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    Financial Analysis of Coca Cola from 1986-1996

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    Financial Analysis and Forecasting
    A. Examination of Balance Sheet & Income Statement
    B. Common Size Statements
    C. Growth Rates
    D. Ratio Analysis
    E. DuPont Analysis
    F. Strategic Financing Model

    Coca-Cola Income Statement for December 1986 and 1996 (in millions)
    1986 1996
    Net Revenues $8,668 $18,546
    Total Revenue $8,668 $18,546
    Cost and Expenses
    Cost of Sales $4,644 $6,738
    S, G, and A $2,699 $7,893
    Interest Charges $186 $286
    Interest/ Other Income (net) ($372) ($967)
    Total Cost and Expenses $7,157 $13,950

    Income before Income Taxes $1,511 $4,596
    Provision for Income Taxes $577 $1,104

    Net Income $934 $3,492
    Dividends ($402) ($1,247)
    Adjustments to Retained Earnings $0 $0
    Retained Earnings, Beginning Balance $3,092 $12,882
    Retained Earnings, End Balance $3,624 $15,127

    Coca-Cola Balance Sheets for December 1986 and 1996- amount in millions
    1986 1996
    Assets
    Current Assets
    Cash and Equivalents $888 $1,658
    Receivables $1,081 $1,641
    Inventory $933 $952
    Other $837 $1,659
    Total Current Assets $3,739 $5,910
    Productive Assets
    Property, Plant, and Equipment $2,790 $5,581
    Accumulated Depreciation ($1,026) ($2,031)
    Net Productive Assets $1,764 $3,550
    Other Assets $2,870 $6,701
    Total Assets $8,373 $16,161
    Liabilities And Shareholders Equity
    Liabilities
    Current Liabilities
    Accounts Payable $1,333 $2,972
    Current Debt Due $725 $3,397
    Other $697 $1,037
    Total Current Liabilities $2,755 $7,406
    Long-Term Liabilities
    LT Debt $1,011 $1,116
    Other LT Liabilities $711 $1,182
    Deferred Income Taxes $381 $301
    Total LT Liabilities $2,103 $2,599

    Total Liabilities $4,858 $10,005
    Shareholders' Equity
    Common Stock $714 $1,916
    Treasury Stock ($705) ($10,320)
    Retained Earnings $3,624 $15,127
    Equity Adjustments ($118) ($567)
    Total Shareholders' Equity $3,515 $6,156

    Total Equity $8,373 $16,161

    Common Size Balance Sheets
    Coca-Cola Balance Sheets for December 1986 and 1996
    1986 % 1996 %
    Assets
    Current Assets
    Cash and Equivalents $888 11% $1,658 10%
    Receivables $1,081 13% $1,641 10%
    Inventory $933 11% $952 6%
    Other $837 10% $1,659 10%
    Total Current Assets $3,739 45% $5,910 36%
    Productive Assets
    Property, Plant, and Equipment $2,790 $5,581
    Accumulated Depreciation ($1,026) ($2,031)
    Net Productive Assets $1,764 21% $3,550 22%
    Other Assets $2,870 34% $6,701 41%
    Total Assets $8,373 $16,161
    Liabilities And Shareholders Equity
    Liabilities
    Current Liabilities
    Accounts Payable $1,333 16% $2,972 18%
    Current Debt Due $725 9% $3,397 21%
    Other $697 8% $1,037 6%
    Total Current Liabilities $2,755 33% $7,406 46%
    Long-Term Liabilities
    LT Debt $1,011 12% $1,116 7%
    Other LT Liabilities $711 8% $1,182 7%
    Deferred Income Taxes $381 5% $301 2%
    Total LT Liabilities $2,103 25% $2,599 16%

    Total Liabilities $4,858 55% $10,005 62%
    Shareholders' Equity
    Common Stock $714 4% $1,916 12%
    Treasury Stock ($705) (8%) ($10,320) (64%)
    Retained Earnings $3,624 43% $15,127 94%
    Equity Adjustments ($118) (1%) ($567) (4%)
    Total Shareholders' Equity $3,515 42% $6,156 38%

    Total Equity $8,373 $16,161

    Coca-Cola Common-Size Statements of Income and Retained Earnings for December 1986 and 1996

    1986 % 1996 %
    Net Revenues $8,668 $18,546
    Total Revenue $8,668 $15,546
    Cost and Expenses
    Cost of Sales $4,644 54% $6,738 36%
    S, G, and A $2,699 31% $7,893 43%
    Interest Charges $186 2% $286 2%
    Interest/ Other Income (net) ($372) (4%) ($967) (5%)
    Total Cost and Expenses $7,157 83% $13,950 75%
    Income before Income Taxes $1,511 17.4% $4,596 25%
    Provision of Income Taxes $577 6.7% $1,104 6%
    Net Income $934 10.8% $3,492 18.8%
    Dividends (% of NI) ($402) 43% ($1,247) 36%
    Adjustments to Retained Earnings $0 $0
    Retained Earnings, Beginning Balance $3,092 $12,882
    Retained Earnings, Ending Balance $3,624 $15,127

    Ratio Analysis for Coco-Cola: 1986 and 1996

    Coca-Cola
    Ratio Definition 1986 (in %) 1996 (in %)
    Liquidity
    1. Current ratio current assets
    current liabilities 1.36 0.8

    2. Quick ratio (acid test) current assets - inventories
    current liabilities 1.02 0.67

    Asset Management
    3. Average collection period accounts receivables
    credits sales/ 365 45.5 32.3
    Total Rev. = Cr. Sales
    4. Inventory turnover cost of sales
    average inventory 5 7.1
    INO = AVE INV
    5. Fixed asset turnover sales
    fixed assets 4.9 5.2
    FIXED ASSETS = NET
    6. Total asset turnover sales
    total assets 1.04 1.15

    Financial Leverage Management
    7. Debt Ratio total debt
    total assets 0.58 0.62
    ST+LT= Total Debt
    8, Debt-to-equity total debt
    total equity 1.4 1.63
    ST+LT
    9. Times interest earned earnings before interest and taxes (EBIT)
    interest charges

    10. Times fixed charges earned EBIT + lease payment
    interest +lease payments + before tax
    sinking fund + Preferred stock dividends before tax

    Profitability
    11. Gross profit margin sales - cost of sales
    sales 46.4 63.7

    12. Net profit margin earnings after taxes (EAT)
    sales 10.8 18.8

    13. Return on investment earnings after taxes (EAT)
    total assets 11.1 21.6

    14. Return on Stockholders' equity earnings after taxes (EAT)
    stockholders' equity 26.6 56.7

    Market Based
    15. Price-to-earnings ratio market price per share
    current earnings per share

    16. Market-to-book ratio market price per share
    book value per share

    Dividend Policy
    17. Payout ratio dividend per share
    earnings per share 43 36

    18. Dividend yield expected dividend per share
    stock price

    DU PONT ANALYSIS

    Profit Margin Asset Turnover ROA

    Net Profit X Net Sales = ROA
    Net Sales Total Assets

    1986 10.8% X 1.04 = ROA of 1986

    1996 18.8% X 1.15 = ROA of 1996

    Profit Margin X Asset Turnover X Leverage = ROE

    Net Profit X Net Sales X Leverage = ROE
    Net Sales Total Assets

    1986 10.8 X 1.04 X 2.4 = ROE of 1986
    1996 18.8 X 1.15 X 2.6 = ROE of 1996

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    https://brainmass.com/business/finance/financial-analysis-coca-cola-292933

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    Solution Preview

    Financial Analysis and Forecasting
    A. Examination of Balance Sheet & Income Statement
    B. Common Size Statements
    C. Growth Rates
    D. Ratio Analysis
    E. DuPont Analysis
    F. Strategic Financing Model

    Coca-Cola Income Statement for December 1986 and 1996 (in millions)
    1986 1996
    Net Revenues $8,668 $18,546
    Total Revenue $8,668 $18,546
    Cost and Expenses
    Cost of Sales $4,644 $6,738
    S, G, and A $2,699 $7,893
    Interest Charges $186 $286
    Interest/ Other Income (net) ($372) ($967)
    Total Cost and Expenses $7,157 $13,950

    Income before Income Taxes $1,511 $4,596
    Provision for Income Taxes $577 $1,104

    Net Income $934 $3,492
    Dividends ($402) ($1,247)
    Adjustments to Retained Earnings $0 $0
    Retained Earnings, Beginning Balance $3,092 $12,882
    Retained Earnings, End Balance $3,624 $15,127

    Coca-Cola Balance Sheets for December 1986 and 1996- amount in millions
    1986 1996
    Assets
    Current Assets
    Cash and Equivalents $888 $1,658
    Receivables $1,081 $1,641
    Inventory $933 $952
    Other $837 $1,659
    Total Current Assets $3,739 $5,910
    Productive Assets
    Property, Plant, and Equipment $2,790 $5,581
    Accumulated Depreciation ($1,026) ($2,031)
    Net Productive Assets $1,764 $3,550
    Other Assets $2,870 $6,701
    Total Assets $8,373 $16,161
    Liabilities And Shareholders Equity
    Liabilities
    Current Liabilities
    Accounts Payable $1,333 $2,972
    Current Debt Due $725 $3,397
    Other $697 $1,037
    Total Current Liabilities $2,755 $7,406
    Long-Term Liabilities
    LT Debt $1,011 $1,116
    Other LT Liabilities $711 $1,182
    Deferred Income Taxes $381 $301
    Total LT Liabilities $2,103 $2,599

    Total Liabilities $4,858 $10,005
    Shareholders' Equity
    Common Stock $714 $1,916
    Treasury Stock ($705) ($10,320)
    Retained Earnings $3,624 $15,127
    Equity Adjustments ($118) ($567)
    Total Shareholders' Equity $3,515 $6,156

    Total Equity $8,373 $16,161

    Common Size Balance Sheets
    Coca-Cola Balance Sheets for December 1986 and 1996
    1986 % 1996 %
    Assets
    Current Assets
    Cash and Equivalents $888 11% $1,658 10%
    Receivables $1,081 13% $1,641 10%
    Inventory $933 11% $952 6%
    Other $837 10% $1,659 10%
    Total Current Assets $3,739 45% $5,910 36%
    Productive Assets
    Property, Plant, and Equipment $2,790 $5,581
    Accumulated Depreciation ($1,026) ($2,031)
    Net Productive ...

    Solution Summary

    The solution analyzes the financial performance of Coke in terms of liquidity, leverage, profitability, and efficiency for the period 1986 - 1996 in an attached Word document.

    $2.19

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