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The Coca – Cola Aaron Trower ACG2021 SECTION 004

The Coca – Cola Aaron Trower ACG2021 SECTION 004. Executive Summary.

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The Coca – Cola Aaron Trower ACG2021 SECTION 004

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  1. The Coca – ColaAaron TrowerACG2021 SECTION 004

  2. Executive Summary In 2006, they expect to achieve an improved balance of volume and pricing growth in both North America and Europe. With renewed efforts in marketing, The Coca – Cola Companywill achieve improvements in brand, package, and profits.

  3. Part A. Introduction • E. Neville Isdell, CEO • Home office: Atlanta, GA • Fiscal Year End: Dec 31, 2005 • The Coca-Cola Company is predominantly a manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups. They also manufacture, distribute and market some finished beverages. • The company's products are sold in more than 200 countries through an extensive network of independent and company-owned bottlers.

  4. Part A. Audit Report • The Coca - Cola Company’s independent auditors are Ernst & Young LLP. • The financial statements were prepared in conformity with generally accepted accounting principles appropriate in the circumstances and, accordingly, include certain amounts based on our best judgments and estimates. • The financial information in this Annual Report on Form 10-K is consistent with that in the financial statements.

  5. Part A. Stock Market Information • The Most Recent Stock Price is $44.77 • The Twelve month trading range of the stock is 45.20 – 39.36 • Dividend per share is 1.12 • The Date of the above information is October 6, 2006. • This stock has a fairly typical dividend yield, both compared with its industry peers and the broader market. Note that its dividend has risen dramatically over the past five years. In my opinion hold on to this stock.

  6. Part B. Industry Situation and Company Plans The beverage industry as a whole has been showing a steady growth over the past three years. Likewise, the Coca – Company has shown an increase over the same period. The Coca – Company has been one of the better performer in this industry. The company plans to get their product in every major market in the world and continue to turn a good profit. Annual Report Link Up to date information Link

  7. Part C. Income Statement The format of their Income Statement is a multi-step format. Although gross profit, income from operations, and net income all increase, these increases were below what the company predicted due to the hurricanes of last year.

  8. Part C. Balance Sheet The Asset decreased and liabilities and stockholders equity increase from 2004 to 2005. The assets change the most. The hurricanes’ detrimental effect on their business results was significant due to lost sales in high per capita consumption markets.

  9. Part D. Accounting Policies The financial statements are prepared according to the Generally Accepted Accounting Principles. The topics of the notes to the financial statements are: Business and summary of significant accounting policies. Bottling investments Property, Plant, and Equipment Goodwill, Trademarks, and other Intangible Assets Accounts Payable and Accrued Interest Short-term borrowing and credit arrangements

  10. Part D. Accounting Policies (Cont.) • Long-term Debt • Comprehensive Income • Financial Instruments • Commitments Contingencies • Stock Compensation Plans • Pension and Other Postretirement Benefit Plans • Income Taxes • Significant Operating and Non-operating Items • Streamlining Costs • Acquisition and Investments • Operating Segments

  11. Part E. Financial AnalysisLiquidity Ratios • In the current ratio fell by .06 however the company is still in good standing, because the current ratio is still above one. • In 2005 working capital decreased by 734 million dollars from the previous year.

  12. Part E. Financial AnalysisProfitability Ratios • The Profit margin tells us that over the past year coca – cola was less efficient. • Asset turnover tells you that for every $1 in assets Coke owned during 2005 and 2006, it sold $.75 and $.71 worth of goods, respectively. • Return on assets means that for every $1 in assets, Coke earned $.17 and $.15 in 2005 and 2004, respectively. • Return on assets means that for every $1 in equity, Coke earned $.30 in both 2005 and 2004.

  13. Part E. Financial AnalysisSolvency Ratio • Since the debt to equity ratio is lower than 1, this mean that the shareholder own more of the company than the creditors.

  14. Part E. Financial AnalysisMarket Strength Ratios • The Coca - Cola dividend yield shows that the company has a 2.6% return on stock investments for 2005 and a 2.5% return for 2004. • The Coca - Cola earnings per share shows that for every share outstanding there is $1.12 of net income for 2005 and $1.00 for 2004.

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