Coca Cola Financial Analysis

1375 Words3 Pages

Financial Assessment – Coca-Cola Company
Mata Diarra
Bowie State University

Overview
Coca-Cola Company has over 500 nonalcoholic brands including juices, energy drinks, and water, among others. It is undisputed the largest beverage firm globally. The firm started operations in the year 1886 in the United States, but currently, the company operates in over 200 countries ("Form 10-K", 2017). The firm prides itself on globally recognized nonalcoholic brands such as Coca-Cola, Fanta, Sprite and Diet Coke. One of the critical successes factors of the company is its efficient distribution system that makes it possible to distribute the products to every part of the world. The company has a network of companies controlled or owned …show more content…

They help to establish the performance and state of a firm’s operations that would otherwise not be reflected by individual item in the financial statements (Ittelson, 2009). The ratios help in identifying different aspects of a firm’s performance including profitability, liquidity, and financial leverage of a firm among others. This article determines the profitability, liquidity and the financial leverage of Coca-Cola Company.
Coca-Cola Company Profitability
This ratio determines the ability of the firm to generate profit by utilizing resources at its disposal. For instance, a firm can be assessed in determining the extent to which it uses the assets in making income.
Return on Assets
This ratio shows the ability of a firm to optimally utilize the assets in generating income. A high value indicates the firm optimally uses assets in generating income and vice versa.
Return on assets = Income / Total …show more content…

This indicates PepsiCo optimally utilizes the assets in generating income. On this metric, PepsiCo operates profitably compared to Coca-Cola.
Return on Sales
Year 2014: $6,558m / $66,683m = 0. 098 = 9.8%
Year 2015: $5,501m / $63,056 = 0.087 = 8.7%
Year 2106: $6,379m / $62,799 = 0.102 = 10.2%
From the analysis, the return on sales has increased over the recent three years. This indicates that the firm demand of the firm’s products has a positive trend. This is contrary to the return on sales for Coca-Cola which is relatively constant. Thus, the PepsiCo sales are on a positive trend.
PepsiCo Liquidity Analysis
Current ratio = Current assets/ Current liabilities
Year 2014: $20,663 / $18,092 = 1.142
Year 2015: $23,031/ $17,578 = 1.31
Year 2016: $27,089 / $21,135 = 1.282
The current ratio over the three years shows that the firm has no difficulties in paying short-term liabilities in time. At every year under consideration, the current ratio is above 1 (one) indicating the firm can pay the current liabilities with the current assets without using other sources such as debt

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