The Coca-Cola Company has been operating internationally for over a century and has seen rapid growth in its business since it started. The company has introduced many innovative carbonated and non-fizzy drinks to add to their numerous products, which have been well received by consumers all over the world, including the Vanilla Coke and Coke Zero…
We will be looking at several types of financial ratios available in assessing the financial position of The Coca-Cola Company: Liquidity Ratios, Asset Management Ratios, Profitability Ratios and Gearing Ratios.
The quantitative findings in this segment can be found in the Appendix section of this report. The results show that The Coca-Cola Company has a good Liquidity Ratio. The company's Current Ratio is 1.12 (0.95 in Q1 2008) and its Quick Ratio is 0.94 (0.80 in Q1 2008). This means that The Coca-Cola Company is still able to generate enough cash to settle its short-term liabilities. There has been a slight improvement in its Liquidity Ratio compared with the previous quarter. As a guide, a current ratio of 2 is ideal. However, in the company's case, 46% of its Current Assets (42% in Q1 2008) are made up of cash and cash equivalents.
At a glance, the company's assets are being managed efficiently. Its Inventory Turnover is 1.13 (1.07 in Q1 2008), which shows that company is trading better. Its inventories declined by 6% in the first quarter of 2009 whereas its sales increased by 3% in the same quarter of 2008. Nevertheless, the company should take note that over increasing its inventories may adversely affect its business performance. This is because costs associated with holding inventories for too long can be very expensive. As such, managing its inventories well is recommended.
There is a slight improvement in the Average Collection Days of 39 (43 Days in Q1 2008). Although the company is able to meet its short-term liabilities; it should still make an effort to improve the collection of its debts. The credit term given to its customers is not stated; however, as a guideline, 30 days is recommended. In this case, the company's customers are enjoying slightly more than the normal credit terms and this should be monitored.
The profitability of The Coca-Cola Company is sound. Its Gross Profit Margin of 69% (64% in Q1 2008) is quite high. This is a 4% drop compared to the first quarter of 2008, due to the lower sales in the first quarter of 2009. Although, its sales performance shows a slight improvement from the previous quarter, the comparative results from the first quarter of last year did not fair as well. The company should analyze further the cause of this decline - whether the efficiency of its production dropped resulting in lower finished goods or simply experiencing slower sales due to consumer choice.
The Return on Assets and Return on Equity ratios show similar results. At 3.2% and 6.4% respectively (3.2% and 6.5% respectively in Q1 2008), these can still be improved on. The Gearing Ratio is quite low at 24% (14% in Q1 2008). Although it has nearly doubled, the results should not cause an alarm.
The estimated cost of capital of the company is 12.75%. This measures the opportunity cost of the investors that their investment is creating value. It measures what it costs to raise capital. It is advisable to have a balance between debt and equity sources. This balance should be the mix that gives the lowest possible cost of capital consistent to the attributes of the company.
Considering the sluggish economic situation across the world, The Coca-Cola Com ...
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(The Coca Cola Company Research Paper Example | Topics and Well Written Essays - 1500 Words)
“The Coca Cola Company Research Paper Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.net/miscellaneous/303603-the-coca-cola-company.
Investment is a vital activity which requires various types of analysis to be done. To choose the right company is a very important decision. If the investor chooses the wrong stock then he or she could have to bear loss. The nonfinancial parameters has been discussed in this project.
Pemberton. It was produced as a tonic, which was modified by removing alcohol and adding vegetable essences. The name of the company was originally Coca-Cola Syrup and Extract but was shortened to Coca-Cola. It was registered in 1886 and since then it has been rapidly increasing its market share.
The company has a product line that includes over 2,700 diverse items and operates in almost all the countries in the world (Deichert, 2006). The primary goal of the company is to develop soft drink concentrates and syrups to be sold to bottling companies that include the prime beverage distribution system in the world.
The company faces challenges in today’s marketplace due to market driven changes, regulatory changes as well as socio-economic changes. An internal analysis of Coca-Cola is performed to understand the internal capabilities.
The paper will also enable to recognize the differential aspects in the strategies taken by the company to sustain in the mature market. Introduction Mature market can be defined as the market which is at a state of equilibrium. The state of equilibrium can be described as the position where the demand and the supply are equal and the chance of significant growth is less.
Similarly, there has been a remarkable result in Earnings per Share and the operating income that directly influences the net revenue of budgeting and marketing policies (Rich et al 2009). This will eventually help in the long-term projects such as market expansion and customer satisfaction.
After its foundation, Coca-Cola extensively grew in its production and delivery scales after Asa Candler’s receivership. Despite the immersed efforts to accrue success in the company’s products, the management met opposition from existing competitors with Pepsi leading the race.
This problem was brought about by the presence of poorly processed carbon dioxide. France also reported a health risk having over a hundred sick people. It also had to ban the products until the problem was resolved. As well mold contamination in Poland was brought to light.
The SWOT analysis of the Coca-cola explores its internal and external environment. It suggests that the main strengths of the company include its popularity as world leader around the globe, strong international trade, strong branding and
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