coca cola financial analysis individual assignment

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COCA-COLA FINANCIAL ANALYSIS - INDIVIDUAL
ASSIGNMENT
Corporate Finance (FPT University)

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LECTURER: AN HAI VO

FINANCIAL
ANALYSIS
FIN202 // PREPARED BY AN DOAN

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ABSTRACT AND SUMMARY
Supervised by:
Mr. An Hai Vo, Master of Science

In this research documentary, I will examine the annual financial performance
from the years 2018 and back of one of the biggest corporations in the world

which is the Coca-Cola Company. The research will consider the various ratios
used in analyzing a financial situation of a business like liquidity ratios, activity
ratios, debt ratios, and profitability ratios, and then apply them to determine
whether Coca-Cola Company is performing well or not. The sources of data
collections method were used from Yahoo Finance, Investing.com, Financial
Modeling Prep, and the instruction of Mr. An Hai Vo, my Finance Corporate
subject's lecturer to better know and understand the company's financial
health history, give out my own recommendation and conclusion about CocaCola financial potential specializing 2018 - 2020 period.

All information in this article is unique, with references attached below. As a
sophomore in economics, the analysis below certainly has a lot of flaws. Looking
forward to your comments.

INDIVIDUAL ASSIGNMENT
Financial Statement Analysis of Coca-Cola
Company ( 2018 - 2020 )

Gia An Doan Nguyen

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FINANCIAL ANALYSIS OF

TABLE OF CONTENTS

COCA-COLA CO.

I. BUSINESS OVERVIEW
 Company Profile

1

Mission and Vision

3

About Competitors

4

Operation Segment

9

II. FINANCIAL STATEMENT
Income Statement

12

Balance Sheet

14

Cash Flow Statement

99

III. FINANCIAL RATIO
Liquidity Ratio

18

Efficiency Ratio

19

Leverage Ratio
Profitability Ratio
Market Value Ratio 

22
24
25
25

IV. PEER-GROUP ANALYSIS
Asset Management

25

Fund Management

27

Profitability

30

V. CONCLUSION
Recommendation
Conclusion

PERIOD: FROM 2018 TO 2020
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FINANCIAL ANALYSIS |

PAGE | 01

2018 - 2020

COCA-COLA CORPORATION

COMPANY
OVERVIEW
PROFILE
Founded and headquartered in Atlanta, Georgia,
the Coca-Cola Group currently operates with its
branded products in 200 countries around the
world. The Coca-Cola brand is the top-selling
beverage brand that owns, licenses, and markets

more than 500 diversified brands (Bottled Water,
Soft Drinks, and Juices). Coca-Cola Co. owns four
of

the

top

5

global

nonalcoholic

sparkling

beverage brands: Coca-Cola, Diet Coke, Fanta, and
Sprite.

MISSION AND VISION
The company's mission and vision are reflected by
social activities in the countries and markets
where Coca-Cola is present. There are three main
values including becoming a favorite brand, topchosen

brand;

sustainable

development

is

a

beverage brand that aims to find innovative and
sustainable solutions; and for a better future life,
Coca-Cola will continue to invest to improve the
lives of everyone - from corporate system to
communities.
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GLOBAL GEOMETRY

YEAR 2018
FINANCIAL ANALYSIS |

PAGE | 02

37M
COMPETITORS
Nowadays, the non-alcoholic beverage segment of the commercial
beverage industry is highly competitive, consisting of a variety of
brands in Coca-Colas' target markets. PepsiCo, Inc., one of the main
competitors worth noting. Including other significant: RedBull,
DPSG, Keurig Dr Pepper, Mondelēz International, Inc., Kraft Foods
Group, Inc., Soylent, and Tetra Park, etc. Coca-Cola also competes

with many regional and local companies.

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FINANCIAL ANALYSIS |

PAGE | 03

OPERATING SEGMENT
As the basic foundation for internal financial reporting, the operating
structure effective from Dec 31, 2015, includes the following:

Eurasia and Africa

The Asia Pacific

Europe

Bottling Investments

Latin America

Corporate

North America

Bottling Investments

19%

Eurasia and Africa
6%
Europe
16.8%

The Asia Pacific
12.8%

Latin America
10.6%

North America
34.7%

Revenue Distribution of the Coca Cola Company in 2020 by operating segment
Souce Statista com
-

:

.

In 2020, one-third of The Coca-Cola Company’s total revenue (35%)
was specifically generated in North America, becoming their most
lucrative by far. General description finance in this report presented
in North America - financial indexes listed on NYSE (New York Stock
Exchange).
IND

. IVIDUAL ASSIGNMENT

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AN DOAN


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FINANCIAL
STATEMENT
ANALYSIS

Date: 20 Oct 2021
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INCOME
STATEMENT
2018 - 2020 ( From Investing.com)

FINANCIAL ANALYSIS

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CHART 1.1: STATISTICS 2018 - 2020
Firstly, suddenly hit by the effect of

INCOME
STATEMENT

the national lockdown in COVID-19,
cost reductions are being made in
direct and indirect categories
expenses and by reorganization.

Over recent fiscal years, the ColaCola Company's total revenue has
fluctuated globally, nearly $40
billion. As the US-China Trade War
tariff imposition caused massive
disruption to businesses and rattled
global finance. Net operating
revenue fell 6% to $7.1 billion in the
last three quarters of 2018 and fell
10% to $31.9 billion in 2018.

Coca-Cola planned to eliminate
2,200 jobs. The reductions include 6
operating units severance,
canceling 200 brands or half of its
portfolio. This cutoff point lead
2019's selling, general and
administrative expenses at $12,2
billion to a downward trend and
reached the lowest point in 2020
among 3 years, at just $9.7 billion.

FINANCIAL ANALYSIS

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FINANCIAL ANALYSIS

PAGE | 08

GENERAL FINANCIAL HEALTH

SOURCE: CNN BUSINESS

Nonetheless,

as

the

2018

-

2020

annual

report,

the

beverage giant spent roughly two-thirds of its revenue ($23
- $28 billion) on its COGS and other spending results.

Whilst, net revenue, and its global volumes upper 24%
before stuck with a downward trend from 2019 to 2020.
Moreover, Coca-Cola Company’s revenues ascended from
$31.86 billion in 2018 to a top of $37.3 billion in 2019 and
slightly fall again to $33.01 billion in 2020. The Net Income
in this period fluctuates with increasing $2.5 billion from
2018-2019 and a decrease in 2020 at a lower level ($7,7
billion).

Thus, from the difference between net income and net loss,
estimate that the company's global volumes are stuck with

a downward trend that cannot control business health
including

ineffective

investment

and

is

affected

extraordinary expenses items (COVID-19 pandemic).
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BALANCE SHEET
2018 - 2020 ( From Investing.com)

FINANCIAL ANALYSIS

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C HA R T 1 . 2

TOTAL ASSET
In general, Coca-Cola's total assets tend to slightly rise within 3
years from 2018-2020, ranging from $83 - $87 billion, the highest
value in 2020 is approximately $87,3 billion. Even though, the
accompanying figures get saw a fall in the current asset amount.
Specifically, total items cash, cash equivalent & short-term
investment follows a downward trend, hitting a 3-year low of
about $10,9 billion (about 9.81%), a difference of about $5,2
billion compared to 2018. Besides with a slight increase in
inventories account due to upper price of raw material and
progress payment.

FINANCIAL ANALYSIS

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PAGE
F I N11
ANCIAL

ANALYSIS

PAGE | 12

$3.6 b
Increasing in
Intangible asset

TRADEMARK AND
GOODWILL INCREASE
One noticeable point in 2020 balance sheet
accounts - growth in trademarks, goodwill, and
other intangible assets. The item related to the
brand value of Coca-Cola shows growth in 2020
with the difference compared to 2018 of $3,6
billion (about 5%). This is a potential little step
forward in the context of the economy's strong
breakdown by the pandemic, explained by its
earnings,

or

in

more

detail,

refranchising

operation-driven margin expansion at the same
time on account of lower COGS and SG&A
expenses mentioned above.

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FINANCIAL ANALYSIS |

PAGE | 14
Total Liabilities

75.000

50.000

25.000

0

2018

2019

2020

Coca-Cola Co.'s total liabilities increases for 3 years, the numbers ranged
from about $66 - $68 billion. This number simultaneously tended to be
higher year-over-year, with reaching a peak appeared in 2020 (nearly
$68 billion), it increased by $1.78 billion (+2.7%). This upward trend in
the liability index can be explained by the retarded growth trend of the
market, in order to increase the value of the stock and deal with
extraordinary loss items from the COVID-19 pandemic, the company is
required to use leverage in the business leading to the account payable
steadily increases, the difference between the first year and the last year
in this period is $1.8 billion (1.3%).

TOTAL
LIABILITIES
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TOTAL
EQUITY
In terms of Equity, the period of 3 years
witnessed a stable rise. Coca-Cola begin

with $16,9 billion in 2018, keep moving
forward by 1.52% in 2019 at $18,9 billion, end
up in 2020 with $19,3 billion the difference
between the beginning and the end of the
period

was

$2.4

billion

(approx

1.48%).

Importantly, from 2018 to 2020, the Total
Liabilities ratio dominates over Total Equity
according

to

the

common-size

balance

sheet (maintained at more than 75%), equal
to

a

triple

common-size

fraction

according

balance

sheet.

to

the

Apparently,

Coca-Cola is implementing an ineffective
leverage policy, because the amount of debt
is still increasing then returning, showing
dismal progress.
This ascending tendency is affected by a
combination of three volatile account
factors:
Retained earnings,
Additional paid-in capital

Treasury stock.

FINANCIAL ANALYSIS

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NET WORKING CAPITAL

PAGE 16

QUARTERLY CASHFLOW
The fluctuations in Coca-Cola's Working Capital index have shown
that Coke is not an exception in the edge of COVID-19 negative
impact.

It

shows

significant

fluctuations

from

2018-2020,

decreasing in turn in 2018 and 2019 at 2B USD and -6.6B USD,
especially in 2019 hit a low in the last 10 years (2011-2021). The
situation is still volatile from Q4 2019 to Q2 2020 as Coke is also
looking to streamline its portfolio, including the US continuing to
deal with the pandemic. Thus, nearly at the end of 2020 has
recovered its efficiency (to 4.6%) and continues to grow operating
liquidity.

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CASHFLOW
STATEMENT
2018 - 2020 ( From Investing.com)

FINANCIAL ANALYSIS

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From:

NonCurrent Liabilities
22.1%

SHORTTERM
To LONGTERM

Liabilities Distribution 2020

Current Liabilities
77.9%

Moreover, the study found there is a huge difference between
the two items of long-term and short-term debt over the year,
such an interesting point in the shift of business leverage
structure from reducing short-term debt to focusing on longterm debt. Total current liabilities for the period 2018-2020
reduced significantly, starting to drop (- 3.89%) in 2019, 2020
respectively. Thereafter, in 2020, total current liabilities rapidly
reduce to 16.9 billion USD approximately, (equivalent to -14,5%
). In other words, the proportion of debt structure has shifted
to long-term debt, especially between 2019 - 2020, the item of
long-term debt has skyrocketed from $27 billion to $40 billion
(equal to 15,5%).

FINANCIAL ANALYSIS

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FINANCIAL ANALYSIS

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2018 - 2020

CASHFLOW
STATEMENT
CASHFLOW IN OPERATING ACTIVITIES
During three years from 2018 to 2020, the cash flow used in operating
activities of Coca-cola is various, the numbers of cashflow climbed
quickly from 2018-2019 (+37,3%). Thereafter, the yearly operating cash
flow reached a lower point in 2020 at 9,844 B USD (- 8,4%) but still upon
the operating cash flow of the first year. This is a signal that even though
in downturn 2020 because of Covid-19 but Coca-cola performed well on
its business and it is predicted that operating cash flow will be a positive
account with a consistent growth rate.
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FINANCIAL ANALYSIS

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CASHFLOW IN
INVESTING ACTIVITIES
Based on the company disclosures throughout this period, we
can conclude that Coca-Cola's investing activities showed the
most noticeable fluctuation in the overall pattern of cash flow
statement. Representing a rapid decrease from $5,93 in 2018
(which is impressing numbers of negative investing cash flow
over the past 10 years) to negative $3,9 billion in 2017 following
the landmark 2018 Costa Coffee acquisition. After discontinuing
200 certain brands generating just 2% of its revenue. Collectively,
the figure used to invest activities dropped consistently in 2020,
at just above -1,5B USD (+ 62,9%). Overall, the investing cash flow
follows an unpredictable trend but we can expect that will
optimize the investment account of the whole company.

CASHFLOW IN
FINANCING ACTIVITIES
Generally, for three years (2018-2020), financing activities became
more low-cost every year. After a decreasing figure in 2018 -2019.
There was an upward tendency in 2019 and 2020 at around -9B
USD and -8B USD, respectively. Additionally, the positive tendency
of numbers does not mean it is positive financial management.
But it illustrated that the company would attribute a larger
dividend paid (7,05B USD) due to the increase of profit and
positive insurance stock (529M USD) could be anticipated by
higher earning-per-share items.

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