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Using Income & Balance Sheet analyze Sales & Account Receivable

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Using the Income and Balance Sheet Statements for 2007 & 2008 CocaCola, analyze:

Sales and Accounts Receivable and the degree of growth or strength in their relationship and how if they appear to "be in balance". Are there any abnormal or interesting issues?

Sales and Inventories: Is the firm's level of inventory in balance with their sales growth and strategy?

What is their Quality of Earnings?

How do I determine:
Short-Term Solvency: Current Ratio, Days Sales Outstanding, Inventory Turnover, and Days Accounts Payable Outstanding.

Long-Term Solvency: Interest Coverage, Operating Cash Flow to Total Liabilities.

What is their Return on Equity and the "degree" of Financial Leverage the firm currently has and does it support its business strategy?

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Solution Summary

The degree of growth or strength in relationships for CocaCola in 2007 and 2008 are provided.

See Also This Related BrainMass Solution

Analysis of ratios based on a company's balance sheet

** Please see the attached file for the complete problem description **

This involves the analysis of the various ratios that can be calculated from the balance sheet, income statement and a statement of cash flow for a company. I basically know how all the ratios are calculated but would still like to have them done for comparison.

The main component of this task is to know what all of the ratios will actually tell someone. For example, once the liquidity ratios are calculated - what do they actually reveal and for what purpose would this information be used.
Attached are the ratios needed and the 3 statements needed to determine the ratios.

(Please see the attached file for better formatting)

OutBack Sportswear, Inc.
Annual Balance Sheet ($ millions)
December 31

Current Year Prior Year
Cash and equivalents 9.5 12.0
Accounts receivable 233.2 203.3
Inventories 133.9 118.8
Total Current Assets 376.6 334.1
Net Plant and equipment 203.8 167.0
Total Assets 580.4 501.1

Accounts payable 18.8 14.7
Notes payable 66.2 33.2
Accrued expenses 77.7 62.0
Total current liabilities 162.7 109.9
Long-term bonds 74.4 70.2
Other long-term liabilities 19.6 17.7
Total Liabilities 256.7 197.8
Preferred stock 10.0 10.0
Common stock 45.4 45.4
Retained earnings 268.3 247.9
Total common equity 323.7 303.3
Liabilities and stockholders' equity 580.4 501.1

OutBack Sportswear, Inc.
Annual Income Statement
($ millions, except per-share data)
December 31

Sales 546.9 485.8
Cost of goods sold 286.3 247.3
Gross Profit 260.6 238.5
Selling, general & administrative exp. 186.2 180.5
Depreciation & amortization 22.7 20.1
Earnings before interest and taxes (EBIT) 51.7 37.9
Interest Expense 7.7 8.0
Earnings before tax 44.0 29.9
Total income tax 18.1 11.9
Ner Income 25.9 18.0
Preferred dividends 1.0 1.0
Net income available for common 24.9 17.0
Dividends on common stock 4.5 3.6
Addition to retained earnings 20.4 13.4
Per-share data:
Earnings per share 2.77 1.89
Dividends per share 0.50 0.40
Shares outstanding (millions) 9.000 9.000

OutBack Sportswear, Inc.
Statement of Cash Flows ($ millions)
December 31
Cash Flows from Operating Activities
Net Income 25.9
Depreciation and amortization 22.7
Accounts receivable decrease (increase) (29.9)
Inventories decrease (increase) (15.1)
Accounts payable increase (decrease) 4.1
Accrued expenses increase (decrease) 15.7
Net cash provided by (used in) operating activities 23.4
Cash Flows from Investing Activities
Purchase of plant and equipmemt (59.5)
Net cash provided by (used in) investing activities (59.5)
Cash Flows from Financing Activities
Notes payable increase (decrease) 33
Issuance of long-term debt, net 4.2
Increase in other long-term liabilities 1.9
Cash dividends (preferred and common) (5.5)
Net cash provided by (used in) financing activities 33.6
Net increase (decrease) in cash and equivalents (2.5)
Cash and equivalents, beginning of year 12.0
Cash and equivalents, end of year 9.5

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