Coca-Cola Financial Statement and Financial Ratios Analysis

Coca-Cola's Company Summary

The Coca-Cola Company was started in 1886, as a beverage organization.  The firm’s specialty is non-alcoholic beverages.

Coke does business in Europe, the Middle East, Africa, Latin America, North America, and Asia.  Its headquarters is located at One Coca-Cola Plaza in Atlanta, Ga. They employ about 62,000 people.  Coke competes in the beverage – soft drink industry. As for competitors, Coke competes with Pepsi, Nestle, Dr. Pepper, and Kraft Heinz.

Coca-Cola Financial Report Sources

"Coca-Cola 2020 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 Coca-Cola's 10k annual statements were collected, the author then inserted Coca-Cola's income statement information and Coca-Cola balance sheet information into a customized financial template. 

Section 1: Coca-Cola Income Statement

In this section, I walk through a broad definition of what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc., in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Coca-Cola's important income statement line item trends for the last 5 years, in most cases.

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

Coca-Cola 2021 Summary Income Statement
Column1	2021	2020	2019	2018	2017
Revenues	38,655	33,014	37,266	34,300	36,212
COGS	15,357	13,433	14,619	13,067	13,721
Gross Profit	23,298	19,581	22,647	21,233	22,491
SG&A	12,144	9,731	12,103	11,002	12,834
Depreciation	1,452	1,536	1,365	1,086	1,260
R & D
Other	846	853	458	1,079	1,902
Total Operating Expenses	14,442	12,120	13,926	13,167	15,996
EBIT	14,022	11,186	11,732	9,175	7,743
Other Income
Interest Expense	1,597	1,437	946	950	853
EBT	12,425	9,749	10,786	8,225	6,890
Taxes	2,621	1,981	1,801	1,749	5,607
Net Income	9,804	7,768	8,985	6,476	1,283

 

Section 2: Coca-Cola Balance Sheet Analyzed

For Coke's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define Coke's balance sheet line item, such as cash, property, plant and equipment, and liabilities for the last 5 years.  Next, I then offer an analysis of Coke's balance sheet line item.

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 2021 Summary Balance Sheet
Column1	2021	2020	2019	2018	2017
Cash	9,684	6,795	6,480	9,077	6,006
Short Term Investment	2,941	4,119	4,695	7,038	14,669
Account Receivable	3,512	3,144	3,971	3,685	3,667
Inventory	3,414	3,266	3,379	3,071	2,655
Other
Current Assets	22,545	19,240	20,411	24,930	36,545
Net PPE	9,920	10,777	10,838	9,598	8,203
Goodwill	19,363	17,506	16,764	14,109	9,401
Other
Total Assets	94,354	87,296	86,381	83,216	87,896
Accounts Payable	14,619	11,145	11,312	9,533	8,748
Accrued Expense
Accrued Taxes	686	788	414	411	410
Notes Payable	3,307	2,183	10,994	13,835	13,205
LT Debt - Current	1,338	485	4,253	5,003	3,298
Other
Total Current Liabilities	19,950	14,601	26,973	28,782	27,194
LT Debt	38,116	40,125	27,516	25,376	31,182
Other
Total Liabilities	69,494	66,012	44,185	45,100	49,942
Common Stock	19,876	19,361	18,914	18,280	17,624
Treasury	51,641	52,016	52,244	51,719	50,677
Retained Earnings	69,094	66,555	65,855	63,234	60,430
Other
Total Equity	24,860	21,284	21,098	19,058	18,977
Total Equity & Liability	94,354	87,296	65,283	64,158	68,919

Section 3: Coca-Cola's Financial Ratio Summary

For this section, I have chosen about 10 different financial ratios to review for Coca-Cola for the last 5 years.  In reviewing each of Coke's financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Coke's important financial ratios.  Important ratios calculated and analyzed for the last five years include:

Coca-Cola Current Ratio

Current Ratio.

Coca-Cola’s current ratio was .76 in 2019.  As of 2021, Coca-Cola’s current ratio would increase to 1.13.  The growth in the firm’s current ratio shows that the company has enough current assets to cover its current 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 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 of 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