coca cola analysis.doc

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Interpretation And

Analysis Of Company

Financial Reports[Type the document subtitle]

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FINANCIAL STATEMENTS NEEDS TO MAKE DECISION; AN

OVERVIEWThe financial statements are prepared to make decisions in the first place. It plays a

key role in the creation of administrative decisions. However, the information

received from these statement are not the final because no one can take the

meaningful decisions on the basis of tese statements alone. (Yohn, 2001).

Through the analysis and interpretation of financial statements, thedecisions made by

these statements would be very beneficial. Financial analysis needs to determine the

financial strength of the balance sheet and P & Loss accounts.

there are mainly four types of financial statements available on which basis a financial

advsor took some decision in the favor of company. Four types of financial statement

are like balance sheet, profit and loss statement account, cash flow statement and the

statement of changes in equity. These statements are used for the analysis purpose.

There are so many methods to analyze the statements like trend analysis, vertical

analysis, horizintal analysis and ratio analysis etc. from all these methods, ratio

analysis is a very importantr tool to measure the analysis of all the financial

statements. It is the process of creation and interpretation of the various reports that

can be analyzed more clearly the financial statements and the decisions taken by such

an analysis. (Udell, 2002)financial statement analysis can be determined as the relationship of doctor and

patient. Doctor examine the patient and give the report on it and let the know about

the diseases. So the same case is with statements analysis, analyst examine the

statements and then give the report on it whether the firm is enjoying the good health

or not by the help of these statement analysis.

The purpose of financial analysis is to identify the information contained in the

financial statements in order to judge the profitability and financial position of the

company. Analysis of financial statements is an attempt to determine the importance

and meaning of the data so that it can predict the financial statements, the ability

future salary to pay interest and debt maturity and profitability of sound dividend

policy.

The financial report is the relationship between accounting numbers expressed

mathematically report provides information on the financial situation of concern.

These are indicators and indicators of financial health, strength, or a position of


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weakness Foundation. One can draw conclusions about the real financial situation of

concern with the help of reports.

OVERVIEW FOR THE FINANCIAL ANALYSIS

The first purpose of statement analysis is to provide the information for the purpose of

decision making. 2nd essential step is to point out the the important information and

then arrange it. Final step is to analyze the statements and interpret all the calculation

and result it. (Douglas. 1999)

ESSENTIAL FEATURES OF FINANCIAL ANALYSIS

The main feature of the analysis of financial statements is to provide the

easiest and reliable information to concerned persons.

Information which is provided by the analyst needs to classify for the

concerned persons.

Last but not least feature is to compare the conclusions with another company

or with another time frame. (Udell, 2002)

Purpose of Analysis of financial statements

Through this analysis concerned person would be known about the earningcapability of the firm.

Solvency of the firm can be known.

Companys sound position can be determined by these analyses

Is the fir capable to meet its short and long term debts and obligation, these

analyses provide the information

By comparing two firms, it provides the knowledge whether the firm is

performing well or not.

Trend analysis by comparing time series analysis.

Management efficiency can be determined

Management can get better information through it for taking firms decisions.

Steps to make Analysis


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There is a procedure which needs to be adopted by the financial analyst to interpret

the financial statements.:-

First of all analyst should know about the reasons for making the analysis.

That analyst must know about the policies of the company and well known

about the principles of accounting.

After analyzing the reasons, the aim should be specified. What the firm wants

to do. The purpose of that firm might be profit making. Then analyst should be

well known about the sources of earning.

Before the start of analysis, all the statement should be provided to analyst for

making the analysis. Balance sheet and profit and loss accounts are very

essential. (Bushe, 1997)

Make the availability of all the data relevant to financial statements. It needs to

be recognized and rearranged according to availability. Data needs to be

minimized till relevant information.

Analysis can be of more than one method. So here the topic would define the

way of ratio analysis. So here the relationship would be established to evaluate

the information from these statements.

After choosing the method for analyzing, interpretation needs to be very

simple and in an understandable way. Because this analysis would help in

explaining the decision making of the firms.

Findings would be presented in the form of reports to the management.

RATIO ANALYSIS:

It is the way for which one can analyze the statements in a very broad way. It

facilitates to couching and analyzing the statements by considering the financial

statements. It focuses on tangible and measurable facts which are the essentials of any

firm.

If one considers it that the analysis of financial statement through ratio analysis is just

a comparison of two time frames or two companies it is wrong. One understands that

this is just the game for the numbers on the balance sheet, income statement and any


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other statement, which is wrong. It actually looks for the relationship between values

and evaluate the performance of the firm and result in the future outcomes.

RATIO:

The ratio is the measurement of figures in terms of the other. It shows the relationship

between two values which are actually dependent on each other. Calculation of the

ratio is termed as the division of one figure with the other one. Two main heads must

be divided with each other. The result of these ratios is termed as Times.

RATIO ANALYSIS: AN OVERVIEW

After analyzing the definition of ratio, ratio analysis is the process of two figures what

these terms actually depict. What does it mean of these ratios? It is a method in which

bundle of figures can be calculated, evaluating and interpreting.

It is used for the quantitative analysis for the statement analysis. It can be used for the

both of the trend analysis as well horizontal and vertical analysis. By these ratios,

health and sound position of the forms can be calculated. Analysis of anything is

actually based on the purposes and objectives of the things to whom analysis is

required.

Ratio analysis is the way to provide the insight of valuable information to concernedpersons or stakeholders. Who are the stakeholders actually? Stakeholders are those

who have a stake in any firm or interested parties in the firm's affairs. These parties

can be outsiders like creditors and customers while the internal parts can be

management and shareholders of the companies etc.

Due to the financial statement analysis, stakeholders can view the performance of the

company, leverage position of the company and strengths of the companies. By taking

an example of leverage ratio, analysts would find that how much company is

leveraged. Or if the financial advisor calculates the liquidity ratio, its results would

show that how much company is liquid to set off their obligations.

One thing which should be kept in mind by the financial advisor that not to be focused

only on one ratio. One ratio can give wrong direction. There needs to be some set of

ratio analysis of different aspects.

INTRODUCTION OF COCA-COLA COMPANY


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For the purpose of ratio analysis, Coca-Cola company has been chosen as a case

study. Coca-cola company is the worlds largest marketer because it is dealing in the

sale and promotion of alcohol free beverages in the world. In the U.K, it is also a very

big brand which is distributing the alcohol free beverages to the local market. Coca-

cola is mainly dealing with five hundred alcohol free beverages, syrups and juices and

coffees. It was originally started with the name COKE and origin was United states of

America in 1944. Mr Gigga was the person who starts the business with medicines

and market dominance with the soft drinks from all over the world in the twentieth

century.

Coca Cola started its operation in the united states of America and sold its firstly

product in the same country in the year of 1886. It is the company which starts from

medicines and now established as a multinational company in the world. It was

registered in New York stock exchange in the year of 1919 and its sales were 1.6

billion in the twentieth century. There was a person who holds the major position in

the different designations like the chairman of the board, CEO and President of the

company. His names were Mukhtar Kent.

Financial reporting and making the financial statement is the main part of this study.There are so many branches for this multinational brand from which there are some asfollows: Europe, north and Latin America, Eurasia and Africa are some examples.

Position in the Industry:

The Coca-Cola company

is the well renownedmultinational and worlds largest

company in beverages market.

There are more than 3000 beverages license has been issued forthis brand all over the world

In the 200 counties, there are 55000 brand names available all

over the world (Olson, 2005)


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As per above mentioned pie chart, it is clearly describing the

major part of the coca-cola which is 44 percent currently in the

beverages market.

After the coca cola industry, 31 percent share has been

occupied by the Pepsi limited company.

So that the main competitors of the Coca Cola limited is the

Pepsi and Dr. Pepper which is also holding the 31 percent and

15 percent respectively.


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Interpretation of financial statement analysis:

Liquidity Ratios:

1. Current RatioYear 2005 Year 2006

Year 2007

2007 Year 2008

Interpretation:

Four years analysis is showing that the firm is able to achieve

its target by mitigating by the obligations. In the year 2005, the

company was able to meet its obligation as compared to current

assets. After that company goes for more growth and in year 2007

company was not in a sound position as compared to other years.but

C.Ratio = C.AssetsC.Liab

= $10908$11705

= 0.936 cents


= $8442$8891

= 0.95 cents

C.Ratio = C.Assets

C.Liab= $12106

$13226= 0.916 cents


= $12177$12987

= 0.93 cents

0 .9 0 .9 0 5 0 .9 1 0 .9 1 5 0 .9 2 0 .9 2 5 0 .9 3 0 .9 3 5 0 .9 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8


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in year 2008, company gain tries to boost up its ability to meet

obligations against its assets.

Quick Rati o Year 2005 Year 2006

Year 2007 Year 2008

Interpretation:This ratio explains that the way to meet obligations through its most liquid assets.Graphical representation shows that except in year 2007, all the year were good for itsliquidity terms. The company is enjoying the very good health of the firm. In year2007, there was a great decline which was suffered by the company, after that the

period of booms touch the surface of coca cola one more time.

Quick ratio = C.A - StockC.Liab

= $10908 - $2018911700

= 0.79 cents


= $8441 - $1641$8890

= 0.76


= $12106 2227$13226

= 0.75


= $12186 2188$12989

= 0.76

0.745 0.75 0.755 0.76 0.765

2005

2006

2007

2008


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Debt / Equity Ratio:

Year 2005 Year2006

Year2007 Year 2008

Interpretation:By making the comparative analysis for the four years, it was found that debt

to equity ratio is good for all the years. Debt to equity ratio is actually a term as howmuch debt can be payoffs against shareholders equity. Shareholders are getting thefacilities of debts then how much capability to pay off.By taking the view of graphical representation and interpretation, it is continuouslyrising. In year 2008 it is on its peak as compared to previous years. it results in thefinancing from the shareholders' equity now.

Debt to Total Asset Ratio:

D/E ratio = C.L + L.T.DebtsS. equity

= $14159$19717

= 0.718


= $10205$16921

= 0.60


= $16501$21745

= 0.76


= $15768$20473

= 0.77

Debt to Equity Ratio

0

0.2

0.4

0.6

0.8

1

2005 2006 2007 2008

Years

Ratio


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2005 2006

2007 2008

Interpretation:

This ratio defines as the companys ability to meet the debts of

company through financial assets of the firm. In the year 2005 the

ratio was almost 37 percent while in year 2008 it remain alsmots

same for of the years.there is a slight upward change in the ratio find,

so it needs to be care.

Long Term Debt to Total Capitalization:

Debt To Total Asset Ratio = Total debtsTotal assets

= $1415837917

= 0.373


= $10204$29963

= 0.34


= $16502$43269

= 0.38


= $15769$40519

= 0.389

Debt to Total Asset Ratio

0

0.1

0.2

0.3

0.4

0.5

2005 2006 2007 2008

Years

Ratio


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2005 2006

2007 2008

Interpretation:

It is the relation between the long term debts and the capital

structure of the company. In the year 2005, the ratio was satisfactory

but in the year 2006 it was in declining phase. After more struggle by

the company it was again rising up to 0.12 in the year 2008.

Long term debt to total = Long term debtsCapitalization Total capitalization

= $2457$22169

= 0.11


= $1314$18234

= 0.07


= $3277$25021

= 0.13


= $2781$23253

= 0.12

Long Term Debt to Total Capitalization

0

0.05

0.1

0.15

2005 2006 2007 2008

Years

Ratio


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Gross Profit Margin Ratio:

2005 2006

2007 2008

Interpretation:

If the ratio of the gross profit would be higher then its results for the firm to producemore at lower cost of goods sold. In the comparisons of the financial statements ofCocaCola company, the position stagnant but it is high which resuls in favorablecondition.

Net Profit Margin Ratio:

2005 2006

Gross Profit margin ratio = Net sales CGSNet sales

= $28296 9981$28296

= 64.7 %

Gross Profit margin ratio = Net sales CGSNet sales

= $24088 8164$24088

= 66 %

Gross Profit margin ratio = Net sales CGS

Net sales= $28857 10406

$28857= 63 %

Gross Profit margin ratio = Net sales CGS

Net sales= $31944 11374

$31944= 64%

Gross Profit Margin Ratio

0

20

40

60

80

2005 2006 2007 2008

Years

Rati

Net profit margin ratio = Net profit after taxesNet sales

= $5623

$28296= 19.87 %


= $5080

$24088= 21 %


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2007 2008

2009 = 7,605/30990= 24.5%

Interpretation:

According to the definition, higher the ratio, higher will be the

firms ability to pay its taxes. In the first three years, the margin is

high but in 2008 the margin falls by 2%. For the company, roughly

0.20 cents out of every sales dollar consists of After Tax Profit.in

2009the company again suddenly high the ratio 6.4% .

Return on Investment:

2005 2006


= $5981$28857

= 20.7%


= $5807$31944= 18.1%

Net Profit Margin Ratio

0

5

10

15

20

25

2005 2006 2007 2008

Years

Ratio

Return on Investment = Net profit after taxesTotal assets

= $5623$37917

= 14.8 %


= $5080$29963

= 17 %


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2007 2008

2009 = 7605/48671= 15.6%

Interpretation:

The ratio should be higher. Here starting from 2005, the ratio

is almost 15% and goes up in 2006 and is static in 2008 and 2009 with

14%-15.6%. The fluctuations show that in 2005, the firm is

generating 14.8% and in 2009 15.6% of net profit after taxes by using

its total assets.

Return on Equity:

2005 2006


= $5981$43269

= 14 %


= $5807$40519

= 14.33 %

Return on Investment

0

5

10

15

20

2005 2006 2007 2008Years

Rati

Return on equity = Net profit after taxesShareholders equity

= $5623$19712

= 29 %


= $5080$16920

= 30 %


= $5981$21744

= 27 %


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2007 2008

2009 = 7605/25,346= 30%

Interpretation:

The ratio should be higher. Here starting from 2005, the ratio

is 29% and goes up in 2006 and fluctuates in 2007 and 2008 in 2009

the ratio again high to 30%. The fluctuations show that in 2005, the

firm is generating 29% and in 2009 the firm generating 30% of net

profit after taxes through Shareholders Equity.

Receivable Activity Ratio:

2005 2006


= $5807$20472

= 28 %

Return on Equity

0

10

20

30

40

2005 2006 2007 2008

Years

Rati

Receivable activity ratio = Annual creditsales

Receivables= $28296

$2998= 10 times


Receivables= $24088

$2587= 9.3 times


Receivables= $28857

$8317= 8.69 times


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2007 2008

2009 = 30,990/3,758= 8.25 times

Interpretation:

This ratio shows that how effectively the firm is using their

assets, the higher the turn over between the sales and cash collection.

For Coca-Cola company , the turnover in 2005 is 10 times, 9.3 times

in 2006, 8.69 in 2007, 10 times in 2008 and 8.25 in 2009. The ratio

should be low and it is low as shown in the graph.

Receivable Turnover in Days:

2005 2006


Receivables= $31944

$3090= 10 times

Receivable Activity Ratio

0

2

4

6

8

10

12

2005 2006 2007 2008

Years

Ratio

Receivable turnover in days= Days in year xReceivables

Annual credit sales= 365 x 2998

28296= 39 days



24088= 39 days



$28857= 42 days


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2007 2008

Interpretation:the company's ability to collect receivables and conditions here in

2005. In day 39 and remained the same in 2006, but the collection is growingday by 2007, which shows that the collection of slow compared to previousyears. The collection period should be lower, so that timely payments

Inventory Activity Turnover Ratio:

2005 2006



$31944= 37 days

Receivable Turn over in Days

0

10

20

30

40

50

2005 2006 2007 2008Years

Rati

Inventory activity turnover ratio= Cost of goodsold

Average inventory= $9981

$2016= 5 times



$1641= 5 times



$2220= 4.7times


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2007 2008

Interpretation:Generally, a high inventoryturnover,the moreefficient inventory

managementcompanyandfresher, more liquidity, inventory. Theratiosof the time in 2005-06, 2007, and went to the falls, and in 2008, iteventually falls back to 2009. Ratio is high, so it is advantageous. Itshowsthat effectivemanagementof the company.

Inventory Turnover in Days:

2005 2006



$2187= 5.2 times

Inventory Activity

0

1

2

3

4

5

6

2005 2006 2007 2008

Years

Ratio

Inventory turnover in days = Days in year xInventory

CGS= 365 x 2016

9981= 73 days


CGS= 365 x 1641

$8164= 75 days


CGS= 365 x 2220

10406= 78 days


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2007 2008

Interpretation:

The figure tells us how many days, on average, before inventoryis turned into accounts receivable through sales. So in 2005, the

turnover in days is 73. In the next four years the turnover ratio

in days differs from each other. Lowest of all is 2008s ratio,

which is 70 days.

Total Asset Turnover Ratio:

2005 2006


CGS= 365 x 2187

11374= 70 days

Inventory Turn Over in Days

0

20

40

60

80

100

2005 2006 2007 2008

Years

Ratio

Total assets turnover = Net sales

Total assets= $28296$37917

= 74 %


Total assets= $24088$29963

= 80 %Total assets turnover = Net sales

Total assets= $28857

$43269= 66 %


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2007 2008

2009 = 30990/48671= 63%

Interpretation:The report should be high. Here one can see that the total Coca-ColaCompany's assets ratio of0.74 in 2005, on theotherhand, that means that

the company generated revenues of USD assets less investments. Reportincreases in 2006 and then from 2007. In 2008, the company was able tostabilizeand generatea moderate income. However, in 2009, againslowed to0.63totalreturnon the report.

Conclusion:

After applying all the formulas we get an idea of the Coca Cola company is a

profitable firm. For four years, the trend analysis, we found that the company isprofitable returns in the short-term and long-term investments, accounts receivabledecreased conversion rate, and they can pay their debts, as well as their resources.

Limitations:


Total assets= $31944

$40519= 78%

Total Asset Turn Over Ratio

0

20

40

60

80

100

2005 2006 2007 2008

Years

Ratio


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Although financial statement analysis is a very useful tool, it has two limitations:These two limitations involve the comparability of data among financial companiesneed to look beyond ratios.

Comparison of Financial Data:Comparative another company can provide valuable clues about the financial health

of the organization. Unfortunately, the differences between the accounting methodscompanies sometimes very difficult to compare the company's financial records. Forexample, if a company values its inventories LIFO method and another firm byaverage cost method, then direct comparison of financial data items, such as the valueand cost of goods sold two companies can be misleading. Footnotes are sometimessufficient data are presented to restate financial statements for comparative databases.Otherwise, you must take into consideration the lack of comparability of data analyst

before coming to any certain conclusion. However, even with this restriction meantcomparisons of key ratios, and other companies with the industry average. Oftensuggest avenues for further investigation.

The Need to Look Beyond Ratios:An inexperienced analyst may assume that ratios are sufficient in itself as a basis for

judgment about the future: Nothing could be further from the truth. Results based onanalysis parameters must be considered tentative. Reports should not be considered asfinal, but they should be seen as a starting point, as indicators of what to pursue inmore depth. They raise a lot of questions, but they rarely answer any question bythemselves,Besides correlation, other sources of data to be analyzed, so that a decision on thefuture of the organization analyst should look, for example, industry trends,technological changes, changes in changing consumer tastes and broader factors and

economic changes within the company.Introduction:

Each task trend analysis of the company. Therefore, we have selected balancesheet and income statement of the Coca-Cola Company. Four years of data werecollected through a secondary source, which gauges, graphical presentations arecovered in detail by the comments.At the end of the restrictions that we have an idea of what problems are facinganalysts and what are the things that should be kept in mind

Balance Sheet of Coca-Cola Company:

Assets Dec 08 Dec 07 Dec 06

Current Assets

Cash 4,701.0 4,093.0 2,440.0

Net Receivables 3,090.0 3,317.0 2,587.0

Inventories 2,187.0 2,220.0 1,641.0

Dec2005

3744

2998

2016

2148

10907

7907

19102

37917

Dec2005

1226


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Other Current Assets 2,198.0 2,475.0 1,773.0

Total Current Assets 12,176.0 12,105.0 8,441.0

Net Fixed Assets 8,326.0 8,493.0 6,903.0

Other Noncurrent Assets 20,017.0 22,671.0 14,619.0

Total Assets 40,519.0 43,269.0 29,963.0

Liabilities and Shareholder's Equity Dec 08 Dec 07 Dec 06

Current Liabilities

Accounts Payable 1,370.0 1,380.0 929.0

Short-Term Debt 6,531.0 6,052.0 3,268.0

Other Current Liabilities 5,087.0 5,793.0 4,693.0

Total Current Liabilities 12,988.0 13,225.0 8,890.0

Long-Term Debt 2,781.0 3,277.0 1,314.0

Other Noncurrent Liabilities 4,278.0 5,023.0 2,839.0

Total Liabilities 20,047.0 21,525.0 13,043.0

Shareholder's Equity

Preferred Stock Equity -- -- --

Common Stock Equity 20,472.0 21,744.0 16,920.0

Total Equity 20,472.0 21,744.0 16,920.0

Shares Outstanding (mil.) 2,317.2 2,317.2 2,317.2

Income Statement of Coca-Cola Company:

Revenue 31,944.0 28,857.0 24,088.0

Cost of Goods Sold 11,374.0 10,406.0 8,164.0

Gross Profit 20,570.0 18,451.0 15,924.0

Gross Profit Margin 64.4% 63.9% 66.1%

4046

18205

--

19712

19712

2317.2

28296

9981

18315

64.8%

10716

1109

7668

27.2%

251

--

7296

1674

5622

5622

--


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SG&A Expense 11,774.0 10,945.0 9,431.0

Depreciation & Amortization 1,228.0 1,163.0 938.0

Operating Income 7,877.0 8,329.0 6,798.0

Operating Margin 24.7% 28.9% 28.2%

Non operating Income (902.0) 841.0 297.0

Non operating Expenses (105.0) (220.0) --

Income Before Taxes 7,439.0 7,873.0 6,578.0

Income Taxes 1,632.0 1,892.0 1,498.0

Net Income After Taxes 5,807.0 5,981.0 5,080.0

Continuing Operations 5,807.0 5,981.0 5,080.0

Discontinued Operations -- -- --

Total Operations 5,807.0 5,981.0 5,080.0

Total Net Income 5,807.0 5,981.0 5,080.0

Net Profit Margin 18.2% 20.7% 21.1%

Diluted EPS from Total Net Income ($) 2.49 2.57 2.16

Dividends per Share 1.52 1.36 1.24

Internal and External Factors:

PEST Analysis for the COCA-COLAPEST analysis shows the internal and external effects on the company. It takes thelooks on the company like P for Political, E foe Economical effect, S for Social and Tfor technological effects which impact on the company's affairs.

An Analysis of Coca-Cola

Political Impact:It includes the effects of the government which includes the sourcing for the funds,

performances and targets to achieve.

Impact of Politics on CoCa CoLa:

5622

5622

20%

2.40

1.37


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Coca cola deals in the alcohol free beverages which is the category of FDA. For thispurpose, the government takes part in the manufacturing of these kind of products bysome laws and regulations. There would be some fines in the case of non performanceof work.

There are some factors which are causing an impact on the company as: Most of the time a change in taxation rates, interest rates and revision of the

rules and regulation cause an impact on the firms.

Coca cola is an multinational brand. There are so many competitors in theworld. So the competitors can sell the alcoholic beverages to the market butdue to the restriction on alcoholic beverages for the coca cola, they cannot sellthese goods, so it also impacts.

Political instability also suffers heavily on the business environment.Instability of civil wars, change in the government on an immediate basis andrestriction to send resources from one place to another.

Especially in the international market, restrictions on imports and exportssuffered heavily.

Terrorism is also the reason for the lower level of sales of the company. Ifthere is instability in the country and Government is not able to defend it dueto weak defensive powers then it will impact on the coca cola companyheavily.

For the purpose of developing the countries by penetrating the market is alsoaffected by the government actions.

Economic Impact:It includes the employment opportunities in the economy, demand and supplyconditions, training provision and increment in the regional competitiveness.

Analysis for the Coca Cola Inc.

Last year the U.S. economy was strong and nearly every part of it was growing anddoing well. However, things changed. Most economists loosely define a recession astwo consecutive quarters of contraction, or negative GDP growth.However, because of aggressive action by the Federal Reserve and Congress it will beshort and mild. The economy will return to sustained, positive growth in the first halfof 2002. (Ghobadian, 2009)

In the Last year, the U.K. economy was strong, and almost every part of the economywas growing and healthy. However, things have changed. Many economists looselydescribed as two consecutive quarters of decline in the downturn, or -ve growth inGDP.However, due to the aggressive action of the FED and Congress will be back soon.Future Prospects

The Federal Reserve is doing everything it can help the economy for thepurpose of recovery. They cut interest rates ten times this year: The rate hasfallen to a 40-year low rates two percent lower interest eventually causedconsumer demand in the economy. Companies to expand and increase the use

of debt as a result of low borrowing rates: Coca-Cola can borrow money toinvest in other products, as well as interest rates are low. The loan can be used


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for research into a new product or technology. As for researching newproducts that will cost less in the Coca-Cola company to sell its products andpeople spend more because they get free products from Coca-Cola.

Before the attacks of September 11, 2001, the United States, the economy isstarting to recover a bit and see only recently that they have reached economic

levels. Customers will now resume their normal habits, going to shoppingmalls, cars, eating out and restaurants. However, many are still cautious inhandling their money. They believe that low inflation is still ahead of us,consumers can regain confidence next year.

Non-alcoholic beverage industry has big discounts to countries outside the UKand poor standard surveys of the industry, "major soft drink companies, thereis economic improvement in many major international markets, such as Japan,Brazil and Germany . "This market will continue to play an important role inthe success and sustainable growth for the majority of non-alcoholic beverageindustry.


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Social Impact: It covers the life style of the people, carrier shortages and difficulties in the

society. (Harris, 2001)

Social Analysis of Coca-Cola

Many UK citizens needs to engage in a healthy lifestyle which is influencedby the soft drinks industry. Many bottled water and Diet colas are passinginstead of beer and other alcoholic beveragestere is no care for the healthyfood or water or any bevarages. Economy is not awared for the disadvantagesof alcoholic bevarages and they are getting it vigirously. (Scholes, 2000)

Consumers aged 38-56 are also increasingly concerned about the level ofnutrition. There are some segments for the market which arte distributed. Inthese segments there are some baby boomers segments which is a very largesegment. So people are more concerned about their babes food. People want to

live long life but the junk foods are decreasing the life time day by day.due tothis factor, aggregate demand for these bevarages also decreasing.

Technological Impact:Technology is changing more vigorously. So the change in technology includesinternet facilities which are changing the trend day by day. First it comes from dial upconnections to broadband technology, WiFi technologies and much more. Electroniclearning through technology, computers, laptops, and many other technologicalchanges occur everywhere which cause the enhancement of knowledge of theconsumer world.

Analysis:

Technological effects have a main feature of promotions, advertisement andmarketing through the different channels has been easy. Media have given the

best opportunity to expand it. Television and the internet are the source of theincrease in the awareness of the people.

By introducing the perishable bottles and caps of the bottles have enhanced thesale of the coca cola industry. Consumers can take it to anywhere and bin itany time at any place.

Production of the coca cola company has been increased due to thewtechnology improvement. Now the coca cola company is expanding their

sectors through more precisely focused on technology. (Praetz., 2000)

FINDINGSAND CONCLUSION:

At the end of the study, it has been found that how much benefit is the financialstatement analysis? After performing the ratio analysis some points of considerationhave been chosen as follows which would be beneficial for the firms:Findings:

1) Through financial statement analysis, analyst analyzes that the coca colacompany should reduce their liabilities by reducing the expenses which areaccrued. By this thing company can improve the liquidity position.

2) The company needs to be focused for the inventory as well as selling. It meanscaring for the inventory management and then make the selling as per


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availability of stock. There needs to be some LIFO and FIFO method tocalculate the CGS for the goods in stock.

3) If company reduced the operating cost then it would be eligible to make profitmargins comparatively better.

Earning Per Share:4) If the earnings per share ratio calculate then it would be easy to find out the

profitability of the company. So as per the ratio determined, it shows thatcompany is in a very sound position and they are eligible to pay the dividendsto their shareholders.


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706
http://query.nytimes.com/gst/fullpage.html?res=9805EEDC163BF93BA2575AC0A9669C8B63http://query.nytimes.com/gst/fullpage.html?res=9805EEDC163BF93BA2575AC0A9669C8B63http://en.wikipedia.org/wiki/New_York_Timeshttp://en.wikipedia.org/wiki/New_York_Timeshttp://books.google.com/?id=ESJzaCJE3fQC&pg=PA26&dq=what+is+fmcg&q=what%20is%20fmcghttp://query.nytimes.com/gst/fullpage.html?res=9805EEDC163BF93BA2575AC0A9669C8B63http://en.wikipedia.org/wiki/New_York_Timeshttp://en.wikipedia.org/wiki/New_York_Timeshttp://books.google.com/?id=ESJzaCJE3fQC&pg=PA26&dq=what+is+fmcg&q=what%20is%20fmcg


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Annexure:Income Statement of Coca-Cola Company:

SCAL

EAR

NDING

Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009

venue 28296.0 24,088.0 28,857.0 31,944.0 30,990.0

st of

oods Sold

9981.0 8,164.0 10,406.0 11,374.0 11,088.0

oss Profit 18315.0 15,924.0 18,451.0 20,570.0 19,902.0

oss Profit

argin

64.8% 66.1% 63.9% 64.4% 64%

G&A

pense

10716.0 9,431.0 10,945.0 11,774.0 11,671.0

preciation

mortization

1109.0 938.0 1,163.0 1,228.0 1,236.0

perating

come

7668.0 6,798.0 8,329.0 7,877.0 9,301.0

perating

argin

27.2% 28.2% 28.9% 24.7% 20.6%

o operating

come

251.0 297.0 841.0 (902.0) 121.75.0

o operating

penses

-- -- (220.0) (105.0) (181.67.0)

come

fore Taxes

7296.0 6,578.0 7,873.0 7,439.0 8,946.0

come

xes

1674.0 1,498.0 1,892.0 1,632.0 2,040.0

t Income

ter Taxes

5622.0 5,080.0 5,981.0 5,807.0 7,605.0

ntinuing

perations

5622.0 5,080.0 5,981.0 5,807.0 7,605.0

ntinuingperations

5622.0 5,080.0 5,981.0 5,807.0 7,605.0


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sBalance sheet

Year 2005 2006 2007 2008 2009

Assets

C. Assets

Cash 3745.01 2,440.0 4,093.0 4,701.0 9,151.0

Debtors 2998.0 2,587.0 2,587.0 3,317.0 3,758.0

Stocks 2016.0 1,641.0 2,220.0 2,187.0 2,354.0

Other C. Assets 2148.0 1,773.0 2,475.0 2,198.0 2288.0

Total CurrentAssets

10907.0 8,441.0 12,105.0 12,176.0 17,551.0

Net Fixed Assets 7907.0 6,903.0 8,493.0 8,326.0 9,561.0

Other Non currentAssets

19102.0 14,619.0 22,671.0 20,017.0 2,421.0

Total Assets 37917.0 29,963.0 43,269.0 40,519.0 $ 48,671.0

Liabilities and

Shareholder's

Equity

Current Liabilities

Accounts Payable 1226.0 929.0 1,380.0 1,370.0 13,721.0

Short-Term Debt 5283.0 3,268.0 6,052.0 6,531.0 6,800.0

Other CurrentLiabilities

5191.0 4,693.0 5,793.0 5,087.0

Total Current

Liabilities

11701.0 8,890.0 13,225.0 12,988.0 13,721.0

Long-Term Debt 2457.0 1,314.0 3,277.0 2,781.0 5,059.0

Other Non current

Liabilities

4046.0 2,839.0 5,023.0 4,278.0 4,545.0

Total Liabilities 18205.0 13,043.0 21,525.0 20,047.0 23,872.0

Shareholder's

Equity

Preferred Stock

Equity

- - - - - - - - - -

Common Stock

Equity

19712.0 16,920.0 21,744.0 20,472.0 24,799.0

Total Equity 19712.0 16,920.0 21,744.0 20,472.0 25,346.0

Shares Outstanding

(mil.)

2317.2 2,317.2 2,317.2 2,317.2 2,317.2

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