Analysing Financial Performance of Coca-Cola
2. Analysing Financial Performance
Analyse the company’s financial performance, over two years, using the following ratios (you will need to present your results): * Current ratio * Acid test ratio * Gearing * Asset turnover ratio * Inventory turnover ratio (if appropriate) * Receivables (debtors’) days * Payables (creditors’) days * Gross profit margin * Net profit margin * Return on capital employed (ROCE) * Dividend per share (if information is available) (40 marks) Ratio | 2010 | 2011 | Current Ratio=Current assetsCurrent liabilities | 2549724283=1.05 | 2157918508=1.17 | Acid Test=Liquid assetsCurrent liabilities | 25497-309224283=0.92 | 21579-265018508=1.02 | Gearing=Non-current liabilities × 100Total equity+non-current liabilities | 23770 × 10031921+23770=42.7% | 23096 × 10031317+23096=42.4% | Asset Turnover=RevenueNet assets | 4654218533=2.51 | 3511918921=2.50 | Inventory Turnover=Inventories × 365Cost of sales | 3092 × 36518216=62.0 | 2650 × 36512693=76.2 | Receivables Days= Debtors × 365Revenue | 4920 ×36546542=38.6 | 4430 × 36535119=46.0 | Payables Days=Creditors × 365Revenue | 9009 × 36546542=70.7 | 8859 × 36535119=92.1 | Gross Profit Margin=Gross profit × 100Revenue | 28326 × 10046542=60.9% | 22426 × 10035119=63.9% | Net Profit Margin=Net profit × 100Revenue | 11439 × 10046542=24.6% | 14243 × 10035119=40.6% | Return on Capital Employees ROCE=Operating profit ×100Total equity+non-current liabilities | 10154 × 10031921+23770=18.2% | 8449 × 10031317+23096=15.5% |
Current ratio measures the ability of Coca Cola to meet its liabilities or debts over the next year or so. Coca Cola have a current ratio of 1.17:1, which has increased from 2010’s 1.05:1. This shows that they are able to meet costs of current liabilities without needing to sell fixed assets or raising long-term finance. However, Coca Cola should aim to improve their current ratio to closer to 1.6:1. They could do this by selling fixed
Analyse the company’s financial performance, over two years, using the following ratios (you will need to present your results): * Current ratio * Acid test ratio * Gearing * Asset turnover ratio * Inventory turnover ratio (if appropriate) * Receivables (debtors’) days * Payables (creditors’) days * Gross profit margin * Net profit margin * Return on capital employed (ROCE) * Dividend per share (if information is available) (40 marks) Ratio | 2010 | 2011 | Current Ratio=Current assetsCurrent liabilities | 2549724283=1.05 | 2157918508=1.17 | Acid Test=Liquid assetsCurrent liabilities | 25497-309224283=0.92 | 21579-265018508=1.02 | Gearing=Non-current liabilities × 100Total equity+non-current liabilities | 23770 × 10031921+23770=42.7% | 23096 × 10031317+23096=42.4% | Asset Turnover=RevenueNet assets | 4654218533=2.51 | 3511918921=2.50 | Inventory Turnover=Inventories × 365Cost of sales | 3092 × 36518216=62.0 | 2650 × 36512693=76.2 | Receivables Days= Debtors × 365Revenue | 4920 ×36546542=38.6 | 4430 × 36535119=46.0 | Payables Days=Creditors × 365Revenue | 9009 × 36546542=70.7 | 8859 × 36535119=92.1 | Gross Profit Margin=Gross profit × 100Revenue | 28326 × 10046542=60.9% | 22426 × 10035119=63.9% | Net Profit Margin=Net profit × 100Revenue | 11439 × 10046542=24.6% | 14243 × 10035119=40.6% | Return on Capital Employees ROCE=Operating profit ×100Total equity+non-current liabilities | 10154 × 10031921+23770=18.2% | 8449 × 10031317+23096=15.5% |
Current ratio measures the ability of Coca Cola to meet its liabilities or debts over the next year or so. Coca Cola have a current ratio of 1.17:1, which has increased from 2010’s 1.05:1. This shows that they are able to meet costs of current liabilities without needing to sell fixed assets or raising long-term finance. However, Coca Cola should aim to improve their current ratio to closer to 1.6:1. They could do this by selling fixed