Need Help? Don’t Be Shy To Ask.
Introduction
Coca-Cola Company is a global manufacturer and distributor of beverage drinks headquartered in Atlanta, United States. It was founded in the 1880s by John Pemberton in his pharmacy after making Coca-Cola syrup in his backyard. Today, Coca-Cola manufactures and distributes about 500 brands in over 200 countries. The company started selling the beverage in bottles in the late 19th century, which marked the beginning of the Coca-Cola bottled beverage sold by the company today. Today, the company has grown to a global company that operates in over 200 countries with over 800,000 workers in different regions (Luo, 2022).
It has also introduced varieties of
beverage drinks with over five hundred brands, including fruit juice, coffee,
sports drinks, tea, and carbonated drinks. Its vision is "to refresh the
world to inspire moments of happiness and to create value to make a difference
in the world." It maintains strong core competencies such as innovation
and creativity and a strong brand image related to its mission statement of
addressing the goal of global spread (Zhiqi
Xiao & Jingxian Zhang, 2020). The paper will discuss an analysis of the
financials for Coca Cola Company by focusing on its ROI, ROA, ROE, OPM, Asset
Turnover, WCT, Current Ratio, Earnings Per Share on Common Stock,
Price-Earnings Ratio, and Dividends Yield.
Contact us now to get custom essays written for you in less than 12 hours
Coca-Cola's annual revenue for 2021 was $38.655B, which shows that the company is performing well after recording a 17.09% increase from 2020.it also reported an Annual Net Income of $9,771 in 2021, a 20.71% increase after recording $7,747 in 2020. Coca-Cola as a company has seen a steady increase over the years in its return on investment after it reported a Return on Investment (ROI) of 16.29% for the period between 2016 and 2021. According to the company's financial statements, Coca-Cola's total assets for the quarter ending 31st Dec 2021 were $90.606B, a 6.77% decline since 2020 ("CocaCola PE Ratio 2010-2021 | KO", 2022).
In the first quarter of the year 2018, the company only
had an ROE of 6.76 percent, one of the company's worst years in nearly a decade.
However, the company's ROE increased up to 34.73 percent. The increase falls
fairly high above the company average ROE per year, especially over the last
ten years (Zhiqi Xiao &
Jingxian Zhang, 2020). Even though the
company is slightly below the last year’s ROE, they are still doing well and
staying above the average. It shows that the company is doing a good job at
increasing its profits while at the same time requiring much capital. This can
also suggest and show us that the company's management is doing a good job of
diversifying shareholders.
Over the past decade, the
Coca-Cola Company has seen a relatively steady plateau in ROA. However, over
the past two years, the company has seen an increase in its ROA, which could be
closely related to its ROE. Since the company has seen an increase in ROE and
profits, it reflects upon its ROA. During the first quarter of the 2021 year,
the analysis shows that the company recorded a ROA of 7.82 percent. Although
this may not seem like a very high ROA, it is a good sign for the company as it
increases compared to previous years. With the company's ROA increasing, the
Coca-Cola Company is making good profits compared to the investment dollars
they are spending.
The operating margin represents
how efficiently a company can generate profit through its core operations. The
company has shown profit margins considered average within the past few years.
However, the company realized increased profits margins of about 5 percent
in2021. The current operating profit margin for Coca-Cola as of 31st Dec 2021
is 26.09%. This is a good sign as it currently has a 61.14 percent profit
margin showing that they are finding ways to turn revenue into profits.
Need Help? Don’t Be Shy To Ask.
Current ratio - 1.32 (2020) and
1.33 (2021)
Debt to assets ratio - 0.45
(2020) and 0.54 (2021)
Gross margin - 58.45%
(2020) and 61.14% (2021)
Inventory turnover ratio - 3.95
(2020) and 4.05 (2021)
Price to earnings ratio -
19.30 (2020) and 28.34 (2021)
Return on assets - 8.3%
(2020) and 7.82% (2021)
Return on equity - 38.4% (2020)
and 34.7% (2021)
Contact us now to get custom essays written for you in less than 12 hours
From the ratios presented above, it is clear that Coca-Cola Company's financials are making average progress. For instance, the gross margins increased, and the return on equity and assets stayed about average. Although areas such as return on equity and assets and debt have made slightly negative changes, this is not necessarily bad. From what we saw earlier, the company shows positive signs of increases in revenue and profit.
Because the company is doing well, they are most likely using the
money they profited and investor capital to spend money on improvements. This
could be through upgraded technology and equipment in facilities; it could be
branching out to new products or areas or just overall investment in internal
procedures to increase efficiency and productivity. Therefore the numbers we
see in these ratios show us a good sign of the company's status and its overall
success within the market.
Conclusion
The Coca-Cola Company is the world's largest manufacturer and distributor of beverage drinks. It is showing to be in better condition this year compared to the last few. An analysis of the company's financial performance for the last decade shows that it is making drastic changes to improve its performance. However, looking at the numbers since 2018 and comparing them to the first quarter of the 2021 fiscal year, it becomes evident that company improvement is being made. The company looks to increase its revenue, generate more profit, and find ways to make good use of its investors' dollars to turn that into generated profit to be reinvested.
Since 2018, the company has seen increases of 5 percent in ROA and even up to
almost 30 percent in ROE. Even though the company's ROE is slightly below the
previous financial performance, they are still doing well and staying above the
average. The analysis shows that the company is doing a good job at increasing
its profits while at the same time requiring much capital. It can also suggest
that its management is doing a good job of diversifying shareholders.
Therefore, the financial analysis concludes that the company is making efforts
toward improving its financial performance and claiming its piece of the market
with steam.
Need Help? Don’t Be Shy To Ask.
References
CocaCola
PE Ratio 2010-2021 | KO. Macrotrends.net. (2022). Retrieved 10th Apr 2022, from
https://www.macrotrends.net/stocks/charts/KO/cocacola/pe-ratio.
Coca-Cola
Reports Fourth Quarter and Full Year 2020 Results. The Coca-Cola Company.
(2022). Retrieved 10th Apr 2022, from https://investors.coca-colacompany.com/news-events/press-releases/detail/1012/coca-cola-reports-fourth-quarter-and-full-year-2021-results.
Luo,
T. (2022). Strategic Analysis of Coca-Cola Company based on Harvard
Framework. BCP Business &Amp; Management, 17,
16-21. https://doi.org/10.54691/bcpbm.v17i.342
Zhiqi
Xiao, & Jingxian Zhang. (2020). The Analysis of Effectiveness of Cost
Control Strategy on the Profitability of Coca-Cola Company from 2015 to 2017. Management
Studies, 8(3). https://doi.org/10.17265/2328-2185/2020.03.004
Contact us now to get custom essays written for you in less than 12 hours
No comments:
Post a Comment