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Coca-Cola: Residual Income Valuation Exercise & Coca-Cola: Residual Income Valuation Exercise (TN)
Harvard Business School Case 9-113-056 & 5-113-065
Courseware 9-113-704

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1
 Coca-Cola (ticker symbol KO on NYSE)

STANDARDIZED BALANCE SHEET AND INCOME STATEMENT (millions)

BALANCE SHEET 12/31/2006 12/31/2007 12/31/2008

ASSETS
+ Cash and Marketable Securities 2,590.00 4,308.00 4,979.00
+ Accounts Receivable 2,587.00 3,317.00 3,090.00
+ Inventory 1,641.00 2,220.00 2,187.00
= Other Current Assets 1,623.00 2,260.00 1,920.00
Total Current Assets 8,441.00 12,105.00 12,176.00

+ Long-Term Tangible Assets 9,436.00 11,102.00 9,976.00

+ Long-Term Intangible Assets 5,135.00 12,219.00 12,505.00
= Other Long-Term Assets 6,783.00 7,777.00 5,779.00
Total Long-Term Assets 21,354.00 31,098.00 28,260.00
Total Assets 29,795.00 43,203.00 40,436.00

LIABILITIES
+ Accounts Payable 929.00 1,380.00 1,370.00
+ Short-Term Debt 3,268.00 6,052.00 6,531.00
= Other Current Liabilities 4,693.00 5,793.00 5,087.00
Total Current Liabilities 8,890.00 13,225.00 12,988.00

+ Long Term Debt 1,314.00 3,277.00 2,781.00

+ Deferred Taxes 440.00 1,824.00 794.00
= Other Long-Term Liabilities 2,231.00 3,133.00 3,401.00
Total Long-Term Liabilities 3,985.00 8,234.00 6,976.00
Total Liabilities 12,875.00 21,459.00 19,964.00

Minority Interest (NOTE A) 0.00 0.00 0.00

SHAREHOLDERS' EQUITY
+ Preferred Stock 0.00 0.00 0.00
= Common Shareholder's Equity 16,920.00 21,744.00 20,472.00
Total Shareholder's Equity 16,920.00 21,744.00 20,472.00
TOTAL LIABILITIES & EQUITY 29,795.00 43,203.00 40,436.00

Common Shares Outstanding at Fiscal Year End 2,318.00 2,318.00 2,312.00

INCOME STATEMENT 12/31/2006 12/31/2007 12/31/2008

Sales 24,088.00 28,857.00 31,944.00

- Cost of Goods Sold 7,222.00 9,229.00 10,146.00
= Gross Profit 16,866.00 19,628.00 21,798.00
- SG&A 9,431.00 10,945.00 11,774.00
- Other Operating Expenses 938.00 1,163.00 1,283.00
= Operating Income 6,497.00 7,520.00 8,741.00
Investment Income 0.00 0.00 0.00
Other Income, net of Other Expense 6.00 -95.00 -1,923.00
Other Income 195.00 173.00 53.00
Other Expense 189.00 268.00 1,976.00
- Net Interest Expense (Income) 27.00 220.00 105.00
Interest Income 193.00 236.00 333.00
Interest Expense 220.00 456.00 438.00
- Minority Interest (NOTE A) 0.00 0.00 0.00
= Pretax Income 6,476.00 7,205.00 6,713.00
- Tax Expense 1,498.00 1,892.00 1,632.00
+ Unusual Gains, Net of Unusual Losses 102.00 668.00 726.00
= Net Income 5,080.00 5,981.00 5,807.00
- Preferred Dividends 0.00 0.00 0.00
= Net Income to Common 5,080.00 5,981.00 5,807.00

NOTE A: "Minority interest" is now called "non-controlling interest."

 FORECAST ASSUMPTIONS
Cost of Capital Parameters
12/31/2009 12/31/2010
Market Risk Premium 5.00%
9,409.00 11,511.00 Risk Free Rate 3.00%
3,758.00 4,430.00 Tax Rate 35.00%
2,354.00 2,650.00 Cost of Debt 4.50%
2,030.00 2,988.00 Common Equity Beta 0.60
17,551.00 21,579.00

11,441.00 16,672.00
12,828.00 26,909.00
6,755.00 7,663.00 DISCOUNTED CASH FLOW VALUATION
31,024.00 51,244.00 HISTORICAL
48,575.00 72,823.00 2007
Sales 28,857.00

1,410.00 1,887.00 Beg. Net Working Capital 229.00

6,800.00 9,376.00 + Beg. Net Long-Term Assets 18,683.00
5,511.00 7,245.00 = Net Operating Assets 18,912.00
13,721.00 18,508.00
Net Debt 1,992.00
5,059.00 14,041.00 + Preferred Stock 0.00
1,484.00 4,163.00 + Shareholder's Equity 16,920.00
2,965.00 4,794.00 = Net Capital 18,912.00
9,508.00 22,998.00 Note: By definition, Net Operating Assets = Net Capital
23,229.00 41,506.00

547.00 314.00 NOPAT (Net Operating Profits After Tax) 6,143.23

- Net Interest Expense After Tax 162.23
= Net Income 5,981.00
0.00 0.00 - Preferred Dividends 5,981.00
24,799.00 31,003.00 = Net Income to Common 0.00
24,799.00 31,003.00 - Investment in Net Working Capital
48,575.00 72,823.00 - Investment in Net Long-Term Assets
+ Increase in Debt Obligations
2,303.00 2,292.00 + increase in Preferred Equity
= Free Cash Flow to Equity

12/31/2009 12/31/2010 Cost of Common Equity

Book Value on Common Equity Growth Rate
31,006.00 35,200.00
9,864.00 11,234.00 Present Value of Free Cash Flow to Equity
21,142.00 23,966.00 PV of FCF to Equity (Years 1-2)
11,381.00 13,179.00 + PV of FCF to Equity (Beyond Year 2)
1,343.00 1,703.00 = Value of the Equity
8,418.00 9,084.00
0.00 0.00 Number of Shares Outstanding (millions)
-161.00 4,425.00 = Estimated value per share
92.00 5,312.00
253.00 887.00
92.00 291.00
249.00 317.00
341.00 608.00
82.00 50.00
8,083.00 13,168.00
2,040.00 2,384.00
781.00 1,025.00
6,824.00 11,809.00
0.00 0.00
6,824.00 11,809.00
Financial Projections 2011 2012 2013 (Terminal)

Sales Growth Rate 10.00% 8.00% 3.00%

NOPAT / Sales 20.00% 20.00% 15.00%
Beg. Net Working Capital / Sales 3.00% 3.00%
Beg. Net Long-Term Assets / Sales 105.00% 100.00%

Net Debt / Book Value of Net Capital 27.75% 27.75% 27.75%

Preferred Equity / Book Value of Net Capita 0.00% 0.00% 0.00%
Shareholders' Equity / Book Value of Net Ca 72.25% 72.25% 72.25%

HISTORICAL FORECAST TERMINAL

2008 2009 2010 2011 2012 2013 2014
31,944.00 31,006.00 35,200.00 38,720.00 41,817.60 43,072.13 44,364.29

624.00 740.00 1,221.00 936.00 1,254.53 1,292.16 1,330.93

26,141.00 24,065.00 26,028.00 41,973.00 43,908.48 43,072.13 44,364.29
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

5,021.00 4,333.00 2,450.00 11,906.00 12,531.42 12,309.80 12,679.10

0.00 0.00 0.00 0.00 0.00 0.00 0.00
21,744.00 20,472.00 24,799.00 31,003.00 32,631.58 32,054.49 33,016.12
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

5,886.47 6,892.78 12,047.32 7,744.00 8,363.52 6,460.82

79.47 68.78 238.32 348.25 366.54 360.06
5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76
0.00 0.00 0.00 0.00 0.00 0.00
5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76
 Coca-Cola (ticker symbol KO on NYSE)

STANDARDIZED BALANCE SHEET AND INCOME STATEMENT (millions)

BALANCE SHEET 12/31/2006 12/31/2007 12/31/2008

ASSETS
Cash and Marketable Securities 2,590.00 4,308.00 4,979.00
+ Accounts Receivable 2,587.00 3,317.00 3,090.00
+ Inventory 1,641.00 2,220.00 2,187.00
+ Other Current Assets 1,623.00 2,260.00 1,920.00
= Total Current Assets 8,441.00 12,105.00 12,176.00

Long-Term Tangible Assets 9,436.00 11,102.00 9,976.00

+ Long-Term Intangible Assets 5,135.00 12,219.00 12,505.00
+ Other Long-Term Assets 6,783.00 7,777.00 5,779.00
= Total Long-Term Assets 21,354.00 31,098.00 28,260.00
TOTAL ASSETS 29,795.00 43,203.00 40,436.00

LIABILITIES
Accounts Payable 929.00 1,380.00 1,370.00
+ Short-Term Debt 3,268.00 6,052.00 6,531.00
+ Other Current Liabilities 4,693.00 5,793.00 5,087.00
= Total Current Liabilities 8,890.00 13,225.00 12,988.00

Long Term Debt 1,314.00 3,277.00 2,781.00

+ Deferred Taxes 440.00 1,824.00 794.00
+ Other Long-Term Liabilities 2,231.00 3,133.00 3,401.00
= Total Long-Term Liabilities 3,985.00 8,234.00 6,976.00
TOTAL LIABILITIES 12,875.00 21,459.00 19,964.00

Minority Interest (NOTE A) 0.00 0.00 0.00

SHAREHOLDERS' EQUITY
Preferred Stock 0.00 0.00 0.00
+ Common Shareholder's Equity 16,920.00 21,744.00 20,472.00
= Total Shareholder's Equity 16,920.00 21,744.00 20,472.00
TOTAL LIABILITIES & EQUITY 29,795.00 43,203.00 40,436.00

Common Shares Outstanding at Fiscal Year End 2,318.00 2,318.00 2,312.00

INCOME STATEMENT 12/31/2006 12/31/2007 12/31/2008

Sales 24,088.00 28,857.00 31,944.00

- Cost of Goods Sold 7,222.00 9,229.00 10,146.00
= Gross Profit 16,866.00 19,628.00 21,798.00
- SG&A 9,431.00 10,945.00 11,774.00
- Other Operating Expenses 938.00 1,163.00 1,283.00
= Operating Income 6,497.00 7,520.00 8,741.00
Investment Income 0.00 0.00 0.00
Other Income, net of Other Expense 6.00 -95.00 -1,923.00
Other Income 195.00 173.00 53.00
Other Expense 189.00 268.00 1,976.00
- Net Interest Expense (Income) 27.00 220.00 105.00
Interest Income 193.00 236.00 333.00
Interest Expense 220.00 456.00 438.00
- Minority Interest (NOTE A) 0.00 0.00 0.00
= Pretax Income 6,476.00 7,205.00 6,713.00
- Tax Expense 1,498.00 1,892.00 1,632.00
+ Unusual Gains, Net of Unusual Losses 102.00 668.00 726.00
= Net Income 5,080.00 5,981.00 5,807.00
- Preferred Dividends 0.00 0.00 0.00
= Net Income to Common 5,080.00 5,981.00 5,807.00

NOTE A: "Minority interest" is now called "non-controlling interest."

 FORECAST ASSUMPTIONS
Cost of Capital Parameters
12/31/2009 12/31/2010
Market Risk Premium 5.00%
9,409.00 11,511.00 Risk Free Rate 3.00%
3,758.00 4,430.00 Tax Rate 35.00%
2,354.00 2,650.00 Cost of Debt 4.50%
2,030.00 2,988.00 Common Equity Beta 0.60
17,551.00 21,579.00

11,441.00 16,672.00
12,828.00 26,909.00
6,755.00 7,663.00 PRO FORMAS & VALUATION
31,024.00 51,244.00 HISTORICAL
48,575.00 72,823.00 2007
PRO FORMA - BEGINNING BALANCE SHEET

1,410.00 1,887.00 Beginning Net Working Capital 229.00

6,800.00 9,376.00 + Beginning Net Long Term Assets 18,683.00
5,511.00 7,245.00 = Beginning Net Operating Assets 18,912.00
13,721.00 18,508.00
Net Debt 1,992.00
5,059.00 14,041.00 + Preferred Stock 0.00
1,484.00 4,163.00 + Shareholder's Equity 16,920.00
2,965.00 4,794.00 = Net Capital 18,912.00
9,508.00 22,998.00
23,229.00 41,506.00

547.00 314.00
Sales Growth #DIV/0!
NOPAT / Sales 21.29%
0.00 0.00 Beg. Net Working Capital / Sales 0.79%
24,799.00 31,003.00 Beg. Net Operating Long Term Assets / Sales 64.74%
24,799.00 31,003.00
48,575.00 72,823.00 Net Debt / Book Value of Net Capital 10.53%
Preferred Equity / Book Value of Net Capital 0.00%
2,303.00 2,292.00 Shareholders' Equity / Book Value of Net Capital 89.47%

PRO FORMA - INCOME STATEMENT

12/31/2009 12/31/2010 Sales 28,857.00
NOPAT (Net Operating Profits After Tax) 6,143.23
31,006.00 35,200.00 - Net Interest Expenses After Tax 162.23
 9,864.00 11,234.00 = Net Income 5,981.00
21,142.00 23,966.00 - Preferred dividends 0.00
11,381.00 13,179.00 = Net Income to Common 5,981.00
1,343.00 1,703.00
8,418.00 9,084.00 Book Value on Common Equity Growth Rate
0.00 0.00
-161.00 4,425.00 RESIDUAL INCOME VALUATION
92.00 5,312.00 Cost of Common Equity
253.00 887.00 Net Income to Common
92.00 291.00 - Charge for Common Equity (Beg Book Value of Equity x Cost of Common Equity)
249.00 317.00 = Residual Income
341.00 608.00 Present Value of Residual Income
82.00 50.00 Present Value of Terminal Abnormal Earnings
8,083.00 13,168.00
2,040.00 2,384.00 Beg. Book Value of Equity
781.00 1,025.00 + PV of Residual Income (forecasted years 1-2)
6,824.00 11,809.00 + PV of Residual Income (terminal value, beginning year 3)
0.00 0.00 = Estimated Value of Equity
6,824.00 11,809.00
= Number of Shares Outstanding (MM)
Estimated Value Per Share
Financial Projections 2011 2012 2013 (Terminal)

Sales Growth Rate 10.00% 8.00% 3.00%

NOPAT / Sales 20.00% 20.00% 15.00%
Beg. Net Working Capital / Sales 3.00% 3.00%
Beg. Net Long-Term Assets / Sales 105.00% 100.00%

Net Debt / Book Value of Net Capital 27.75% 27.75% 27.75%

Preferred Equity / Book Value of Net Capital 0.00% 0.00% 0.00%
Shareholders' Equity / Book Value of Net Cap 72.25% 72.25% 72.25%

HISTORICAL FORECAST TERMINAL

2008 2009 2010 2011 2012 2013 2014

624.00 740.00 1,221.00 936.00 1,254.53 1,292.16 1,330.93

26,141.00 24,065.00 26,028.00 41,973.00 43,908.48 43,072.13 44,364.29
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

5,021.00 4,333.00 2,450.00 11,906.00 12,531.42 12,309.80 12,679.10

0.00 0.00 0.00 0.00 0.00 0.00 0.00
21,744.00 20,472.00 24,799.00 31,003.00 32,631.58 32,054.49 33,016.12
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

10.70% -2.94% 13.53% 10.00% 8.00% 3.00% 3.00%

18.43% 22.23% 34.23% 20.00% 20.00% 15.00% 15.00%
1.95% 2.39% 3.47%
81.83% 77.61% 73.94%

18.76% 17.47% 8.99% 27.75%

0.00% 0.00% 0.00% 0.00%
81.24% 82.53% 91.01% 72.25%

31,944.00 31,006.00 35,200.00 38,720.00 41,817.60 43,072.13 44,364.29

5,886.47 6,892.78 12,047.32 7,744.00 8,363.52 6,460.82 6,654.64
79.47 68.78 238.32 348.25 366.54 360.06 370.86
 5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76 6,283.78
0.00 0.00 0.00 0.00 0.00 0.00 0.00
5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76 6,283.78

3.00%

6.00% 6.00% 6.00% 6.00%

7,395.75 7,996.98 6,100.76 6,283.78
x Cost of Common Equity) 1,860.18 1,957.89 1,923.27 1,980.97
5,535.57 6,039.08 4,177.49 4,302.81
5,222.24 5,374.76
139,249.61

31,003.00 32,631.58 32,054.49 33,016.12

10,597.00
123,931.65
165,531.65

2,292.00
72.22
 Coca-Cola (ticker symbol KO on NYSE)

STANDARDIZED BALANCE SHEET AND INCOME STATEMENT (millions)

BALANCE SHEET 12/31/2006 12/31/2007

ASSETS
Cash and Marketable Securities 2,590.00 4,308.00
+ Accounts Receivable 2,587.00 3,317.00
+ Inventory 1,641.00 2,220.00
+ Other Current Assets 1,623.00 2,260.00
= Total Current Assets 8,441.00 12,105.00

Long-Term Tangible Assets 9,436.00 11,102.00

+ Long-Term Intangible Assets 5,135.00 12,219.00
+ Other Long-Term Assets 6,783.00 7,777.00
= Total Long-Term Assets 21,354.00 31,098.00
TOTAL ASSETS 29,795.00 43,203.00

LIABILITIES
Accounts Payable 929.00 1,380.00
+ Short-Term Debt 3,268.00 6,052.00
+ Other Current Liabilities 4,693.00 5,793.00
= Total Current Liabilities 8,890.00 13,225.00

Long Term Debt 1,314.00 3,277.00

+ Deferred Taxes 440.00 1,824.00
+ Other Long-Term Liabilities 2,231.00 3,133.00
= Total Long-Term Liabilities 3,985.00 8,234.00
TOTAL LIABILITIES 12,875.00 21,459.00

Minority Interest (NOTE A) 0.00 0.00

SHAREHOLDERS' EQUITY
Preferred Stock 0.00 0.00
+ Common Shareholder's Equity 16,920.00 21,744.00
= Total Shareholder's Equity 16,920.00 21,744.00
TOTAL LIABILITIES & EQUITY 29,795.00 43,203.00

Common Shares Outstanding at Fiscal Year End 2,318.00 2,318.00

INCOME STATEMENT 12/31/2006 12/31/2007

Sales 24,088.00 28,857.00

- Cost of Goods Sold 7,222.00 9,229.00
= Gross Profit 16,866.00 19,628.00
- SG&A 9,431.00 10,945.00
- Other Operating Expenses 938.00 1,163.00
= Operating Income 6,497.00 7,520.00
Investment Income 0.00 0.00
Other Income, net of Other Expense 6.00 -95.00
Other Income 195.00 173.00
Other Expense 189.00 268.00
- Net Interest Expense (Income) 27.00 220.00
Interest Income 193.00 236.00
Interest Expense 220.00 456.00
- Minority Interest (NOTE A) 0.00 0.00
= Pretax Income 6,476.00 7,205.00
- Tax Expense 1,498.00 1,892.00
+ Unusual Gains, Net of Unusual Losses 102.00 668.00
= Net Income 5,080.00 5,981.00
- Preferred Dividends 0.00 0.00
= Net Income to Common 5,080.00 5,981.00

NOTE A: "Minority interest" is now called "non-controlling interest."

 FORECAST ASSUMPTIONS
Cost of Capital Parameters
12/31/2008 12/31/2009 12/31/2010
Market Risk Premium
4,979.00 9,409.00 11,511.00 Risk Free Rate
3,090.00 3,758.00 4,430.00 Tax Rate
2,187.00 2,354.00 2,650.00 Cost of Debt
1,920.00 2,030.00 2,988.00 Common Equity Beta
12,176.00 17,551.00 21,579.00

9,976.00 11,441.00 16,672.00

12,505.00 12,828.00 26,909.00
5,779.00 6,755.00 7,663.00 PRO FORMAS & VALUATION
28,260.00 31,024.00 51,244.00
40,436.00 48,575.00 72,823.00
PRO FORMA - BEGINNING BALANCE SHEET

1,370.00 1,410.00 1,887.00

6,531.00 6,800.00 9,376.00 +
5,087.00 5,511.00 7,245.00 =
12,988.00 13,721.00 18,508.00

2,781.00 5,059.00 14,041.00 +

794.00 1,484.00 4,163.00 +
3,401.00 2,965.00 4,794.00 =
6,976.00 9,508.00 22,998.00
19,964.00 23,229.00 41,506.00

0.00 547.00 314.00

0.00 0.00 0.00

20,472.00 24,799.00 31,003.00
20,472.00 24,799.00 31,003.00
40,436.00 48,575.00 72,823.00

2,312.00 2,303.00 2,292.00

PRO FORMA - INCOME STATEMENT

12/31/2008 12/31/2009 12/31/2010

31,944.00 31,006.00 35,200.00 -

10,146.00 9,864.00 11,234.00 =
21,798.00 21,142.00 23,966.00 -
11,774.00 11,381.00 13,179.00 =
1,283.00 1,343.00 1,703.00
8,741.00 8,418.00 9,084.00
0.00 0.00 0.00
-1,923.00 -161.00 4,425.00 RESIDUAL INCOME VALUATION
53.00 92.00 5,312.00
1,976.00 253.00 887.00
105.00 92.00 291.00 -
333.00 249.00 317.00 =
438.00 341.00 608.00
0.00 82.00 50.00
6,713.00 8,083.00 13,168.00
1,632.00 2,040.00 2,384.00
726.00 781.00 1,025.00 +
5,807.00 6,824.00 11,809.00 +
0.00 0.00 0.00 =
5,807.00 6,824.00 11,809.00
=
FORECAST ASSUMPTIONS
Cost of Capital Parameters

Market Risk Premium 5.00%

Risk Free Rate 3.00%
Tax Rate 35.00%
Cost of Debt 4.50%
Common Equity Beta 0.60

PRO FORMAS & VALUATION

HISTORICAL
2007
PRO FORMA - BEGINNING BALANCE SHEET

Beginning Net Working Capital 229.00

Beginning Net Long Term Assets 18,683.00
Beginning Net Operating Assets 18,912.00

Net Debt 1,992.00

Preferred Stock 0.00
Shareholder's Equity 16,920.00
Net Capital 18,912.00

IMPLIED DIVIDEND PAYOUT

IMPLIED DIVIDEND PAYOUT RATIO

Sales Growth #DIV/0!

NOPAT / Sales 21.29%
Beg. Net Working Capital / Sales 0.79%
Beg. Net Operating Long Term Assets / Sales 64.74%

Net Debt / Book Value of Net Capital 10.53%

Preferred Equity / Book Value of Net Capital 0.00%
Shareholders' Equity / Book Value of Net Capital 89.47%

PRO FORMA - INCOME STATEMENT

Sales 28,857.00
NOPAT (Net Operating Profits After Tax) 6,143.23
Net Interest Expenses After Tax 162.23
Net Income 5,981.00
 Preferred dividends 0.00
Net Income to Common 5,981.00

Book Value on Common Equity Growth Rate

RESIDUAL INCOME VALUATION

Cost of Common Equity
Net Income to Common
Charge for Common Equity (Beg Book Value of Equity x Cost of Common Equity)
Residual Income
Present Value of Residual Income
Present Value of Terminal Abnormal Earnings

Beg. Book Value of Equity

PV of Residual Income (forecasted years 1-2)
PV of Residual Income (terminal value, beginning year 3)
Estimated Value of Equity

Number of Shares Outstanding (MM)

Estimated Value Per Share
Financial Projections 2011 2012 2013 (Terminal)

Sales Growth Rate 10.00% 8.00% 3.00%

NOPAT / Sales 20.00% 20.00% 15.00%
Beg. Net Working Capital / Sales 3.00% 3.00%
Beg. Net Long-Term Assets / Sales 105.00% 100.00%

Net Debt / Book Value of Net Capital 27.75% 27.75% 27.75%

Preferred Equity / Book Value of Net Capital 0.00% 0.00% 0.00%
Shareholders' Equity / Book Value of Net Cap 72.25% 72.25% 72.25%

HISTORICAL FORECAST TERMINAL

2008 2009 2010 2011 2012 2013 2014

624.00 740.00 1,221.00 936.00 1,254.53 1,292.16 1,330.93

26,141.00 24,065.00 26,028.00 41,973.00 43,908.48 43,072.13 44,364.29
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

5,021.00 4,333.00 2,450.00 11,906.00 12,531.42 12,309.80 12,679.10

0.00 0.00 0.00 0.00 0.00 0.00 0.00
21,744.00 20,472.00 24,799.00 31,003.00 32,631.58 32,054.49 33,016.12
26,765.00 24,805.00 27,249.00 42,909.00 45,163.01 44,364.29 45,695.22

5,767.17
#DIV/0!

10.70% -2.94% 13.53% 10.00% 8.00% 3.00% 3.00%

18.43% 22.23% 34.23% 20.00% 20.00% 15.00% 15.00%
1.95% 2.39% 3.47% 2.42% 3.00% 3.00% 3.00%
81.83% 77.61% 73.94% 108.40% 105.00% 100.00% 100.00%

18.76% 17.47% 8.99% 27.75% 27.75% 27.75% 27.75%

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
81.24% 82.53% 91.01% 72.25% 72.25% 72.25% 72.25%

31,944.00 31,006.00 35,200.00 38,720.00 41,817.60 43,072.13 44,364.29

5,886.47 6,892.78 12,047.32 7,744.00 8,363.52 6,460.82 6,654.64
79.47 68.78 238.32 348.25 366.54 360.06 370.86
5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76 6,283.78
 0.00 0.00 0.00 0.00 0.00 0.00 0.00
5,807.00 6,824.00 11,809.00 7,395.75 7,996.98 6,100.76 6,283.78
1,923.27
Coca-Cola: Residucal Income Valuation Case - For Class working
Fill the following Tables based on the information given in the case

P&L
Existing
2010 2011 2012
Net Sales 35200 38720.00 41817.60
NOPAT 12047 7744.00 8363.52
Int exp after tax 238 348.25 366.54

Net Income 11809 7395.75 7996.98

Balance Sheet (Beginning of the year values)

Existing
2011 2012 2013
Net Fixed Assets 41973 43908.48 43072.128
Net Working capital 936 1254.53 1292.16
TOTAL(A) 42909 45163.008 44364.292

LTB (B) 11906 12531.425 12309.80

Equity (A-B) 31003 32631.583 32054.487

 2013
43072.13
6460.82
360.06

6100.76

2014
44364.292
1330.93
45695.221

12679.10

33016.122