Working Capital Case Study

Topics: Balance sheet, Accounts receivable, Finance Pages: 3 (824 words) Published: October 21, 2010

Working Capital Case Study (Coca Cola)
Christopher Ouimette, Diana Ramon, Nathaniel Gooden, & Jamie Jaynes University of Phoenix
Corporate Finance
FIN 320
Cliff Merchant
October 11, 2010

Working Capital Case Study (Coca Cola)
Coco-Cola is a publicly held company that has reported profits over its lifespan.  Although the company has reported losses in some years, this has not prevented the company from expanding.  Every company has room for improvement and advancement within its respective market.  The company has indicated profits over the last two years, 2008 and 2009.  Using the information provided by Coco-Cola’s financial statements, certain recommendations can be presented to improve the company’s operating cycle.  Financial decision and operating cycle recommendations need to be considered with great discussion and understanding.  It is important to understand the impact these recommendations will have on the organizations overall working capital. Calculations

2008| | 2009|
Inventory Period:| 25 days| | Inventory Period:| 28 days| Accounts Receivable Period:| 35 days| | Accounts Receivable Period:| 44 days| Accounts Payable Period:| 16 days| | Accounts Payable Period:| 17 days| Cash Conversion Cycle:| 45 days| | Cash Conversion Cycle:| 55 days| Operating Cycle:| 60 days|  | Operating Cycle:| 72 days|

Financial Decision Recommendations
The working capital of a company is defined as the current assets minus liabilities; this “measures how much in liquid assets a company has available to build its business.” (N.A., 2010) Based on the financial statements and the figures calculated for Coca Cola, the company has a good working capital that allows it to improve operations and expand its business. The increase in the accounts receivable period caused a slight increase on the accounts payable period. Even though the company’s sales have decreased, the...
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