Coca-Cola Financial Statement and Financial Ratios Analysis

Coca-Cola's Company Summary

The Coca-Cola Company is a renowned multinational beverage corporation headquartered in Atlanta, Georgia. Founded in 1886, it is one of the world's most recognized and valuable brands. Coca-Cola offers a diverse range of non-alcoholic beverages, including carbonated soft drinks, juices, energy drinks, and bottled water, catering to a global consumer base.

The company's flagship product, Coca-Cola, has achieved immense popularity and has become synonymous with the brand itself. Coca-Cola operates in over 200 countries, with a strong distribution network ensuring its products are available worldwide. It has a vast portfolio of brands, including Sprite, Fanta, Dasani, Minute Maid, and Powerade, catering to various tastes and preferences.

The Coca-Cola Company's success is attributed to its robust marketing strategies, extensive product range, and focus on innovation. Sustainability and environmental responsibility are integral to the company's operations, as it strives to minimize its environmental footprint and promote water conservation and recycling initiatives.

From a financial perspective, Coca-Cola's market capitalization is about $264.66 billion.  Their beta is .55.  This indicates that the company's stock is less risky than the overall market.  Their stock price range for the last 52 weeks has been between $54.02 to $65.47.  In the last year, their dividend payout has increased slightly.  At present, the dividend yield is 2.97%.

Coca-Cola Financial Report Sources

"Coca-Cola 2021 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by Paul Borosky, MBA., doctoral candidate and owner of Quality Business Plan.  In this summarized report, the author researched Coca-Cola's (Coke) 10k, Coca-Cola's 2020 10k annual report, Coca-Cola's 2016 10k annual report, Coca-Cola's 2019 10k annual report, and Coca-Cola's 2019 10k annual report as the basis for information gathering.  Once all of Coca-Cola's 10k annual statements were collected, the author then inserted Coca-Cola's income statement information and Coca-Cola's balance sheet information into a customized financial template. 

Section 1: Coca-Cola Income Statement

This section provides a comprehensive overview of the income statement, emphasizing its significance in financial analysis. It begins with a broad definition and explanation of the income statement, highlighting its importance in assessing a company's financial performance. Subsequently, each line item, including revenues, gross profits, and more, is thoroughly defined and discussed in detail. By examining Coca-Cola's income statement, I present a summary analysis of the company's crucial income statement line item trends over the past five years, offering valuable insights into its financial performance. This analysis enables readers to understand better Coca-Cola's revenue generation, profitability, and key cost components, facilitating informed decision-making and comprehensive financial analysis.

Importance of Coca-Cola Income Statement for Financial Analysis:

The importance of the Coca-Cola income statement in financial analysis cannot be overstated. This statement offers a comprehensive overview of the company's financial performance by providing crucial information about revenues, expenses, and profitability. Analysts can evaluate Coca-Cola's ability to generate revenue, control costs, and ultimately achieve profitability by examining the income statement.

The income statement enables financial professionals to identify trends and patterns in Coca-Cola's revenue streams and expense categories, helping them understand the company's operational efficiency and effectiveness. It also facilitates comparisons with industry peers, allowing for a comprehensive assessment of Coca-Cola's competitive position.

Moreover, the income statement is a foundation for calculating various financial ratios that gauge profitability, such as gross and net profit margins. These ratios offer insights into Coca-Cola's ability to profit from its core operations. Furthermore, the income statement is pivotal in forecasting and budgeting, providing essential information for future financial planning and decision-making.

Revenue Growth:

Coca-Cola’s revenues were $33 billion in 2020.  As of 2021, their revenues were $38.6 billion.  This is a growth rate of 17.1% over the last year.  However, the organization’s growth rate, on average, for the last five years was only 2.3%.  The contrast is due to moderate revenue peaks and valleys.  This trend should be concerning to investors.

Analyst Grade: B

Coke's 2022 Summary Income Statements
Column1	2022	2021	2020	2019	2018
Revenues	43,004	38,655	33,014	37,266	34,300
COGS	18,000	15,357	13,433	14,619	13,067
Gross Profit	25,004	23,298	19,581	22,647	21,233
SG&A	12,880	12,144	9,731	12,103	11,002
Depreciation	1,260	1,452	1,536	1,365	1,086
R & D
Other	1,215	846	853	458	1,079
Total Operating Expenses	15,355	14,442	12,120	13,926	13,167
EBIT	10,909	14,022	11,186	11,732	9,175
Other Income
Interest Expense	882	1,597	1,437	946	950
EBT	11,686	12,425	9,749	10,786	8,225
Taxes	2,115	2,621	1,981	1,801	1,749
Net Income	9,571	9,804	7,768	8,985	6,476

 

Section 2: Coca-Cola Balance Sheet Analyzed

A thorough analysis of the company's balance sheet is conducted in the second section of the Coca-Cola financial report. Each significant line item from the balance sheet, such as cash, property, plant and equipment, and liabilities, is carefully reviewed and defined. The analysis spans a period of five years, providing insights into the trends and changes in these balance sheet items over time. Analysts can assess the company's financial stability, asset management, and debt obligations by examining Coke's balance sheet. This analysis helps understand the company's financial health, evaluate its ability to meet its short-term and long-term obligations and identify areas of strength or concern.

Importance of Coca-Cola's Balance Sheet for Financial Analysis

The Coca-Cola balance sheet is important in financial analysis as it provides a snapshot of the company's financial position at a given time. This statement presents a detailed overview of Coca-Cola's assets, liabilities, and shareholders' equity, allowing analysts to assess its financial strength, liquidity, and solvency. By examining the balance sheet, financial professionals can evaluate Coca-Cola's asset management and utilization, including the composition of its asset base, such as cash, inventory, and property. They can also analyze the company's liabilities, including short-term and long-term debts, and assess its ability to meet financial obligations.

The balance sheet helps identify trends and changes in Coca-Cola's financial position, highlighting growth areas or potential risks. It enables comparisons with industry peers and benchmarking against industry standards. Furthermore, the balance sheet is a foundation for calculating important financial ratios, such as the debt-to-equity ratio, current ratio, and return on assets, providing insights into Coca-Cola's financial performance and efficiency.

The Coca-Cola balance sheet is crucial for financial analysis as it offers valuable information for assessing the company's financial health, making informed decisions, and evaluating its long-term sustainability and growth potential.

Sample- Cash:  Coca-Cola’s cash position in 2019 was $6.4 billion.  In the next two years, Coca-Cola increased its cash position to $9.6 billion in 2021.  As compared to sales, Coca-Cola’s cash was 17.4% in 2019 and 25.1% in 2021.  This trend shows that the firm is holding more cash in relation to sales.  This trend indicates that the company is financially solvent for the short term.  From an investor’s perspective, the overall trend is average.  To improve the trend, let’s see some consistency!

Analyst Grade: B

Coca-Cola's 2022 Summary Balance Sheets
Column1	2022	2021	2020	2019	2018
Cash	9,519	9,684	6,795	6,480	9,077
Short Term Investment	2,112	2,941	4,119	4,695	7,038
Account Receivable	3,487	3,512	3,144	3,971	3,685
Inventory	4,233	3,414	3,266	3,379	3,071
Other
Current Assets	22,591	22,545	19,240	20,411	24,930
Net PPE	9,841	9,920	10,777	10,838	9,598
Goodwill	18,782	19,363	17,506	16,764	14,109
Other
Total Assets	92,763	94,354	87,296	86,381	83,216
Accounts Payable	15,749	14,619	11,145	11,312	9,533
Accrued Expense
Accrued Taxes	1,203	686	788	414	411
Notes Payable	2,373	3,307	2,183	10,994	13,835
LT Debt - Current	399	1,338	485	4,253	5,003
Other
Total Current Liabilities	19,724	19,950	14,601	26,973	28,782
LT Debt	36,377	38,116	40,125	27,516	25,376
Other
Total Liabilities	66,937	69,494	66,012	44,185	45,100
Common Stock	20,582	19,876	19,361	18,914	18,280
Treasury	52,601	51,641	52,016	52,244	51,719
Retained Earnings	71,019	69,094	66,555	65,855	63,234
Other
Total Equity	25,826	24,860	21,284	21,098	19,058
Total Equity & Liability	92,763	94,354	87,296	65,283	64,158

Section 3: Coca-Cola's Financial Ratio Summary

A comprehensive analysis of key financial ratios is conducted in the third section of the Coca-Cola financial report. Around 10 important financial ratios for Coca-Cola have been reviewed over the last five years. Each ratio is defined, and its corresponding formula for calculation is provided. This analysis enables a deep understanding of Coca-Cola's financial performance and efficiency. Important ratios, such as liquidity, profitability, and solvency, are analyzed to assess the company's liquidity position, profitability, and ability to meet financial obligations. By examining these ratios over a five-year period, analysts can identify trends, strengths, and areas of improvement within Coca-Cola's financial performance, aiding in strategic decision-making and financial planning.

Importance of Coca-Cola's Financial Ratios for Financial Analysis

Financial ratios are essential tools for conducting a comprehensive financial analysis of Coca-Cola. These ratios provide valuable insights into the company's financial performance, allowing analysts to assess its profitability, liquidity, solvency, efficiency, and overall financial health.

By examining Coca-Cola's financial ratios, analysts can evaluate the company's profitability through metrics such as return on assets (ROA) and equity (ROE). Liquidity ratios, such as the current and quick ratios, assess Coca-Cola's ability to meet short-term obligations and manage its cash flow effectively.

Solvency ratios, including the debt-to-equity and interest coverage ratios, provide insights into Coca-Cola's long-term financial stability and capacity to fulfill its debt obligations. Efficiency ratios, such as asset and inventory turnover, gauge how efficiently the company utilizes and manages its assets.

Analyzing these financial ratios over time and comparing them to industry benchmarks and competitors helps identify trends, strengths, weaknesses, and potential areas for improvement within Coca-Cola's financial performance. This information is crucial for making informed decisions, developing effective strategies, and evaluating the company's financial position in the market. Financial ratios serve as valuable tools to assess the overall financial performance and sustainability of Coca-Cola.

Coca-Cola Current Ratio

Current Ratio.

Coca-Cola’s current ratio was .76 in 2019.  As of 2021, Coca-Cola’s current ratio will increase to 1.13.  The growth in the firm’s current ratio shows that the company has enough assets to cover its liabilities in the short term.  However, because the organization does generate cash daily, the company may be able to better optimize its current ratio by reducing it to about a range of .7 to .9.

Analyst Grade: B

Coca-Cola's Return on Assets

Return on Assets (ROA)

Coca-Cola’s return on assets (ROA) was 1.46% in 2017.  Over the next four years, the organization would improve its return on assets ending 2021 at 10.39%.  The substantial growth in return on assets shows that the firm is continually doing a better job generating revenues with assets under management.  From an investor’s perspective, this is a good trend.

Analyst Grade: A

Coca-Cola 2021 Liquidity Ratios
Ratios	2021	2020	2019	2018	2017
Current Ratio	1.13	1.32
Cash Ratio	0.63	0.75
Quick Ratio	0.96	1.09
Net Working Capital	2,595	4,639
Coca-Cola 2021 Asset Utilization
Ratios	2021	2020	2019	2018	2017
Total Asset Turnover	0.41	0.38
Fixed Asset Turnover	3.90	3.06
Days Sales Outstanding	31.42	39.33
Inventory Turnover (Using Sales)	11.57	9.94
Inventory Turnover (Using COGS)	4.60	4.04
Accounts Receivable Turnover	11.62	9.28
Working Capital Turnover	14.90	7.12
AP Turnover	1.20	1.19
Average Days Inventory	79.38	90.28
Average Days Payable	303.25	307.69
Coca-Cola 2021 Profitability Ratios
Ratios	2021	2020	2019	2018	2017
Return on Assets	10.39%	8.90%
Return on Equity	39.44%	36.50%
Net Profit Margin	25.36%	23.53%
Gross Profit Margin	60.27%	59.31%
Operating Profit Margin	36.27%	33.88%
Basic Earning Power	14.86%	12.81%
ROCE	18.85%	15.39%
Capital Employed	74,404	72,695
ROIC	16.36%	13.91%
Coca-Cola 2021 Debt Ratios
Ratios	2021	2020	2019	2018	2017
Debt Ratio	45.32%	49.02%
Debt/Equity	172.01%	201.06%
Times Interest Earned	8.78	7.78