Analysis of Financial Statements of Coca Cola

Introduction2

Introduction of Company2

Discussion3

Analysis of Balance Sheet3

Defined Contribution Plan4

Basic and Dilutive EPS4

Share-Based Compensation5

Analysis of Cash Flow Statement6

Conclusion7

Works Cited8

Analysis of Financial Statements of Coca Cola

Introduction

The subject, Analysis of Financial Statements is very important in many ways. It helps us to develop certain techniques about the analysis of financial statements of companies. Investors can use these techniques to identify certain trends and can manage their investments. This analysis is based on the financial statements of Coca Cola. It is a beverages company with operations in many parts of the world. This analysis will help the readers to get insight to this company. This analysis will cover all fundamental financial statements of Coca Cola. It will start with the analysis of the balance sheet items and will conclude with cash flow statement. The analysis will cover all the necessary aspects needed to draw ingenious results.

Introduction of Company

Coca Cola first started in 1886, in Atlanta. Johan Pemberton, a pharmacist introduced this drink and was later named as Coca-Cola. The sale of Coca Cola stated through Jacob's pharmacy with 5 cent a glass. They sold only nine glasses a day. From then on, the company started to move forward, and it never looked back. The company registered its trademark, Coca-Cola, in the year 1893 in the patent office of United States.

Now the company has multiple brands in the market. The famous brands include Coca Cola, Sprite, Fanta, Coke Diet, Coca Cola zero and Minute Maid. There are few others, but they are not very much famous. The company changed its logo over the years. The logo of the company went through various phases to reach its current form. A glimpse of the logo history is given in the following diagram.

1887-1890s

1890-1891

1941-1950s

1958-1960s

1969

2003

2007

2011

Discussion

Analysis of Balance Sheet

There are a number of deductions allowed from income. Our tax laws provide us the leverage to deduct some of the expenses in the current year, and others can be postponed (deferred). The deductions, which are allowed, in subsequent years will increase the taxable income in the current year and will increase the tax liability. We will call this increase in tax liability as deferred tax asset. Similarly, some deductions are allowed in the same year but we want to record them in the next year. This will create a difference in our books. This difference is known as deferred tax liability.

Coca Cola has $4,694 million and $ 4,261 million as deferred tax liability in the fiscal year 2011 and 2010 respectively. There are certain elements which give rise to deferred taxes. These are the temporary differences and carry forwards, which the firm discloses, in notes to the financial statements. The elements of rise to deferred taxes are given below.

Property, plant and equipment

Equity method investments

Unrealized gain/loss

Benefit plans

Trademarks and other intangible assets

Net operating/capital loss carry forwards

Other liabilities

Temporary differences are those which arise when company records certain item in books in one period while records the same item for tax purposes in other ...