Coca Cola

Financial Analysis - Coca Cola Company

Introduction

The Coca-Cola Company is one of the largest producers, distributors and sellers of soft drink concentrates and syrups in the world. It's best known and called by the name of its original product, the Coca-Cola. The headquarters of Coca-Cola is to Atlanta (Georgia), in the United States of America. The Coca-Cola is one of the largest U.S. companies listed on the New York Stock Exchange (NYSE) under the symbol "KO" and is part of Dow Jones and the S & P 500. The drink which takes its name, Coca-Cola was invented by a pharmacist (John Stith Pemberton) in 1886. According to the Annual Report of 2011, the company sells more than 500 different types of beverages in more than 200 countries and territories around the world.

In general, the Coca-Cola produces syrup concentrate which is then sold to various companies bottlers in the world that are linked to the parent from contracts of franchise (www.coca-cola.com).

Main Business of Coca Cola

Bottlers

In general, the Coca-Cola (TCCC) and / or its affiliates produces (or produce) syrup concentrate which is only sold to various bottlers throughout the world who have a franchise Coca-Cola. Coca-Cola bottlers, who territorially exclusive contracts with the company, produce finished products, in cans and bottles from the concentrate in combination with purified water and sweeteners. The bottlers then sell, distribute and trade for the final product Coca-Cola products in retail stores, vending machines, restaurants and food service distributors. In 2011, Coca-Cola had equity shares in 51 companies including non-consolidated bottling, canning and distribution operations involving approximately 58% of total production (360.datamonitor.com).

Financial Analysis

Current Financial Health of the Company

Coca-Cola Co (The) (NYS: KO)

Profitability Ratios

12/31/2011

12/31/2010

12/31/2009

12/31/2008

12/31/2007

ROA % (Net)

11.21

19.42

15.3

13.82

16.33

ROE % (Net)

27.37

42.32

30.15

27.44

30.94

ROI % (Operating)

17.72

18.55

24.78

27.68

27.59

EBITDA Margin %

26.55

42.25

29.99

29.52

29.12

Calculated Tax Rate %

26.1

18.04

24.98

19.63

26.26

Revenue per Employee

318,345

251,569

333,944

344,770

318,862

The profitability trend of the Coca-Cola is steadily reducing in 2011 to the 2010 which state that Coca Cola was outperforming in 2010 but due to reduction in net income while sales increased in 2011 comparing to 2010 with 32.5% [(46542000-35119000)/35119000]. ROA of Coca-Cola in 2011 is 1.21 while previously it was showing value of 19.42. Hence, company is not sufficiently managing their assets in order to generate profit.

This situation cannot attract good investors, in order to maintain a positive trend company need good financial strategy for the future earning to be in positive trend, as ROA showing a down ward trend in 2011 but a huge downfall from 2008 with 48.54% in 2011. Though the company sales are increasing but there are possibilities that company might not be receiving their receivable on time and much of the sales might be on credit (Paul D. K. 2009).

As far as ROI is concern, COCA-COLA has also reduced their investment due to reduction in profit in last few years. Increasing the level of this index indicates higher efficiency of capital employed. This is a signal to shareholders that the company actually uses its resources like other companies sin the industry. That is why when a new issue of shares (stocks) should ...