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    Financial Management

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    Rabbaniya Aisyah Firdauzy
    The Coca-Cola Company was incorporated in 1919 and is a beverage company that owns or licenses over 500 non-alcoholic beverage brands worldwide. It operates through segments like Eurasia and Africa, Europe, Latin America, North America, Asia Pacific, Bottling Investments, and Corporate. Some of its major brands include Coca-Cola, Diet Coke, Fanta, and Sprite. It manufactures concentrate and syrups and makes its products available globally through bottling partners and distributors. The Coca-Cola Company competes with companies like PepsiCo, Nestle, and Dr Pepper Snapple Group. Its book value in 2015 was $25.764 billion while its market value was $180 billion

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    Financial Management

    Uploaded by

    Rabbaniya Aisyah Firdauzy
    365 views9 pages
    The Coca-Cola Company was incorporated in 1919 and is a beverage company that owns or licenses over 500 non-alcoholic beverage brands worldwide. It operates through segments like Eurasia and Africa, Europe, Latin America, North America, Asia Pacific, Bottling Investments, and Corporate. Some of its major brands include Coca-Cola, Diet Coke, Fanta, and Sprite. It manufactures concentrate and syrups and makes its products available globally through bottling partners and distributors. The Coca-Cola Company competes with companies like PepsiCo, Nestle, and Dr Pepper Snapple Group. Its book value in 2015 was $25.764 billion while its market value was $180 billion

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    The Coca-Cola Company was incorporated in 1919 and is a beverage company that owns or licenses over 500 non-alcoholic beverage brands worldwide. It operates through segments like Eurasia and Africa, Europe, Latin America, North America, Asia Pacific, Bottling Investments, and Corporate. Some of its major brands include Coca-Cola, Diet Coke, Fanta, and Sprite. It manufactures concentrate and syrups and makes its products available globally through bottling partners and distributors. The Coca-Cola Company competes with companies like PepsiCo, Nestle, and Dr Pepper Snapple Group. Its book value in 2015 was $25.764 billion while its market value was $180 billion

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    365 views9 pages

    Financial Management

    Uploaded by

    Rabbaniya Aisyah Firdauzy
    The Coca-Cola Company was incorporated in 1919 and is a beverage company that owns or licenses over 500 non-alcoholic beverage brands worldwide. It operates through segments like Eurasia and Africa, Europe, Latin America, North America, Asia Pacific, Bottling Investments, and Corporate. Some of its major brands include Coca-Cola, Diet Coke, Fanta, and Sprite. It manufactures concentrate and syrups and makes its products available globally through bottling partners and distributors. The Coca-Cola Company competes with companies like PepsiCo, Nestle, and Dr Pepper Snapple Group. Its book value in 2015 was $25.764 billion while its market value was $180 billion

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    © All Rights Reserved
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    of 9

    OVERVIEW OF COCA-COLA COMPANY

    The Coca-Cola Company, incorporated on September 5, 1919, is a beverage


    company. The Company owns or licenses and markets over 500 nonalcoholic
    beverage brands, primarily sparkling beverages but also a range of still beverages,
    such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and
    coffees, and energy and sports drinks. The Company's segments include Eurasia and
    Africa, Europe, Latin America, North America, Asia Pacific, Bottling Investments and
    Corporate. The Company owns and markets a range of nonalcoholic sparkling
    beverage brands, including Coca-Cola, Diet Coke, Fanta and Sprite.
    The Company markets, manufactures and sells beverage concentrates, which
    are referred to as beverage bases, and syrups, including fountain syrups (concentrate
    business or concentrate operations), and finished sparkling and still beverages
    (finished product business or finished product operations). The Company makes its
    beverage products available to consumers across the world through its network of
    Company-owned or -controlled bottling and distribution operations, as well as
    independent bottling partners, distributors, wholesalers and retailers.
    The Company competes with PepsiCo, Inc., Nestle S.A., Dr Pepper Snapple
    Group, Inc., Groupe Danone, Mondelez International, Inc., Kraft Foods Group, Inc.,
    Suntory Beverage & Food Limited and Unilever.
    Here are some products by Coca-Cola Company. It can be subsidize by
    category such as for carbonated soft drinks (Coca-cola, Fanta, Sprite), juice and juice
    drinks (Minute Maid, Five alive, Simply lemonade) and many more.

    BOOK VALUE VS MARKET VALUE


    The book value of a company represents how much a company is worth based
    strictly on its balance sheet. To find book value, add up everything the company owns
    in terms of assets, then subtract everything the company owes, such as debts and other
    liabilities. So, basically just find the total equity of a company. Book value reveals
    how much the company is worth if it were liquidated and all assets were sold for cash.
    But if you want to find the book value per share, just dividing book value by the total
    number of shares outstanding, and you can find the book value per share.
    Market value is a much easier figure to derive. The market value is simply the
    price of each share on the open market or how much it would cost to buy a share of
    stock at any given point. While book value represents how much the company's assets
    are worth, market value reveals what investors think the company is worth and how
    much they will pay to buy stock in the firm.
    Now, lets try to find the book value and market value of Coca-Cola Company
    for 2015. It is compute in millions.
    a. Book Value
    2015

    Book Value

    = 25,764

    b. Market Value

    2015

    Market value = Stock price x Outstanding shares


    = 18,078,644

    2014

    2014

    This information is very important for shareholders, especially the market


    value. Because market value has a more meaningful implication in the sense that it is
    the price you have to pay to own a part of the business regardless of what book value
    is stated. After all, when you invest in a share of stock or something like that, you
    want to really know that you are paying for sensible price.
    When the market value greater than book value, it means that market assigns a
    higher value to Coca-Cola, and it absolutely attracts many investors. So we can say
    that Coca-Cola Companys assets are so valuable, make a lot of money, thus the
    market values them far more than what they are stated as being worth from an
    accounting standpoint.
    The difference between market value and book value can depend on various
    factors such as the companys industry, the nature of a companys assets and
    liabilities, and the companys specific attributes.
    Further explanation about how book value and market value matters for either
    stockholders, shareholders, and company will be explain later in this paper.

    IS COCA-COLA A HEALTHY FIRM?


    The Coca-Cola Company is the worlds largest beverage company. They
    believe that success depends on ability to connect with consumers by providing them
    with a wide variety of options to meet their desires, needs and lifestyles. Therefore,
    success further depends on the ability of our people to execute effectively, every day.
    The goal is to use Companys assets our brands, financial strength, unrivaled
    distribution system, global reach, and the talent and strong commitment of our
    management and associates to become more competitive and to accelerate growth
    in a manner that creates value for our shareowners.
    To know whether a firm is in a good condition (the solvency,
    liquidity, profitability, and etc.) or not, we must conduct a financial
    ratios that will help us to analyze deeply about the actual conditions
    of the firm. And we can use that to compare and investigate the
    relationship between different pieces of financial information.
    Financial

    ratios

    are

    traditionally

    grouped

    into

    the

    following

    categories:
    a.
    b.
    c.
    d.
    e.

    Liquidity ratios
    Financial leverage ratios
    Asset management ratios
    Profitability ratios
    Market value ratios

    Next is the summary of some of the ratios that actually can reflected if a company is
    healthy or not.

    Quick Ratio
    Current Asset
    Inventory
    Current Liabilities
    Cash Ratio
    Cash
    Current Liabilities
    Current Ratio
    Current Asset
    Current Liabilities
    Debt-equity Ratio
    Total Asset Total

    2014
    0,923
    times

    2015
    1,132
    times

    I/D
    Increase

    0,277
    times

    0,271
    times

    Decrease

    1,019
    times

    1,240
    times

    Increase

    0,668
    times

    0,714
    times

    Increase

    Equity
    Total Asset
    Days Sales
    Outstanding
    Account
    Receivables
    Net Income
    x (365 days)
    Days Payable
    Outstanding
    Inventory
    COGS
    x (365 days)
    Cash Conversion
    Cycle
    (DSI+DSO-DPO)
    Receivable
    Turnover (RT)
    Sales
    Account
    Receivables
    Days' Sales In
    Receivable
    365 days
    RT
    Inventory
    Turnover (IT)
    COGS
    Inventory
    Days' Sales
    Inventory
    365 days
    IT
    Fixed Assets
    Turnover
    Sales
    Net Fixed Asset
    Profit Margin
    Net Income
    Sales
    ROE
    Total Equity
    Sales
    ROA
    Total Asset
    Sales

    229
    days

    195
    Days

    Decrease

    188
    Days

    202
    days

    Increase

    104
    days

    54
    Days

    Decrease

    10,300
    times

    11,239
    times

    Increase

    36
    days

    33
    days

    Decrease

    5,771
    times

    6,024
    times

    Increase

    63
    days

    61
    days

    Decrease

    0,779
    times

    0,781
    times

    Increase

    15,48%

    16,63%

    Increase

    23,31%

    28,59%

    Increase

    7,74%

    8,17%

    Increase

    First, in liquidity ratio, it tells us that Coca Cola Company has ability to pay

    any of its bills over the short run without undue stress. Example is by looking at the
    current ratio, Coca Cola have more than 1, which is the ideal for any healthy firm.
    Second, in financial leverage ratio, tells us that Coca Cola Company can
    control its long-term liability to meet its obligations. Example by looking at debtequity ratio that increase, means that Coca Cola earns return above its
    capital, and its assets is bigger than its debts.
    Third, turnover ratio, tells us that Coca Cola Company
    efficiently uses its assets to generate sales. Example by looking at
    the days sales outstanding, that decreasing, means that takes Coca
    Cola Company only a fewer days to collect its account receivables.
    Fourth, profitability ratio, tells us that Coca Cola Company
    efficiently use its assets and manages its operations. Examples by
    looking at profit margin that has increased from last year, means
    that the cents Coca Cola generates in profit for every dollar in sales
    is increasing.
    Therefore, with the information available above, we can make a conclusion
    that Coca Cola Company is a healthy firm.

    PAST, PRESENT, AND FUTURE ANALYSIS


    Going publicly traded on 1919, Ernest Woodruff bought the company for $25
    million which now tits market capitalization is more than $180 million! From 1919,
    the company was expanded rapidly. By 1950, Coca Cola was sold over 100 countries.
    Not always went smooth on its business journey, the use of cocaine which was legal at
    that time, was protested by many countries, Saudi Arabia is one of them, so they have
    to pull their products back. But, the companys hardwork attract billionaire investor,
    Warren Buffet to invest in the company and hold for 9.3% of the company.
    Here are some awards and ranking that achieved by Coca Cola Company last
    year:
    AWARDS

    2014 U.N. Womens Empowerment Principles Leadership Award

    2014 Award for Corporate Excellence (Secretary of State)

    2014 Industry Champion of the Year Award (Sustainable Bio Award)

    2014 Best Global Initiative for Womens Economic Empowerment (5by20 program)
    RANKINGS

    CoreBrand: Americas Most Respected Brands - #1

    FORTUNE: Worlds 50 Most Admired Companies - #6

    FORTUNE: Worlds Best Multinational Workplaces (Great Place to Work) - One of


    25

    Interbrand: Best Global Brand - #3

    Harris Reputation Poll: #2

    DiversityInc: Top 50 Companies for Diversity - #33

    Universum Global: Worlds Most Attractive Employers - #23

    Forbes: Worlds Most Valuable Brands - #4

    Forbes/Reputation Institute: Americas Most Reputable Companies - #11

    Forbes: Americas 25 Most Inspiring Companies - #15

    Barron: Worlds Most Respected Companies - #28

    Corporate Responsibility Magazine: 100 Best Corporate Citizens - #9

    Newsweek: Green Rankings - #147 (US) & #229 (World)

    For the present analysis, we can just looking back at the ratios done before. It
    represents about the actual Company condition. Therefore, we can make further
    analysis and interpretation given that available information. If we look back at the
    ratio, Coca Cola Company is a very big company and has many subsidiaries and of
    course a worldwide company. Thus, many factors over market around the world can
    give such big impact for the company. Such as the shocking news that booming lately
    about the Brexit, which is British Exit. Its about British leaving the Europe. This
    event gave affect in many aspects over the world, including the market. It also create a
    volatily of foreign currencies. If we looking deeply in the financial reports of Coca
    Cola Company, there is a decreasing of revenue growth of the company in 2015.
    Maybe its because of the many events occurred in 2015 and before. But, still Coca
    Cola Company is growing rapidly over the year.
    For the future analysis, there are five major plans that the Coca Cola
    Company has stated to be its focus for the coming years:
    -

    Maintaining its long-term high single-digit EPS growth target while adjusting
    its net revenue target to mid-single-digit growth and replacing its operating
    income metric with profit before tax (All long-term growth targets are on a

    comparable currency neutral basis)


    Streamlining and simplifying its operating model to drive the speed and agility

    of the organization and provide line of sight to aligned compensation targets


    Expanding productivity initiatives with $3 billion in expected annualized

    savings by 2019
    Refocusing on its core business model of building the worlds greatest
    beverage brands and leading an unmatched global system of strong local
    bottling partners

    If Coca Cola Company can maintain this program, Coca Cola will likely to
    thrive in previous years even it hard.

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