Coca Cola 10 K Report Analysis

Topics: Balance sheet, Dividend yield, Generally Accepted Accounting Principles Pages: 5 (711 words) Published: April 19, 2012
Examination of a Corporate Annual Report

1. Fill in some basic information about your company

Name of company The Coca Cola Company[1]

Principal exchange where the company trades New York Stock Exchange[2]

Market price of the stock $56.96 as of 12/07/09[3]

Annual dividend $1.52 per share[4]

Last dividend paid on April 1, 2008[5]

2. Read the business summaries and management’s discussion and analysis (MD&A). Summarize the remarks.

Coca Cola prides itself on being the world’s largest manufacturer, distributor and marketer of non-alcoholic beverages worldwide.[6] Although it usually acts as a distributor, it plans to take a more controlling interest in bottling operations in the future.[7] Coca Cola engages in significant marketing expenditures to keep its brand image strong.[8] Coca Cola discusses its four strategies for success: “driving global beverage leadership, accelerating innovation, leveraging balanced geographic portfolio, leading the Coca Cola system for growth.”[9] Some risks and challenges that Coca Cola has to face is adverse health warnings against the company, maintaining superb water quality for its beverages, staying competitive, and being socially responsible.[10]

3. What kind of products and/or services does the corporate provide/sell?

Coca Cola primarily sells non-alcoholic beverages which range in variety. For example, it owns bottled water companies such as Dasani, sports drinks such as Powerade, and most famously soft drinks such as Coke, Diet Coke. Other drink choices include juices, juice drinks, and light beverages.[11]

4. a) Which accounting/auditing firm audited the financial statements?

The company’s independent auditors are Ernst & Young, LLP.

b) Did the auditor’s report indicate any problems or exceptions?

Ernst & Young did not report any problems. They noted, however, that the company adopted FASB Interpretation No. 48 related to accounting for uncertainty in income taxes and SFAS No. 158 related to defined benefit pension and other postretirement plans.[12]

5. a) Did you find any new terms within the financial statements?

No, I did not find any new terms within the financial statements.

b) Did you find the presentation of the financial statements clear?

Yes, I did find the presentation of the financial statements clear because everything was organized in a coherent manner and the concepts largely referred back to the coursework this semester.

6. Indicate the formula to be used and insert the amounts used in computing each ratio. Express your answer in suitable units (percentages, decimals, etc.)

A) Current Ratio

Current Ratio = Current Assets / Current Liabilities
= 12,176 / 12,988[13]
= 0.94[14]

B) Quick Ratio

Quick Ratio = Current Assets – Inventories / Current Liabilities = 12,176 – 2,187 / 12,988
= 0.77[15]

C) Receivable Turnover

Receivable Turnover = Net Credit Sales / Average Accounts Receivable = 318.2 / 37 = 8.6[16]

D) Average days sales uncollected

Average days sales uncollected = 365 / Receivable Turnover = 365 / 8.6
= 42.44[17]

E) Inventory Turnover

Inventory Turnover = Sales / Inventory or Cost of Goods Sold / Avg. Inventory
= 11,374 / 146
= 78[18]

F) Profit Margin

Profit Margin = Net Income / Revenues or Net Profits / Sales = $5,807 / $31,944
= 0.18[19]

G) Return on Assets

Return on Assets = Net Income / Total Assets
= $5,807 / $40,519
= 0.14

H) Return on Equity

Return on Equity = Net Income / Shareholder’s Equity = $5,807 / $20,472...
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