Financial Statement Analysis of Coca-Cola, 2002
The following is an analysis based on the annual report presented by the Coca Cola Company, year 2000. I will on behalf of the information shown in the balance sheet, income statement and the cash flow statement, conduct a number of calculations of ratios. Furthermore comment on changes providing an overall status rapport compared to estimations from previous year.
Coca Cola Company, year 2000
Structure of the company’s assets
2000 1999 Changes in %
Total Assets ($): 20834 21623 96.4
Ratio of Fixed Assets : 68.2% 70.0% 97.4
Inner Structure of fixed assets:
• Intangibles 13.5% 13.0% 103.8
• Tangibles 29.3% 28.2% 103.9
• Investments 57.2% 58.8% 97.3
Ratio of Current Assets : 31.8% 30.0% 106
Inner structure of current assets:
• Inventories 16.1% 16.6% 97.0
• Receivables 25.5% 27.7% 92.1
• Cash & equivalents 27.5% 24.9% 110.4
• Other Assets 28.8% 27.7% 104.0
• Marketable Securities 1.1% 3.7% 29.7
There was a slightly decline in total assets from 1999 till the end of 2000. In percentages a decrease of 3.65, having it reduced from $21623 to $20834 respectively.
Reviewing the structure of assets no major alterations have incurred during this period. Otherwise fixed assets, represents an amount close to 68-69% of total assets. Looking further into this section the governing segment, namely investments, has decreased by 1.69 percentage point. While intangibles and tangibles increasing near to 1 percentage point each, compared to numbers published in 1999.
The current ratio has increased by six percent since 1999. Now contributing to the extension with an approximately 30 percent of total assets. Inventories and receivables declining with a non-significant fraction while cash and equivalents rising with 2.2 percent.
Having stated the circumstances in regards to the decline in total assets, small adjustments have been made, causing diminutive effects on the structure of the company.
Structure of Equities
2000 1999 Changes in %
Ratio of Stockholders’ Equity : 44.7 44.0 101.6
Ratio of Liabilities : 55.3 56.0 98.8
Ratio of Net Indebtedness : 46.9 47.7 98.3
Inner Structure of Liabilities:
• Long-term liabilities 80.9 81.4 99.4
• Short-term liabilities 19.1 8.6 222.1
Growth of Stockholders’ Equity : 1.5 1.5 100.0
The long term debt to equity ratio has increased slightly from 44 to 44.7 percent primarily due to the reduction in equity (due to the income loss). Long term debt to total capital has improved slightly from 81.4 to 80.9 percent. The reason impacting this is the high increase in short-term liabilities. Negative in the sense that they are due within a year and will probably have an effect on liquidity.
2000 1999 Changes in %
Current Ratio : 71.0 65.7 108.0
Current Ratio II : 38.3 34.6 110.7
Quick Ratio : 19.5 16.3 119.6
Credit Coverage Ratio : 18.8 18.2 103.3
Dynamic Liquidity : 18.9 20.1 94.0
Short-term Dynamic Liquidity : 23.4 24.7 94.7
The current ratio which measures a company’s ability to meet its current obligations has increased from 65.7 in 1999 to 71 percent in 2000. At first glimpse a good indication, knowing that the largest proportions are more or less equally spread, within current assets.
Current Ratio II gives us an improved sight into the issue, in regards to whether it can meet its current obligation or not. Having 18.2 percent covered in 1999, and 18.8 in 2000, gives an indication that it has indeed increased covering a larger part. At the same time having covered such small percentages, compared to the high increase of short-term liabilities, may cause some problems of concern.
The Quick Ratio increasing by 3.2 percentage points from 1999 to 2000 shows us that even if it is increasing, the part that can be paid back is only 19.5 of the current liabilities.
Another important fact to consider is the decrease in dynamic liquidity from 20.1 in 1999 to 18.9 in 2000. And the ability of future payments for the next financial year, declining by almost 5 percent, meaning that it can cover 23.4 percent.
Profitability & Efficiency
2000 1999 Changes in %
Sales Revenue ($ 1000): 20458 19805 103.3
Operating Profit/Sales Revenue: 18.0 20.1 89.6
Profit before Tax/ Sales Revenue: 16.1 19.3 83.4
Cost of Goods: 30.3 30.3 100.0
Administrative cost: 44.6 45.4 98.2
ROA : 16.3 17.7 92.1
ROE : 36.5 40.1 91.0
Return on Fixed Assets : 81.5 89.5 91.1
Inventory turnover : 19.2 18.4 104.3
EPS 0.88 0.98 89.8
Seeing that sales revenue have increased by 3.3 percent, a moderate decrease can be observed in operating profit, as well as profit before tax, mainly by 2.1 and 3.2 percentage point correspondingly. Looking further at cost of goods and administrative costs, we can monitor that there haven’t been any changes to the first stated and a drop of 0.8 percent cutting down on administrative costs.
Other indications of profitability are the ROA, ROE and the return on fixed assets indicators. Having them all decreasing with the exemption of one being Inventory turnover, increasing with 4.3 percent. This gives the impression of better management within efficiency of inventory, thus having a decline in ROA and ROE, falling by 7.9 percent and 9 percent in that order.
Commenting on the EPS, indications suggest that the likelihood of gaining profit by investments of shares have fallen with 10.2 percent. Most likely as a result of the high increase of short-term liabilities hence a slower growth pace.
2000 1999 1998
CF from operating activities: 3585 3883 3433
CF from investing activities: -1165 -3421 -2161
CF from financing activities: -2072 -471 -1333
Effect of exchange rates: -140 -28 -28
Net Cash-Flow: 208 -37 -89
Balance of cash at the end of the year: 1819 1611 1648
The Coca Cola Company haven’t had major restructuring going on in the recent years. This can be recognized, as stable figures are presented in the cash flow chart. Even while having different figures, the numbers sum up to equally the same, year after year. These tendencies are most likely intentional and in the interest of the Coca Cola Company.
Estimation on Net Cash-Flow indicates that there might be slight problems in order to face the huge increase in Short-term liabilities, but generating revenues will make them able to pay off such liabilities.
In the year 2000, the Coca Cola Company hasn’t had any drastic changes, except for the fact that short-term liabilities has increased considerably. Having been on the market for a series of decades, these changes will not be of any concern in the short-run, as they have a good reputation. Especially when living up to expectation showing off good results year after year. On the other hand, it is obvious that they are in changing times, and different strategies have to be considered and implemented. Still, the company is heading in the right direction, improving different segments.
Fixed Assets divided by Total Assets
Current Assets divided by Total Assets
Stockholders’ Equity divided by Total Equity
Liabilities divided by Total Equities
(Liabilities-Receivables) divided by Total Equities
Stockholders Equity divided by Share Capital
Current Assets divided by Current Liabilities
(Cash + receivables) divided by Current Liabilities
Cash divided by Current Liabilities
Receivables divided by Current Liabilities
Net Income divided by total Liabilities
Net Income divided by Current liabilities
Profit before Tax divided by Total Assets
Profit before Tax divided by Stockholders Equity
Profit before tax divided by Fixed Assets
Sales revenue divided by Inventories
Profit After tax divided by Number of Shares Outstanding
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