Coca-Cola Financial Analysis

Presented By

Elie Obeid & Isabelle Khalil

Company Profile

• 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

Financial Statement12 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 31,944Cost of goods sold -19,053 -18,216 -12,693 -11,088 -11,374Gross profit 28,964 28,326 22,426 19,902 20,570Selling, general and administrative expenses -17,738 -17,440 -13,158 -11,358 -11,774Other operating charges -447 -732 -819 -313 -350Operating income 10,779 10,154 8,449 8,231 8,446Interest income 471 483 317 249 333Interest expense -397 -417 -733 -355 -438Equity income (loss), net 819 690 1,025 781 -874Other income (loss), net 137 529 5,185 40 39Income before income taxes 11,809 11,439 14,243 8,946 7,506Income taxes -2,723 -2,805 -2,384 -2,040 -1,632Consolidated net income 9,086 8,634 11,859 6,906 5,874Net income attributable to noncontrolling interests -67 -62 -50 -82 -67Net income attributable to shareowners of The Coca-Cola Company 9,019 8,572 11,809 6,824 5,807Source: Coca-Cola Co., Annual Reports

Financial Statement

Liquidity Ratio

Coca-Cola Co., liquidity ratios

Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008Current ratio 1.09 1.05 1.17 1.28 0.94Quick ratio 0.77 0.78 0.85 0.95 0.62Cash ratio 0.59 0.58 0.61 0.67 0.38Source: Based on data from Coca-Cola Co. Annual Reports

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Current Ratio Chart

Cash Ratio Chart

Quick Ratio Chart

Liquidity

ProfitabilityCoca-Cola Co., profitability ratios

Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008Return on SalesGross profit margin 60.32% 60.86% 63.86% 64.22% 64.39%Operating profit margin 22.45% 21.82% 24.06% 26.56% 26.44%Net profit margin 18.78% 18.42% 33.63% 22.02% 18.18%Return on InvestmentReturn on equity (ROE) 27.51% 27.10% 38.09% 27.52% 28.37%Return on assets (ROA) 10.47% 10.72% 16.19% 14.02% 14.33%Source: Based on data from Coca-Cola Co. Annual Reports


Profitability

EfficiencyActivity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.

Short Term ActivityCoca-Cola Co., short-term (operating) activity ratios

Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008Turnover RatiosInventory turnover 14.71 15.05 13.25 13.16 14.61Receivables turnover 10.09 9.46 7.93 8.25 10.34Payables turnover 24.39 21.43 18.61 21.98 23.32Working capital turnover 19.15 38.34 11.44 8.09 –Average No. of DaysAverage inventory processing period 25 24 28 28 25Add: Average receivable collection period 36 39 46 44 35Operating cycle 61 63 74 72 60Less: Average payables payment period 15 17 20 17 16Cash conversion cycle 46 46 54 55 44Source: Based on data from Coca-Cola Co. Annual Reports

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Copyright © 2014 EBIT Financial Analyses Center

Short Term Activity

Long Term ActivityAverage inventory processing period 25 24 28 28 25Add: Average receivable collection period 36 39 46 44 35Operating cycle 61 63 74 72 60Less: Average payables payment period 15 17 20 17 16Cash conversion cycle 46 46 54 55 44Source: Based on data from Coca-Cola Co. Annual Reports


Long Term Activity

Solvency

Coca-Cola Co., debt and solvency ratios

Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008Debt to equity 0.99 0.90 0.76 0.48 0.45Debt to capital 0.50 0.47 0.43 0.32 0.31Interest coverage 30.75 28.43 20.43 26.20 18.14Source: Based on data from Coca-Cola Co. Annual Reports


Solvency

DuPont Analysis

Coca-Cola Co., two-component disaggregation of ROE

ROE = ROA × LeverageDec 31, 2012 27.51% 10.47% 2.63Dec 31, 2011 27.10% 10.72% 2.53Dec 31, 2010 38.09% 16.19% 2.35Dec 31, 2009 27.52% 14.02% 1.96Dec 31, 2008 28.37% 14.33% 1.98

Source: Based on data from Coca-Cola Co. Annual Reports


DuPont ChartThe primary reason for the increase in Return on Equity (ROE) over 2012 year is the increase in Financial Leverage.

Historical Enterprise Value

Coca-Cola Co., EV calculation

Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008No. shares of common stock outstanding 4,456,717,996 4,526,408,442 4,588,633,662 4,610,247,876 4,629,316,324Share price (USD $) 38.45 34.59 31.96 26.36 20.54USD $ in millionsCommon equity (market value) 171,361 156,568 146,653 121,526 95,086Add: Equity attributable to noncontrolling interests (per books) 378 286 314 547 390Total equity 171,739 156,854 146,967 122,073 95,476Add: Loans and notes payable (per books) 16,297 12,871 8,100 6,749 6,066

Add: Current maturities of long-term debt (per books) 1,577 2,041 1,276 51 465Add: Long-term debt (per books) 14,736 13,656 14,041 5,059 2,781Total equity and debt 204,349 185,422 170,384 133,932 104,788Less: Cash and cash equivalents 8,442 12,803 8,517 7,021 4,701Less: Short-term investments 5,017 1,088 2,682 2,130 –Less: Marketable securities 3,092 144 138 62 278Enterprise value (EV) 187,798 171,387 159,047 124,719 99,809


Historical Enterprise Value

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.

Thank You

Coca-Cola Financial Analysis

Economy & Finance

Transcript of Coca-Cola Financial Analysis