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each quarter and payouts can substantially increase at a rapid rate that any
analyst of investor can process. Coca Cola has more than doubled in positive
earnings during the worst recession they had seen for the last 20 years on
the New York Stock Exchange. (NYSE: KO has been one of the largest holding
stocks. As of today NYSE, is rated on a continued basis as one of the most
sought after beneficial brand. This stock has returned very lucrative returns
for years. It has maintained its buying power and has substantially increased
diligently beating inflation. (Ferrati, 2015)
Since Coca Cola operated in over 200 countries, this puts them in a
unique position to contribute to economic success around the world. Coca
Colas global business stimulates job creation by employing local people,
paying taxes to governments, paying suppliers for goods, services, capital
equipment, and supporting community investment programs. Studies of
economic impact of businesses in Asia, Africa, and Eastern Europe have
shown that every job in the Coca Cola system has an average of ten more
jobs are supported in local communities. (insert cite) Coca Colas has been
the beverage leader of the world for many years. Coca Cola ranks in the top
ten of Fortunes 2015 list of worlds most renowned admired companies.
Coca Cola demonstrates an outstanding global presence. One of the reasons
that Coca-Cola resides in the No. 1 market spot lies in the fact it maintains a
presence all over the globe. The citizens of Mexico drank the most servings
of any country in the world with 745 consumed in 2015. The United States
consumed 401 servings during the same time. Many parts of the world such
3
Dr. Pepper Snapple Group pays its shareholders $1.52 per year in dividends
giving them a yield of 3.2%. Dr. Pepper Snapple Group pays out 44% of its
free cash flow, but shareholders should worry about the dividend's safety
considering the companies low cash balance. Coca-Cola's future lies in
emerging markets expansion and non-carbonated beverages such as Honest
Tea and Minute Maid Juice. PepsiCo's continued focus on snacks may cause it
to drop the ball on its beverage segment further enhancing Coca-Cola's
strategic position in beverages. A major snack acquisition on Coca-Cola's
part to mimic PepsiCo's snack strategy may deter Coca-Cola from its core
competency of selling beverages. Dr. Pepper Snapple Group barely makes a
dent in Coca-Cola's dominance and even relies on Coca-Cola for some of its
distribution. With that said Coca-Cola isn't going anywhere anytime soon.
(The Motley Fool, 2015)
There are financial ratios that help one conclude the financial health of an
organization and they include the following:
Current Ratio
The current ratio of a company is used to examine the liquidity of the company as well as its
ability to pay its short term liabilities or debts and payables using its short term assets which are
cash, inventories and receivables.
This ratio provides the prospective investors with business clues concerning the efficiency of the
companys operating cycle and its ability to monetize its products. A higher ratio is good because
it indicates that the company is able to pay off its obligations. The ratios as calculated from the
above table shows there is a good financial performance of the company. They also provide
5
necessary incentive to analysts to advise prospective investors to buy shares of stock in the
company.
EPS
The earnings per share of the company indicate the profits allocated for every outstanding
share of the companys common stock. The earnings per share indicate the companys
profitability.
2015
(Fiscal Year)
2015
(Fiscal Year)
2015
(Fiscal Year)
March
Revenue
EPS
Dividends
$10,576(m)
0.36 (3/28/2015)
0.305
$11,035(m)
0.39 (3/29/2015)
0.28
$11,137(m)
0.45 (3/30/2015)
0.255
June
Revenue
EPS
Dividends
$12,574(m)
0.59 (6/27/2015)
0.305
$12,749(m)
0.59 (6/28/2015)
0.28
$13,085(m)
0.6 (6/29/2015)
0.255
September
Revenue
EPS
Dividends
$11,976(m)
0.47 (9/26/2015)
0.305
$12,030(m)
0.54 (9/27/2015)
0.28
$12,340(m)
0.51 (9/28/2015)
0.255
December (FYE)
Revenue
EPS
Dividends
$10,872(m)
0.18 (12/31/2015)
0.305
$11,040(m)
0.38 (12/31/2015)
0.28
$11,455(m)
0.41 (12/31/2015)
0.255
$45,998(m)
1.6
1.22
$46,854(m)
1.9
1.12
$48,017(m)
1.97
1.02
Fiscal Quarter
Totals
Revenue
EPS
Dividends
Source: Nasdaq.com
The diluted EPS of a company on the other hand expand the EPS by including the shares of the
convertibles or warrants outstanding in the outstanding shares number. The EPS are considered
6
to be one of the most single important variables in determination of the share price. As seen from
the table above, the earnings per share of the company may not have been increasing in literal
form but the fact that they are still very well above 150 is an indication of the good financial
health and performance of the company and they provide enough confidence to prospective
investors as well analysts to recommend for investment in the company.
Quick Ratio
The quick ratio of a company gives a perfect indicator of short term liquidity in terms of the
business. The ratio measures the ability of the company to meet its short term obligations
especially with most of its liquid assets. It is expressed mathematically as;
Quick Ratio = (Current Assets Inventory)/Current Liabilities
This ratio also measures the dollar amount of the companys liquid assets available for every
dollar of the current liabilities but excludes inventory since they are not current.
Cost of Capital
To understand the cost of capital of NYSE: KO, we also need to use the cost of debt and cost
of equity so that an effective weighted average cost of capital can help investors understand the
extent to which shareholders of the company expect in return for any investment over the long
term and how much the company needs in return to break even on their investments.
According to the information gathered from Google, the risk free rate of coca cola is 2.74%, the
beta for the company is 0.42 while the rate of return is 7%. Using the capital assets pricing
model,
At return on equity of 0.0453 it means that investors in the company can expect a return of
4.53% on average per year over the long term on their investments in coca cola to compensate
for their risk they undertake by investing in the company.
Cash Ratio
The cash ratio that determined as a ratio of total cash equivalents to total current liabilities is
used to determine the speed by which the company can repay its short term debt. A strong cash
ratio is useful to creditors because they can use it to determine how much in terms of debt if any
the company would be willing to extend to the company in case they need to get a loan facility.
From the information as provided from the table, we see that the cash ratio for the coca cola
company is well over one for the last four financial years from 2011 through to 2015. It is an
indication that the company is financially healthy and therefore recommended for prospective
investors because they can easily capitalize whenever need arises. As can be realized from the
table, the cash ratio of the company is good enough to entice any prospective investors in the
shares of the company to do so.
Price Earnings Ratio (P/E)
This is a valuation of the companys share price as compared to the per share earnings. It is
expressed as the ratio market value per share / earnings per share. According to information from
table 1 in appendix page, the price earnings ratio of the coca cola company changed from 0.47 in
2011 to 1.02 a significant increase. It then changed to 1.12 in 2015 and finally to 1.22 in 2015
which are significantly positive changes and these enhance trust that investors may want before
they put their dollars of investment in the company.
Income Statement
Submit
Period Ending
Total Revenue
45,998,000
46,854,000
48,017,000
Cost of Revenue
17,889,000
18,421,000
19,053,000
Gross Profit
28,109,000
28,433,000
28,964,000
Operating Expenses
Research Development
Selling General and Administrative
18,401,000
18,205,000
18,185,000
Non Recurring
Others
9,708,000
10,228,000
10,779,000
1,110,000
608,000
9,808,000
11,940,000
12,206,000
483,000
463,000
397,000
9,325,000
11,477,000
11,809,000
2,201,000
2,851,000
2,723,000
Minority Interest
Net Income From Continuing Ops
(669,000)
(26,000)
(42,000)
(67,000)
7,867,000
9,186,000
9,838,000
Discontinued Operations
Extraordinary Items
Other Items
Non-recurring Events
Net Income
7,098,000
8,584,000
9,019,000
7,098,000
8,584,000
9,019,000
Balance Sheet
Submit
8,958,000
10,414,000
8,442,000
12,717,000
9,854,000
8,109,000
Net Receivables
4,466,000
4,873,000
4,759,000
Inventory
3,100,000
3,277,000
3,264,000
3,745,000
2,886,000
5,754,000
32,986,000
31,304,000
30,328,000
13,625,000
11,512,000
10,448,000
14,633,000
14,967,000
14,476,000
Goodwill
12,100,000
12,312,000
12,255,000
Intangible Assets
14,272,000
15,299,000
15,082,000
4,407,000
4,661,000
3,585,000
92,023,000
90,055,000
86,174,000
Period Ending
Assets
Current Assets
Cash And Cash Equivalents
Short Term Investments
Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges
Total Assets
10
Liabilities
Current Liabilities
Accounts Payable
9,634,000
9,886,000
9,151,000
22,682,000
17,925,000
17,874,000
58,000
796,000
32,374,000
27,811,000
27,821,000
19,063,000
19,154,000
14,736,000
Other Liabilities
4,389,000
3,498,000
5,468,000
5,636,000
6,152,000
4,981,000
241,000
267,000
378,000
61,703,000
56,882,000
53,384,000
Preferred Stock
Minority Interest
Negative Goodwill
Total Liabilities
Stockholders' Equity
Common Stock
1,760,000
1,760,000
1,760,000
Retained Earnings
63,408,000
61,660,000
58,045,000
Treasury Stock
(42,225,000)
(39,091,000)
(35,009,000)
Capital Surplus
13,154,000
12,276,000
11,379,000
(5,777,000)
(3,432,000)
(3,385,000)
30,320,000
33,173,000
32,790,000
3,948,000
5,562,000
5,453,000
11
Cash Flow
Submit
Period Ending
Net Income
7,098,000
8,584,000
9,019,000
Depreciation
1,976,000
1,977,000
1,982,000
1,954,000
871,000
657,000
Changes In Liabilities
Changes In Inventories
(439,000)
10,615,000
(932,000)
10,542,000
(1,080,000)
10,645,000
(2,406,000)
(2,550,000)
(2,780,000)
Investments
(4,814,000)
(1,991,000)
(7,033,000)
(286,000)
327,000
(1,591,000)
(7,506,000)
(4,214,000)
(11,404,000)
Dividends Paid
(5,350,000)
(4,969,000)
(4,595,000)
(2,630,000)
(3,504,000)
(3,070,000)
Net Borrowings
4,712,000
4,711,000
4,218,000
(363,000)
17,000
100,000
(3,631,000)
(3,745,000)
(3,347,000)
(934,000)
(611,000)
(255,000)
(1,456,000)
1,972,000
(4,361,000)
13
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His Worst (BRK-B, KO). Fool.com. Retrieved 28 February 2015, from
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