Financial Analysis: Coca-Cola Company

Financial Analysis: Coca-Cola Company

Financial Analysis

Coca-Cola Company

MSF Cohort 3

         Business 505, Fall 2013

Xuan Fang (Margaret)

Abstract

The chief aim of the present work is to analyze the financial statements and overall financial health of the Coca-Cola Company. The paper consists of three parts: In the beginning, we give a brief introduction about the Coca-Cola Company and its business, and then present a general overview of the carbonated soft drink industry as well as discuss industry leaders, major trends, and future prospective in this industry. In the main part of the paper, we are devoted to use the financial ratios including Liquidity, Efficiency/Activity, Leverage, Coverage, Profitability, and Market Ratios to analyze the overall financial health of the Coca-Cola Company. 

Based on the aforementioned analysis, the third part arrives at a conclusion that Coca-Cola as a market leader in the CSD Industry is in a healthy financial situation and should be continued to invest in.

Key words: Coca-Cola Company, financial health, financial ratios

Introduction

The Coca-Cola Company, as market leader in the carbonated soft drink industry as well as a strong international company, holds over half of the global market share for non-alcoholic beverages.

Thus, we are intended to investigate the Coca-Cola Co.’s overall financial performance and give the future investment suggestion. The procedure we followed can be briefly described as data collection, ratio calculation, ratio analysis, and conclusion drawing.

The paper is arranged as follows. The first section provides the overview of the Coca-Cola Company and its industry. The second section analyzes the Coca-Cola Co.’s overall financial health of the company from six aspects including Liquidity, Efficiency/Activity, Leverage, Coverage, Profitability, and Market. The last section arrives at a conclusion about the strengths and weakness of the Coca-Cola Company and gives the investment suggestion about this company.

I. Company & Industry Background

1.1 Company Introduction

The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. [1]

The Coca-Cola Company has its own system---the Coca-Cola system---that comprises its company and more than 250 bottling partners worldwide. This system operates through multiple local channels: the Coca-Cola Company (manufactures syrups concentrate)---Bottling Partners (produce finished product)---Customers (including grocery stores, restaurants, movie theaters, etc.)---Consumers.

The Coca-Cola company represents four of the world’s top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. "Coca-Cola" or "Coke" accounted for approximately 78% of the company's total gallon sales. And the company offers over 500 brands in more than 200 countries or territories. [2]

However, success is always accompanied by criticisms. The Coca-Cola Company has been involved in controversies and lawsuits related to human rights violations and other unethical practices, particularly since the early 2000s. Thus, in recent years, the company has been making every effort to respect human rights and protect workplace rights.

1.2 Industry Analysis

1.2.1 General Overview

The carbonated soft drink industry includes the manufacture and sale of diet and standard cola, fruit-flavored carbonated drinks and mixers.

1. America occupies over 54% of the global market
2. The CSD industry is expected to generate worldwide revenue in excess of $209 billion in 2014, indicating 12% market growth in five years, with volume also rising 10% in the same period to exceed 197 billion liters. [3]
3. Cola holds the leading market segment, with more than 42% of the global market in terms of value

1.2.2 Industry Leaders

1）Coca-Cola

a. Market leader, holding over 42% of the CSD market.

b. Nearly 140,000 employees worldwide and over 3,500 products for retail sale in more than 200 countries

2) PepsiCo

a. New-York headquartered PepsiCo markets over 20 brands that generate revenue of more than $1 billion per year

b. Generate between $250 million and $1 billion annually by its 24 other brands