that the company is operating below the market rates and
therefore are at a risk threat of loosing the shareholders
(Duncan, 2010).
Compare all ratios to industry averages. Evaluate the company's
ratios against the industry averages.
The company’s ratios are quite higher than the market ratios in
vital ratios such as the gross margin and the operating margin of
0.61 and 0.24 as compared to industries of 0.53 and 0.21. The
only ratio where the company performed below the industry is
in the EPS where they showed a weakness at 1.9 against the
markets 2.44
Analyze the company's cash flows.
The net cash flows for the year end period to December 2013
was at negative 704000 meaning that the company ended the
year with a negative outflow. The company also showed some
form of laxity in changing the debtor’s period and the creditor’s
period in order to better their cash in hand. This is a weakness
that will threaten the performance of the company in the next
financial year. The financial year returns from investment

5. activities were all negative returns meaning that either most of
the investments were at the early development with opportunity
that the inflow will be positive in the future (Martin, 2011).
Assess the overall financial health of your company based on
this financial analysis.
The company is financially healthy since they can be able to
meet their current obligations when they arise. The total current
assets stand at 31304 against the current liability of 27, 343.
From this data we can say that the company in the short term is
financially healthy. This is an opportunity for the company to
gain fro the operations of the year and invest more to increase
liquidity. Further more in the long-term the company is still
solvent with assets of 90000 against the liability of 45900. This
is another strong point and an opportunity to counter the
competitors with lower assets to cover for the liability like the
Pepsi
The company has been faced by the threat of contingency
liabilities that affects the operation of the business.
Contingencies though not recorded in the statement are
potential source of cash outflow if those cases are ruled against
the company. The law suits include those filed in relation to
monopolistic and discriminatory practices. Some of those cases
that have been settled out of court have ended up costing the
company a lot of money. Such situations affect the company’s
cash flow and also the long term position of the state.
The emergence of nestles as a strong competitor is worrying for
the company and is also a big threat too. The nestles has had a
market capitalization of 243 which is higher than the markets
and that of coca- cola. Such emergence is a threat to the market
share of sales and the oversea market strategy (Martin, 2011).
References
http://finance.yahoo.com/q/bs?s=KO
Martin, D.(2011). Financial Accounting, New Jersey NJ:
Prentice Hall

6. Duncan, J.(2010). An introduction to financial accounting, New
York NY: McGraw-Hill
Clement, W.Y, (2013). Financial Analysis, New York NY:
McGraw-Hill
FINANCIAL ANALYSIS- INSTRUCTIONS
Hi Everyone,
Please download and save this document for your reference. For
your Unit 3- Assignment 2 and Unit 6- Assignment 2, please
follow these instructions:
You want to choose a publicly traded company. (Note: Be sure
to have your public company chosen by the end of Unit 1). Be
sure that it is large enough so it contains a lot of easily found
financial information. I recommend using Yahoo’s financial
web site at http://finance.yahoo.com/ .
You will write your Final Analysis paper that includes the
following:
Executive Summary: Introduce your company and its current
status.. How are they performing? Are they profitable? Are they
gaining or losing market share? Have they introduced new
products?, etc.
SWOT Analysis: Please include a comprehensive SWOT
analysis about your chosen company. You should include 4-5
items under each heading (Strengths, Weaknesses, Threats, and
Opportunities).
Recommendations & Justifications: You will use the
Recommendations below (or make up some of your own) and
justify whether the firm should go along with the
recommendation.

7. Concluding thoughts: include what the potential is for your
chosen company if they are able to execute your
recommendations and the ramifications if they do not.
Your Unit 3- Assignment 2 will consist of completing the
Executive Summary and SWOT Analysis. For your Unit 6-
Assignment 2 you will complete the Recommendations &
Justifications and Concluding thoughts.
As a financial consultant, what recommendations would you
propose to current company management based on your
findings? This added value content should include conclusions
and recommendations for the firm going forward (as if you were
a consultant for the firm). Adding value means having detailed
conclusions and recommendations. Having detailed
RECOMMENDATIONS and being able to JUSTIFY them are
VERY IMPORTANT! Typical recommendations and
conclusions that you will probably use include:
· Should the firm increase capital expenditures to increase
competitiveness?
· Should the firm increase growth by acquiring other companies
for synergies or grow internally?
· Should the firm risk increasing their leverage (debt) to
increase earnings and return on capital or keep the leverage the
same (or even decrease it?)
· Should the firm increase/decrease marketing spending?
· Should the firm increase/decrease R&D spending?
· How should they go about controlling costs including labor,
health care, and pension liabilities? (GM and Ford need help in
this department).
There are many more recommendations you can offer. (Note:
feel free to add more recommendations or change some of the
ones above that fit your chosen company. Note that you want a

8. minimum of at least 6 recommendations.)Feel free to be
creative. If you make these recommendations, you want to list
WHAT the recommendation is and JUSTIFY WHY the firm
should embrace it (and how it benefits the firm). You are the
chief financial consultant so you have full rein to make any
recommendations. Feel free to use reference and be sure to cite
them (APA) format if you do. References are not required
though as the paper could be written entirely in your own
words.
I listed 6 common recommendations above and they are
included in your Final Paper template. Feel free to use these
and/or make up some of your own. The key is that you want to
JUSTIFY any recommendation that you make.
For example, if you recommend that a company should increase
their capital expenditures, then justify why. Common
justifications could that they need to increase capital
expenditure to support their R&D spending, to expand domestic
operations, or to expand internationally. You want to support
your recommendations with thorough justifications.
If you use references, then be sure to cite them using APA
formatting.
The format of your paper could be to list each Recommendation
and Justify each one like below:
Recommendation #1: Should the firm increase capital
expenditures to increase competitiveness?
Justification: Yes because to remain competitive, they need to
invest in technologies to keep up with their main competitors.
They also plan to expand internationally, so investing into these
new markets and the learning curve involve will involve
spending at least ? billion dollars. etc, etc, etc.

9. Recommendation #2: Should the firm increase growth by
acquiring other companies for synergies or grow internally?
Justification: I feel that my company should grow internally.
Due to my industry, acquiring a competitor involves integrating
a different culture into our firm. Also, the companies are selling
for such a high premium currently that it odes not justify buying
our competitors. Finally, since our stock price is down currently
and interest rates are high, it would be very expensive to borrow
to finance the purchase. etc, etc, etc.
When you complete your Final Analysis paper then please
submit it privately to me for grading.
So for u03a2, your Executive Summary needs to be 250 words
minimum and for your SWOT Analysis you should have 4-5
items listed under each area (Strengths, Weaknesses, Threats,
and Opportunities).
For u06a2, your “Recommendations & Justifications” need to be
a minimum of 1,000 words and concluding thoughts should be
250 words minimum.
Lets have fun with the assignment and learn a lot about your
chosen company!
Regards,
Michael Blagg
FINANCIAL ANALYSIS: TEMPLATE
NAME:
EXECUTIVE SUMMARY:
SWOT ANALYSIS:
RECOMMENDATIONS AND JUSTIFICATIONS:
1. RECOMMENDATION #1: Should the firm increase their
capital expenditures to increase competitiveness? This will

10. almost always be true but what segments of the business get the
most capital allocated to them and why?
2. RECOMMENDATION #2: Should the firm increase growth
by acquiring other companies for synergies or grow internally?
Do they have the infrastructure to grow internally? If they by a
competitor, how will the merger be integrated in regards to
culture, overlapping businesses, etc.
3. RECOMMENDATION #3: Should the firm risk increasing
their leverage (debt) to increase earnings and return on capital
or keep the leverage the same (or even decrease it). If so, why
and by how much.
4. RECOMMENDATION #4:Should they increase marketing
spending? If so, by how much and where should it be allocated.
Should online marketing spending and international marketing
increase by more than print ads? Justify any additional spending
that is recommended.
5. RECOMMENDATION #5:Should the firm increase/decrease
R&D spending? If so, by how much. At what level do you feel
your chose firm would be spending too much on R&D.
6. RECOMMENDATION #6: How should they go about
controlling costs including labor, health care, and
pension liabilities? (GM and Ford need help in this department).
7. RECOMMENDATION #7: Should the firm expand overseas?
If so, which markets should be focused on first and why?
CONCLUDING THOUGHTS ON THE FUTURE OF YOUR
CHOSEN COMPANY