Financial Analysis of Coca-Cola Co.
Financial Analysis of Coca-Cola Co.
The Coca-Cola Company is the world largest beverage company. Along with Coca-Cola, recognized as the world’s most valuable brand, the company markets four of the world’s top 5 non-alcoholic sparkling brands, including Diet Coke, Fanta, and Sprite. Consumers in more than 200 countries are enjoying the company’s beverages at a rate exceeding 1.4 billion servings each day (Seeking Alpha, 2011).
The Coca-Cola Company engages in the manufacture, distribution, and marketing of nonalcoholic beverage concentrates and syrups worldwide. The company offers nonalcoholic beverages, principally carbonated soft drinks, as well ...view middle of the document...
The company sells its beverage concentrates and syrups to bottling and canning operators, distributors, fountain wholesalers, and fountain retailers.
In May 1886 Coca-Cola was invented by John Pemberton, a pharmacist from Atlanta, Georgia (Bellis). John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. The name was a suggestion given by his bookkeeper Frank Robinson who also scripted the famous logo. The soft drink was first sold to the public at the soda fountain in Jacob’s Pharmacy in Atlanta. Until 1905, the soft drink, marketed as a tonic, contained extracts of cocaine as well as cocoa nut. In 1887, As a Candler, his partner bought the formula from Mr. Pemberton for $2,300. By the late 1890s, Coca Cola was one of the America’s bestselling drinks, largely due to Candler’s aggressive marketing of the product. Under Candler’s ownership the company increased its sales by over 4000% between 1890 and 1900 (Bellis). “On April 23, 1985, the trade secret "New Coke" formula was released. Today, products of the Coca Cola Company are consumed at the rate of more than one billion drinks per day” (Bellis).
Table 1 shows The Coca-Cola Company’s most recent three-year balance sheets, which represent “snapshots” of its financial position on the last day of each year. The Balance Sheet presents a picture of the business' net worth at a particular point in time. It summarizes all the financial data about the company business, breaking that data into 3 categories; assets, liabilities, and equity. The relationship between them is expressed in this equation:
Assets = Liabilities + Equity.
Assets are what a company uses to operate its business, while its liabilities and equity are two sources that support these assets. Owner’s equity, referred to as shareholders’ equity in a publicly traded company, is the amount of money initially invested into the company plus any retained earnings, and it represents a source of funding for the business. Coke has a fairly strong balance sheet. Despite being a very solid balance sheet, it’s not as pristine as it was before the acquisition of their North American bottler. They took on debt, increased interest payments, and acquired substantial goodwill, but kept these numbers fairly moderate/conservative.
Table 1. The Coca Cola Company 3 Year Balance Sheet (Yahoo Financials, 2011)
Period Ending | 31-Dec-10 | 31-Dec-09 | 31-Dec-08 |
Current Assets |
| Cash And Cash Equivalents | 8,379,000 | 6,959,000 | 4,701,000 |
| Short Term Investments | 2,820,000 | 2,192,000 | 278,000 |
| Net Receivables | 4,430,000 | 3,758,000 | 3,090,000 |
| Inventory | 2,650,000 | 2,354,000 | 2,187,000 |
| Other Current Assets | 3,162,000 | 2,226,000 | 1,920,000 |
Total Current Assets | 21,579,000 | 17,551,000 | 12,176,000 |
Long Term Investments | 7,585,000 | 6,755,000 | 5,779,000 |