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Coca Cola FS

Coca Cola's balance sheet shows: - Total assets of $19.145 billion including $6.38 billion in current assets and $3.669 billion in net fixed assets. - Total liabilities of $10.742 billion including $8.64 billion in current liabilities and $2.102 billion in noncurrent liabilities. - Total shareholder's equity of $8.403 billion. The document provides Coca Cola's balance sheet and income statement for two years to analyze the company's assets, liabilities, working capital, profitability, and returns. Questions are asked about items like interest-bearing debt, equity capital, retained earnings, brand value, margins,

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Manan Munshi
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176 views3 pages

Coca Cola FS

Coca Cola's balance sheet shows: - Total assets of $19.145 billion including $6.38 billion in current assets and $3.669 billion in net fixed assets. - Total liabilities of $10.742 billion including $8.64 billion in current liabilities and $2.102 billion in noncurrent liabilities. - Total shareholder's equity of $8.403 billion. The document provides Coca Cola's balance sheet and income statement for two years to analyze the company's assets, liabilities, working capital, profitability, and returns. Questions are asked about items like interest-bearing debt, equity capital, retained earnings, brand value, margins,

Uploaded by

Manan Munshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Class Activity 1

Coca Cola’s Balance Sheet

Cash and near-cash 1,648 Accounts payable 3,141

Marketable securities 1,049 Short-term borrowings 4,462

Accounts receivable 1,666 Other short-term liabilities 1,037

Other current assets 2,017 Current liabilities 8,640

Current assets 6,380 Long-term borrowings 687

Long-term investments 1,863 Other long-term liabilities 1,415

Depreciable fixed assets 5,486 Noncurrent liabilities 2,102

Non-depreciable fixed assets 199

Accumulated depreciation 2,016 Share capital (paid-in) 3,060

Net fixed assets 3,669 Retained earnings 5,343

Other assets 7,233 Shareholder’s equity 8,403

Total Assets $19,145 Total Liabilities and Equity $19,145

A. Examine the Assets of Coca-Cola’s balance sheet


a. Which assets are likely to be assessed closest to market value? Explain.
b. Coca-Cola has net fixed assets of $3,669 million. Can you estimate how much Coca-Cola
paid for these assets? Is there any way to know the age of these assets?
c. Coca-Cola seems to have far more invested in current assets than in fixed assets. Is this
significant? Explain.
d. In the early 1980s, Coca-Cola sold off its bottling operations, and the bottlers became
independent companies. How would this action have impacted the assets on Coca-Cola’s
balance sheet? (The manufacturing plants are most likely to be part of the bottling
operations.)
B. Examine the liabilities on Coca-Cola’s balance sheet.
a. How much interest-bearing debt does Coca-Cola have outstanding? (You can assume that
other short-term liabilities represent sundry payables, and other long-term liabilities represent
health care and pension obligations.)
b. How much did Coca-Cola obtain in equity capital when it issued stock originally to the
financial markets?
c. Is there any significance to the fact that the retained earnings amount is much larger than
the original paid-in capital?
d. The market value of Coca-Cola’s equity is $140 billion. What is the book value of equity
in Coca-Cola? Why is there such a large difference between the market value of equity and
the book value of equity?
3. Coca-Cola’s most valuable asset is its brand name. Where in the balance sheet do you see
its value? Is there any way to adjust the balance sheet to reflect the value of this asset?
4. Assume that you have been asked to analyze Coca-Cola’s working capital management.
a. Estimate the net working capital and noncash working capital for CocaCola.
b. Estimate the firm’s current ratio.
c. Estimate the firm’s quick ratio.
d. Would you draw any conclusions about the riskiness of Coca-Cola as a firm by looking at
these numbers? Why or why not?

Coca-Cola’s income statements

Year 1 Year 2

Net revenues $18,868 $18,813

Cost of goods sold 6,015 5,562

Selling, general, and administrative expenses 7,852 8,284

Earnings before interest and taxes 5,001 4,967

Interest expenses 258 277

Nonoperating gains 1,312 508

Income tax expenses 1,926 1,665

Net income 4,129 3,533

Dividends 1,387 1,480

1.How much operating income did Coca-Cola earn, before taxes, in Year 2? How does this
compare to how much Coca-Cola earned in Year 1? What are the reasons for the difference?
2 . The biggest expense for Coca-Cola is advertising, which is part of the selling, generals
and administrative (G&A) expenses. A large portion of these expenses is designed to build up
Coca-Cola’s brand name. Should advertising expenses be treated as operating expenses or are
they really capital expenses? If they are to be treated as capital expenses, how would you
capitalize them? (Use the capitalization of R&D as a guide.)
3. What effective tax rate did Coca-Cola have in Year 2 ? How does it compare with what the
company paid in Year 1 as an effective tax rate? What might account for the difference?
4. You have been asked to assess the profitability of Coca-Cola as a firm. To that end,
estimate the pre-tax operating and net margins in both years for the firm. Are there any
conclusions you would draw from the comparisons across the two years?
5. The book value of equity at Coca-Cola in Year 1 was $7,274 million. The book value of
interest-bearing debt was $3,875 million.
Estimate: a. The return on equity (beginning of the year) in Year 2.
b. The pre-tax return on capital (beginning of the year) in Year 2
c. The after-tax return on capital (beginning of the year) in Year 2, using the effective tax rate
in Year 2.

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