coca cola financial analysis individual assignment

In this research documentary, I will examine the annual financial performance from the years 2018 and back of one of the biggest corporations in the world which is the CocaCola Company. The research will consider the various ratios used in analyzing a financial situation of a business like liquidity ratios, activity ratios, debt ratios, and profitability ratios, and then apply them to determine whether CocaCola Company is performing well or not. The sources of data collections method were used from Yahoo Finance, Investing.com, Financial Modeling Prep, and the instruction of Mr. An Hai Vo, my Finance Corporate subjects lecturer to better know and understand the companys financial health history, give out my own recommendation and conclusion about CocaCola financial potential specializing 2018 2020 period.

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COCA-COLA FINANCIAL ANALYSIS - INDIVIDUAL

ASSIGNMENT Corporate Finance (FPT University)

StuDocu is not sponsored or endorsed by any college or university

COCA-COLA FINANCIAL ANALYSIS - INDIVIDUAL

ASSIGNMENT Corporate Finance (FPT University)

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In this research documentary, I will examine the annual financial performancefrom the years 2018 and back of one of the biggest corporations in the worldwhich is the Coca-Cola Company The research will consider the various ratiosused in analyzing a financial situation of a business like liquidity ratios, activityratios, debt ratios, and profitability ratios, and then apply them to determinewhether Coca-Cola Company is performing well or not The sources of datacollections method were used from Yahoo Finance, Investing.com, FinancialModeling Prep, and the instruction of Mr An Hai Vo, my Finance Corporatesubject's lecturer to better know and understand the company's financialhealth history, give out my own recommendation and conclusion about Coca-Cola financial potential specializing 2018 - 2020 period.

All information in this article is unique, with references attached below As a sophomore in economics, the analysis below certainly has a lot of flaws Looking forward to your comments

ABSTRACT AND SUMMARY

Mr An Hai Vo, Master of Science

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II FINANCIAL STATEMENT

III FINANCIAL RATIO

IV PEER-GROUP ANALYSIS

Liquidity Ratio Efficiency Ratio Leverage Ratio Profitability Ratio Market Value Ratio 

Asset Management Fund Management Profitability

Recommendation Conclusion

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Founded and headquartered in Atlanta, Georgia,

the Coca-Cola Group currently operates with its

branded products in 200 countries around the

world The Coca-Cola brand is the top-selling

beverage brand that owns, licenses, and markets

more than 500 diversified brands (Bottled Water,

Soft Drinks, and Juices) Coca-Cola Co owns four

of the top 5 global nonalcoholic sparkling

beverage brands: Coca-Cola, Diet Coke, Fanta, and

Sprite

M I S S I O N A N D V I S I O N

The company's mission and vision are reflected by

social activities in the countries and markets

where Coca-Cola is present There are three main

values including becoming a favorite brand,

top-chosen brand; sustainable development is a

beverage brand that aims to find innovative and

sustainable solutions; and for a better future life,

Coca-Cola will continue to invest to improve the

lives of everyone - from corporate system to

communities

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Nowadays, the non-alcoholic beverage segment of the commercialbeverage industry is highly competitive, consisting of a variety ofbrands in Coca-Colas' target markets PepsiCo, Inc., one of the maincompetitors worth noting Including other significant: RedBull,DPSG, Keurig Dr Pepper, Mondelēz International, Inc., Kraft FoodsGroup, Inc., Soylent, and Tetra Park, etc Coca-Cola also competeswith many regional and local companies

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FINANCIAL ANALYSIS |

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North America 34.7%

in North America - financial indexes listed on NYSE (New York StockExchange)

As the basic foundation for internal financial reporting, the operating

structure effective from Dec 31, 2015, includes the following:

Eurasia and AfricaEurope

Latin AmericaNorth America

Revenue Distribution of the Coca-Cola Company in 2020 by operating segment Souce: Statista.com

The Asia PacificBottling InvestmentsCorporate

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STATEMENT

ANALYSIS

F I N A N C I A L A N A L Y S I S P A G E 0 7

INCOME

STATEMENT

Over recent fiscal years, the

Cola-Cola Company's total revenue has

fluctuated globally, nearly $40

billion As the US-China Trade War

tariff imposition caused massive

disruption to businesses and rattled

global finance Net operating

revenue fell 6% to $7.1 billion in the

last three quarters of 2018 and fell

10% to $31.9 billion in 2018

Firstly, suddenly hit by the effect ofthe national lockdown in COVID-19,cost reductions are being made indirect and indirect categoriesexpenses and by reorganization.Coca-Cola planned to eliminate2,200 jobs The reductions include 6operating units severance,

canceling 200 brands or half of itsportfolio This cutoff point lead2019's selling, general andadministrative expenses at $12,2billion to a downward trend andreached the lowest point in 2020among 3 years, at just $9.7 billion

CHART 1.1: STATISTICS 2018 - 2020

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Nonetheless, as the 2018 - 2020 annual report, thebeverage giant spent roughly two-thirds of its revenue ($23

- $28 billion) on its COGS and other spending results

Whilst, net revenue, and its global volumes upper 24%before stuck with a downward trend from 2019 to 2020.Moreover, Coca-Cola Company’s revenues ascended from

$31.86 billion in 2018 to a top of $37.3 billion in 2019 andslightly fall again to $33.01 billion in 2020 The Net Income

in this period fluctuates with increasing $2.5 billion from2018-2019 and a decrease in 2020 at a lower level ($7,7billion)

Thus, from the difference between net income and net loss,estimate that the company's global volumes are stuck with

a downward trend that cannot control business healthincluding ineffective investment and is affected byextraordinary expenses items (COVID-19 pandemic)

GENERAL FINANCIAL HEALTH

SOURCE: CNN BUSINESS

BALANCE SHEET

2018 - 2020 ( From Investing.com)

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In general, Coca-Cola's total assets tend to slightly rise within 3

years from 2018-2020, ranging from $83 - $87 billion, the highest

value in 2020 is approximately $87,3 billion Even though, the

accompanying figures get saw a fall in the current asset amount

Specifically, total items cash, cash equivalent & short-term

investment follows a downward trend, hitting a 3-year low of

about $10,9 billion (about 9.81%), a difference of about $5,2

billion compared to 2018 Besides with a slight increase in

inventories account due to upper price of raw material and

$3.6 bIncreasing inIntangible asset

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One noticeable point in 2020 balance sheetaccounts - growth in trademarks, goodwill, andother intangible assets The item related to thebrand value of Coca-Cola shows growth in 2020with the difference compared to 2018 of $3,6billion (about 5%) This is a potential little stepforward in the context of the economy's strongbreakdown by the pandemic, explained by itsearnings, or in more detail, refranchisingoperation-driven margin expansion at the sametime on account of lower COGS and SG&Aexpenses mentioned above

TRADEMARK AND GOODWILL INCREASE

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Coca-Cola Co.'s total liabilities increases for 3 years, the numbers rangedfrom about $66 - $68 billion This number simultaneously tended to behigher year-over-year, with reaching a peak appeared in 2020 (nearly

$68 billion), it increased by $1.78 billion (+2.7%) This upward trend inthe liability index can be explained by the retarded growth trend of themarket, in order to increase the value of the stock and deal withextraordinary loss items from the COVID-19 pandemic, the company isrequired to use leverage in the business leading to the account payablesteadily increases, the difference between the first year and the last year

in this period is $1.8 billion (1.3%)

Total Liabilities

Retained earnings, Additional paid-in capitalTreasury stock.

In terms of Equity, the period of 3 yearswitnessed a stable rise Coca-Cola beginwith $16,9 billion in 2018, keep movingforward by 1.52% in 2019 at $18,9 billion, end

up in 2020 with $19,3 billion the differencebetween the beginning and the end of theperiod was $2.4 billion (approx 1.48%).Importantly, from 2018 to 2020, the TotalLiabilities ratio dominates over Total Equityaccording to the common-size balancesheet (maintained at more than 75%), equal

to a triple fraction according to thecommon-size balance sheet Apparently,Coca-Cola is implementing an ineffectiveleverage policy, because the amount of debt

is still increasing then returning, showingdismal progress

This ascending tendency is affected by acombination of three volatile accountfactors:

Q U A R T E R L Y C A S H F L O W

The fluctuations in Coca-Cola's Working Capital index have shown

that Coke is not an exception in the edge of COVID-19 negative

impact It shows significant fluctuations from 2018-2020,

decreasing in turn in 2018 and 2019 at 2B USD and -6.6B USD,

especially in 2019 hit a low in the last 10 years (2011-2021) The

situation is still volatile from Q4 2019 to Q2 2020 as Coke is also

looking to streamline its portfolio, including the US continuing to

deal with the pandemic Thus, nearly at the end of 2020 has

recovered its efficiency (to 4.6%) and continues to grow operating

liquidity

N E T W O R K I N G C A P I T A L

Moreover, the study found there is a huge difference between

the two items of long-term and short-term debt over the year,

such an interesting point in the shift of business leverage

structure from reducing short-term debt to focusing on

long-term debt Total current liabilities for the period 2018-2020

reduced significantly, starting to drop (- 3.89%) in 2019, 2020

respectively Thereafter, in 2020, total current liabilities rapidly

reduce to 16.9 billion USD approximately, (equivalent to -14,5%

) In other words, the proportion of debt structure has shifted

to long-term debt, especially between 2019 - 2020, the item of

long-term debt has skyrocketed from $27 billion to $40 billion

(equal to 15,5%)

Current Liabilities 77.9%

STATEMENT

2018 - 2020

CASHFLOW IN OPERATING ACTIVITIES

During three years from 2018 to 2020, the cash flow used in operatingactivities of Coca-cola is various, the numbers of cashflow climbedquickly from 2018-2019 (+37,3%) Thereafter, the yearly operating cashflow reached a lower point in 2020 at 9,844 B USD (- 8,4%) but still uponthe operating cash flow of the first year This is a signal that even though

in downturn 2020 because of Covid-19 but Coca-cola performed well onits business and it is predicted that operating cash flow will be a positiveaccount with a consistent growth rate

CASHFLOW IN INVESTING ACTIVITIES

Based on the company disclosures throughout this period, wecan conclude that Coca-Cola's investing activities showed themost noticeable fluctuation in the overall pattern of cash flowstatement Representing a rapid decrease from $5,93 in 2018(which is impressing numbers of negative investing cash flowover the past 10 years) to negative $3,9 billion in 2017 followingthe landmark 2018 Costa Coffee acquisition After discontinuing

200 certain brands generating just 2% of its revenue Collectively,the figure used to invest activities dropped consistently in 2020,

at just above -1,5B USD (+ 62,9%) Overall, the investing cash flowfollows an unpredictable trend but we can expect that willoptimize the investment account of the whole company

CASHFLOW IN FINANCING ACTIVITIES

Generally, for three years (2018-2020), financing activities becamemore low-cost every year After a decreasing figure in 2018 -2019.There was an upward tendency in 2019 and 2020 at around -9BUSD and -8B USD, respectively Additionally, the positive tendency

of numbers does not mean it is positive financial management.But it illustrated that the company would attribute a largerdividend paid (7,05B USD) due to the increase of profit andpositive insurance stock (529M USD) could be anticipated byhigher earning-per-share items

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RATIO ANALYSIS

Table 4.1: Financial Ratios

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LIQUIDITY RATIO

As the proportion in Tab 4.1 shows that the current ratio fluctuated from

2018 to 2020, reaching the highest point in 2020 at 1.32 Causing byincluding an increase in the current assets (from Tab 1.1) meanwhile therewas a quick fall of short-term debt in 2020

Nevertheless, exact concluding the company's ability to pay short-termobligations is usually based on a quick ratio After relatively acceptablefalling from 0.66 to 0.56, from 2019-2020 rebounded an upward trend(+0.4) at 0.96 in 2020 In addition, the company's liquidity is generallyhigher than that of the beverage industry as a whole and maintained untilnow, proportions of the quick ratio between Coca-Cola's and the beverageindustry are 1.25 and 1.24 respectively In short, the firm's liquidity hasnothing went wrong at this time

EFFICIENCY RATIO

Receivable Turnover Ratio

Inventory Turnover Ratio

In overview, receivable turnover demonstrated that after maintaining thesame figure from 2018 - 2019 at 9.38, it climbed remarkably to 10.5 in

2020, reaching an average value of 9.6 This is the result of limited tradecredit terms to customers In comparison industry index 9.49, forecastwith a higher rate is less potential to towards adopting credits, and face

to competitive credit terms from others in their industrial peer groups

The number of times Coca-Cola sells inventory yearly varies just under 4,4

in 3 years It increased from 4.26 to 4.33 between 2018 and 2019 beforedropping to 4.11 in 2020, which means that inventory sales are decreasingand there is a bit of ineffectiveness in inventory control Based onconsideration between the average value is 4.23, which is much lowerthan the industry average ( equal 6.33), indicating to Coca-Cola’sinventory liquidity was problematic and its blocked liquid ability ofinventory

Total Asset Turnover Ratio

Besides, total asset turnovers fluctuate slightly, reaching values at 0.43,and 0.38 in 2018 and 2020 respectively, an average value equal to 0.396,radically reaches lower range than the industry average of 0.63 Thisturnover rate is not equal to 1, which is understandable because thebeverage goods industry usually has this index lower than general fields.But the fact that Coca-Cola's rate is lower than the industry means theproblem of using assets acquired and inefficient generating salesrevenue, also probably caused by some other external problems

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