Coca-Cola Company Analysis The Coca-Cola company was founded in 1886 by John Pemberton, a Civil War veteran and Atlanta pharmacist. He was inspired by his curiosity as he stirred up a fragrant, caramel-colored liquid that he brought down to a place called Jacobs’ Pharmacy. There he added carbonated water and let several customers sample the new concoction. Jacobs’ Pharmacy put it on sale for five cents a glass and named it Coca-Cola. This “inspired curiosity” has now grown to be the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. In 1906 Coca-Cola opened bottling plants in Canada, Cuba, and Panama. Today they produce nearly 400 brands in over 200 countries. More than 70% of their income comes from outside the U.S. (1). This paper will focus on an analysis of operations of the statement of cash flow reports and a vertical and horizontal analysis of the consolidated balance sheets. Also an analysis of the global financial condition of the Coca-Cola Company and the value of goodwill and other intangible assets will be discussed. The statement of cash flows reports a firm’s major cash inflows and outflows for a period. This statement provides useful information about a company’s ability to generate cash from operations, maintain and expand its operating capacity, meeting its financial obligations, and pay dividends. There are three types of activities to look at in this statement, which are cash flows from operating activities, investing activities, and financial activities (3, 2005). When analyzing Coca-Cola’s statement of cash flow, the first thing to note is a steady increase in operating activities within the past few years. These transactions affect the net income. From 2001 to 2003 the cash from net income increased from $4.1 million to $5.5 million. The operating activities is often the most important cash flow of a business because it shows the cash from revenue compared to the payments made for expenses (2). The cash flows from investing activities are cash flows from transactions that affect the investments in non-current assets. Some of these include investments in bottling companies; purchases of property, plant and equipment; and purchases of investments and assets. For the most part, these figures have remained fairly stable. From 2001 to 2003 it went from $1.1 million to $9.3 million, showing a slight decline (2). The last part of this report is the cash flow from financing activities.
Furthermore, the cash-flow demonstrates the monetary receipts and monetary expenses in a certain time period. The cash-flow budget greatly centers on viability, which relates to the organization’s generating enough cash to meet both short-term and long-term financial obligations to maintain their existence (Finkler et al., 2013). In essence, an organization generating more cash than using in their operations produces a more
In Be Our Guest, Inc.’s scenario, we can see that the total cash flow from operations increased from 1995, $168,000, to 1997, $229,000, by 37%. This increase to the CFO is a result of a few different accounts. Although net income decreased 22.8% from 1995 to 1997, because depreciation increased 25.8% from 1995 to 1997, the total net income adjusted for non-cash charges increased by 4% from $250,000 to $259,000, from 1995 to 1997. The changes to Accounts Receivable over the years reduce cash flow from operations by $75,000, $46, $42,633 in 1995, 1996, and 1997, respectively. These increases in accounts receivable cause the cash flow from operations to decrease because Be Our Guest, Inc. collected less money from their customers compared to the sales. Whereas, the changes in Accounts payable & accruals of, $5,768, $19,063, and $14,859, in 1995, 1996, and 1997, respectively, caused the cash flow from operations to increase because Be Our Guest, Inc. is paying their suppliers less, indicating they are retaining more cash for
Net cash from operations rose from 2007 at $146.9 million to 2011 at $411.1 million
GAAP and IFRS), there are two allowable ways and means to actually display the operating portion of the statement of cash flows: The direct approaches, happens to be referred to as this because of the summing of money/cash on conditions that it is used by operating activities of $930, and is composed of cash inflows & outflows that can basically be traced straight to the cash T-account. & The Indirect Method, is allowable under GAAP and is another technique of actually computing/calculating and making known money/cash on condition that it is used by operating activities. Among other things, under this particular approach, money/cash on the condition that it is used by operating activities is actually calculated indirectly by starting with the Net Income estimations, which is shown on the income statement, and adjusting it for differentiation between cash flows &
Free Cash Flow = Net Operating Profit After Taxes (NOPAT) - Net Investment in Operating Capital
The cash flow statements for Microsoft, Corp. for the past three years had an up and down
I first needed to acquire additional information to complete a spreadsheet that would compute the cash flows for the analysis. I learned cash flow in any year depends on sales volume and profit margin per unit in that year. I learned that sales volume is a function of price. Also profit margin per unit is calculated by the difference between price per unit and costs per unit.
Cash flow is calculated by subtracting total expenses from total income. If the resulting number is positive, the company is making a profit, and is considered to "be in the black."
As investors it is important to understand the company in which you are looking at. One of the most common mistakes made is people only see the current trends of the company and do not research previous years. In doing this they are not getting the true picture of the company and it is important to understand the cash flows of the company in and out. In order to do that one should look at the statement of cash flows, as it will provide information as to where the company spends its money. This assignment will be looking at “Eat at My Restaurant,” which is a case study that compares three different well-known companies. The companies in which we will look at are Panera Bread, Starbucks, and Yum Brands, Inc.
Therefore, the amount of profit obtained is somewhat arbitrary. However, cash flow is an objective measure of cash and it is not subjected to a personal criterion. Net cash flow is the difference between cash inflows and cash outflows; that is, the cash received into the business and cash paid out of the business (Fernández, 2006). Whereas, net profit is the figure obtained after expenses or cost of resources used by the business is deducted from revenues generated from the business operations activities. Nonetheless, the figure for revenue and cash are not entirely cash, some of the items may be sold on credit and some of the expenses are not paid up
One reason that we chose it is it is not only the number one in global sales of soda drinks, but also the world's most famous soft drink brands. In soft drinks industry, the Coca-Cola Company has tremendous influence. Although there are many competitors, such as Pepsi in global, Royal Crown in America, Virgin in Europe, and Future Cola in China, etc., Coca–Cola Company is still in the leadership of soda drinks market in most countries. “We make our branded beverage products available to consumers throughout the world through our network of Company-owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers — the world’s largest beverage distribution system.” Consumers in more than 200 countries enjoy its beverages at a rate of 1.9 billion servings a day. Thus, people pay close attention to every important decision Coca–Cola Company makes. (2013 10-K)
Hewlett-Packard generated nearly $6.1 billion in cash flow from its operations and increased its cash and equivalents by 3 billion in 2003 (Datamonitor, 2004). Debt levels in this year were also very low which was significantly lower then the previous year. This is a great advantage which enables the company to increase its investments.
Cash flow statements provide essential information to company owners, shareholders and investors and provide an overview of the status of cash flow at a given point in time. Cash flow management is an ongoing process that ties the forecasting of cash flow to strategic goals and objectives of an organization. The measurement of cash flow can be used for calculating other parameters that give information on a company 's value, liquidity or solvency, and situation. Without positive cash flow, a company cannot meet its financial obligations.