The Coca-Cola CompanyBalance Sheet
as at December 31, _ _ _ _ _.2006 2005 2004
$ in '000
Assets
Current Assets Cash & Cash Equivlent 2,440,000 4,701,000 6,707,000
Short-Term Investment 150,000 66,000 61,000
Net Receiveables 2,704,000 2,281,000 2,171,000
Inventory 1,641,000 1,424,000 1,420,000
Other Current Assets 1,506,000 1,778,000 1,735,000
Total Current Assets 8,441,000 10,250,000 12,094,000
Non-Current Assets Long term investment 6,783,000 6,922,000 6,252,000
Property, Plant & Equipments 6,903,000 5,786,000 6,091,000
Goodwill 1,403,000 1,047,000 1,097,000
Intengible Assets 3,732,000 2,774,000 2,739,000
Accumulated Amortization - - -
Other Assets 2,533,000 2,648,000 3,054,000
Def. Long Term Assets Charges 168,000 - -
Total Non-Current Assets 21,522,000 19,177,000 19,233,000
TOTAL ASSETS 29,963,000 29,427,000 31,327,000
EQUITY AND LIABILITIES
CURRENT LIABILITIES Accounts Payable 5,622,000 5,290,000 4,751,000
Short-term Debt 3,268,000 4,546,000 6,021,000
Other Current Liabilities - - 199,000
Total Current Liabilities 8,890,000 9,836,000 10,971,000
NON-CURRENT LIABILITIES Long-term Debt 1,314,000 1,154,000 ### 1,157,000
Other Liabilities 1,873,000 1,730,000 2,814,000
Def. Long Term Liability charges 608,000 352,000 450,000
Minority Interest 358,000 - -
Negative Goodwill - - -
Total Non-Current Liabilities 4,153,000 3,236,000 4,421,000
Total Liabilities 13,043,000 13,072,000 15,392,000
SHARE CAPITAL AND RESERVES
Shareholder's Equity
Misc Stock Opt Warrants
Redeemable Preferred Stock
Preferred Stock
Common Stock 878,000 877,000 875,000
Retained Earnings 33,468,000 31,299,000 29,105,000
Treasury Stocks (22,118,000) (19,644,000) (17,625,000)
Capital Surplus 5,983,000 5,492,000 4,928,000
Other Shareholders Equity (1,291,000) (1,669,000) (1,348,000)
Total Shareholder's Equity 16,920,000 16,355,000 15,935,000
TOTAL EQUITY AND LIABILITIES 29,963,000 ### 29,427,000 31,327,000
The Coca-Cola CompanyProfit & Loss Account
For the Year Ended December 31, _ _ _ _ _.
2006 2005 2004
$ in '000
Total Revenue 24,088,000 23,104,000 21,962,000
Cost of sales (8,164,000)### (8,195,000) (7,638,000)
Gross profit 15,924,000 14,909,000 14,324,000
Operating Expense - - -
Research & Development - - -
Selling, Gen. & Administrative Exp. (9,616,000) (8,824,000) (8,626,000)
Non-Recurring - - -
Others - - -
Total Operating Expens - - -
Operating Income or Loss 6,308,000 6,085,000 5,698,000
Income from Cont. Operations - - -
Total Other income/expense Net 388,000 845,000 720,000
EBIT 6,798,000 6,930,000 6,418,000
Interest Expense (220,000) (240,000) (196,000)
Income Befor Tax 6,578,000 6,690,000 6,222,000
Income Tax Expense (1,498,000) (1,818,000) (1,375,000)
Minority Interest - - -
Net Income from Cont Operations 5,080,000 4,872,000 4,847,000
Non-Recurring Events - - -
Discount Oper - - -
Extraordinary Items - - -
Effect of Acct Changes - - -
Other Items - - -
Net Income 5,080,000 4,872,000 4,847,000
The Coca-Cola Company Financial Analysis
2006 2005 2004
Liquidity Ratios
Liquidity refers to a company's ability to meet its muturing short-term obligations.
Liquidity is essential to conducting business activity, particularly in times of adversity, such as
when business operations losses due to economic recession or steep rise in the price of raw
material or part or other factors.
1. Net Working Capital: = Current Assets - Current Liabilities
= (449,000.00) 414,000.00 ###
Net working capital of any organization is consider as safety cushion for creditors for their
investment. Organization must have to maintain a large balance , when they have difficulty to borrow
on short notice.
In Coca-Cola Company case, the Company's Net Working Capital continuously decreasing
over the period. In 2005, the Company's working capital decreased $ 709,000 (Thousands) but in 2006
it decrease more then the last year to $ 863,000 (Thousand) which turns the Company's working capital
into negetive, which is very alarming condition for the Company as well as for the inverstors.
2. Current Ratio: = Current Assets
Current Liabilities
= 0.95 1.04 1.10
Current ratio is used to measure the ability of organization to meet/cover it current liabilities
out of its current assets. Just like net working capital , organization have to maintain high current ratio is
required in case of any borrowing on short notice period.
In Coca-Cola Company, the Company's Current ratio also continuously decreasing as Net
Working Capital decreased. This shows that the Company's ability to meet it current liabilities out of its
year 2006, it further reduces with 0.09 form 1.04 to 0.95 rapidly as compared to 2005.
current assets decreased. In 2004, it was 1.10 which reduced 0.06 in 2005 to 1.04. But in current Financial
The Coca-Cola Company Financial Analysis
2006 2005 2004
Liquidity Ratios (Con't)
3. Quick (Acid Test) Ratio: = Current Assets - Inventroy
Current Liabilities
= 0.76 0.90 0.97
Quick (Acid Test) ratio is used to measure the value of organization most current assets to
meet/cover its current liabilities. Inventroy & Prepaid expenses are not included because they not easily
convertible into cash or cash equivlent and are not capable of covering current liabilities.
Coca-cola Company's Quick (Acid Test) ratio also on decreasing trend. And this decreased
increased with the passage of time. In 2004, it was actually at 0.97 and came down at 0.90 in 2005. In
2006, this down ward trend continue and it further decreased and reached at 0.76 with a decrease of 0.12.
In Short, the Coca-Cola Company's liquidity ratio results show that the company is in
a weak position against its current liabilites and this trend is continue. If Company not take pay
attention to this situation, it creates serious problem for the company in future.
The Coca-Cola Company Financial Analysis
2006 2005 2004
Activity (Asset Utilization) Ratios
Activity ratio are used to determine how quickly various accounts are converted into
sales or cash. It is necessary to evaluate the activity or liquidity of specific current accounts. For
this purpose, various ratios exist to measure the activity of receiveables, inventory & Total Assets.
1. Account Receiveable Turnov = Net Credit Sale
Avg. Account Receivable
*Avg. Account R/A = 2,492,500.00 2,226,000.00
= 9.66 times 10.38 times
The Account Receiveable Turnover ratio gives the number of times the account receiveables
are collected during the year. The higher account receiveable turnover, the better company in collecting
revenue from customers. Moreover, an excessively high ratio show that company follows stringent credit
policy.
In 2005, Company's account receiveable turnover ratio was 10.38. The drop in this ratio shows
a problem in collecting the revenues from the creditors/customers. The company needs to re-evaluate its
credit policy.
2. Collection Period: = 365 Days
Account Receiveable Turnover
= 37.77 days 35.17 days
Collection period is the number of days it takes to convert/collect a sale(credit sale) into cash.
The Coca-Cola Company Financial Analysis
2006 2005 2004
In 2005, Company's collection period was 35.17 days (almost 35 days) that now increased to
37.77 days (almost 38 days). Now company's problems increased as the Company's account receiveable
time perioed reduced and Secondly, the company's collection period efficiency decreased.
Activity (Asset Utilization) Ratios (Con't)
3. Inventory Turnover Ratio: = Cost of Good Sold
Average Inventory
* Avg. Inventroy = 1,532,500.00 1,422,000.00
= (5.33) times (5.76) times
Inventory turnover ratio describes that how many times the inventory (Finished goods ) are
moved/sold. Holding of excess inventory show that Company funds tied up in inventory, high inventory
carrying cost and as well as risk of obsolescence.
In 2005, Company's Inventory turnover ratio was 5.76 that now reduce slight to 5.33 times.
This shows that there is stocking of goods that may be due the introduction of new product line or due
obsolete goods that have actually no worth.
4. Inventory Age: = 365 Days
Inventory Turnover
= (68.52) days (63.33) days
Inventory age is the ratio of calcuating the time period for inventory/finished goods to be
hold with the company.
In 2005, Company's Inventory age was 63.33 days (almost 63 days) which in 2006 increased
The Coca-Cola Company Financial Analysis
2006 2005 2004
to 68.52 days (almost 69 days) with a difference of 6 days that is not good for the company. As much
lengthening the holding period show potentially greater the risk of obsolencence.
Activity (Asset Utilization) Ratios (Con't)
5. Operating Cycle = Avg. Collection Period + Inventory Age
= (30.75) days (28.17) days
The Operating cycle of an organization is the number of days it take to convert inventory
and account receiveables to cash. For every business entity, the minimum/short operating cycle is
desireable.
The Coca-cola Company's operating cycle in 2006 is 106.28 days (almost 106 days) that are
more then the operating cycle of last year 2005. In 2005, the operating cycle was 98.50 days (almost 99
days) which now length by 7 days. This is an unfavorable trend to tied up amount of money with the
non-cash assets or any investment.
6. Total Asset Turnover Ratio: = Sale
Avg. Total Assets
* Avg. Total Assets = 29,695,000.00 30,377,000.00
= 0.81 0.76
The Operating cycle of an organization is the number of days it take to convert inventory
and account receiveables to cash. For every business entity, the minimum/short operating cycle is
desireable.
The Coca-Cola Company Financial Analysis
2006 2005 2004
The Coca-cola Company's operating cycle in 2006 is 106.28 days (almost 106 days) that are
more then the operating cycle of last year 2005. In 2005, the operating cycle was 98.50 days (almost 99
days) which now length by 7 days. This is an unfavorable trend to tied up amount of money with the
Activity (Asset Utilization) Ratios (Con't)
7. Fixed Asset Turnover Ratio: = Sale
Avg. Fixed Assets
* Avg. Fixed Assets = 6,344,500.00 5,938,500.00
= 3.80 3.89
The Coca-Cola Company Financial Analysis
2006 2005 2004
Leverage (Solvency, Long-Term Debt) Ratios
Leverage (Solvency) is the company's ability to meet its long-term obligations as they
become due in future. Solvency analysis concentrated on the long-term finanacial and operating
structure of the business.Further more the solvency is dependent long-run profitability, unless the
organization is not profitable the organization will not be able to meet its long-term debts.
1. Debt Ratio: = Total Liabilities
Total Assets
= 0.4353 0.4442 0.4913
The debt ratio compares the total liabilites (total debt) to total assets. It shows the percentage
of total funds obtained from the creditors for business operations.
The Coca-cola Company's debt ratio show that in 2005 the company make improvement in its
debt ratio and reduce it from 0.4913 to 0.4442 . But in 2006, the company slightly improve its debt ratio
from 0.4442 of 2005 to 0.4353 in 2006. This shows that the degree of debt decreased to total assets.
2. Debt Equity Ratio: = Total Liabilities
The Coca-Cola Company Financial Analysis
2006 2005 20042. Debt Equity Ratio: =
Total Equity
= 0.77 0.80 0.97
The debt equity ratio is the significant measure of solvency ratio. In high debt result, it will
less fexibility for company in obtaioning more funds in tight money market. High debt equity ratio also
make it difficult fro the company to meet interest charges and principal payments at muturity.
The Coca-cola Company's debt equity ratio show that the company’s debt equity ratio slightly
improved as compared to 2005 & 2004.
Leverage (Solvency, Long-Term Debt) Ratios
3. Interest Coverage Ratio: = Earning Before Interest & Taxes (EBIT)
Interest Expense
= 30.90 28.88
The interest coverage ratio shows the number of times before tax earnings cover interest
expense. We can say that it is a safety margin indicator that tells how much decline in earnings an orga-
nization can bear/control.
The Coca-cola Company's Interest coverage in 2006 is 30.44 that shows a positive indicator
and show that more earnings are available for interest charges payments as compared to last year 2005.
4. L-T Debt to Equity Ratio: = Long Term Debt
Total Shareholder Equity
= 0.0777 0.0706 0.0726
The Coca-Cola Company Financial Analysis
2006 2005 2004
The long-term debt to equity ratio is balance between the firms long term debts and its owner
equity.
The Coca-cola Company's long-term debt of equity ratio slightly increase in 2006 at 0.0777
from 0.0706 in 2005. This shows that the company's long-term debts increased over the year while these
were decreased in 2005 as compared to 2004 from 0.0726 to 0.0706.
Profitability Ratios
Profitability ratios reflects the company positions as per their operations and the return
of the organization
structure of the business.Further more the solvency is dependent long-run profitability, unless the
organization is not profitable the organization will not be able to meet its long-term debts.
1. Gross Profit Mangin Ratio: = Gross Profit
Net Sale
= 0.6611 0.6453 0.6522
The Coca-Cola Company Financial Analysis
2006 2005 2004
2. Operating Profit Ratio: = Earning Before Interest & Taxes (EBIT)
Net Sale
= 0.2822 0.2999 0.2922
3. Profit Margin Ratio: = Net Profit
Net Sale
= 0.2109 0.2109 0.2207
The Coca-Cola Company Financial Analysis
2006 2005 2004
4. Return on Investment(Assets = Net income
Avg. Total Assets
* Avg. Total Assets = 29,695,000 30,377,000
= 0.1711 0.1604
5. Return on Equity: = Net income
Avg. Shareholders
* Avg. Shareholders = 16,637,500 16,145,000
= 0.3053 0.3018
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
Company's Internal & Sustainable Growth Rate
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
Liquidity Ratios
a. Net Working Capital: = Current Assets - Current Liabilities
(449,000.00) 414,000.00 1,123,000.00
b. Current Ratio: =
Current Assets Current Liabilities
0.95 1.04 1.10
c. Quick (Acid Test) Ratio: =
Current Assets - Inventroy Current Liabilities
0.76 0.90 0.97
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
Activity (Asset Utilization) Ratios
d. Account Receiveable Turnover =
Net Credit Sale Avg. Account Receivable
*Avg. Account R/A = 2492500 2226000 1085500
= 9.66 10.38 20.23
e. Collection Period: =
365 DaysAccount Receiveable Turnover
37.77 35.17 18.04
f. Inventory Turnover Ratio: =
Cost of Good SoldAverage Inventory
* Avg. Inventroy = 1532500 1422000
-5.33 -5.76
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
g. Inventory Age: =
365 DaysInventory Turnover
= -68.52 -63.33
h. Operating Cycle = Avg. Collection Period + Inventory Age
-30.75 -28.17
= 106 Days = 99 Days
i. Total Asset Turnover Ratio: =
SaleAvg. Total Assets
* Avg. Total Assets = 29695000 30377000
= 0.81 0.76
j. Fixed Asset Turnover Ratio: =
SaleAvg. Fixed Assets
* Avg. Fixed Assets = 6344500 5938500
= 3.80 3.89
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
Leverage (Solvency, Long-Term Debt) Ratios
k. Debt Ratio: =
Total LiabilitiesTotal Assets
= 0.4353 0.4442 0.4913
l. Debt Equity Ratio: =
Total LiabilitiesTotal Equity
= 0.7709 0.7993 0.9659
m. Interest Coverage Ratio: =
Earning Before Interest & Taxes (EBIT)Interest Expense
= -30.900 -28.875
n. L-T Debt to Equity Ratio: =
Long Term DebtTotal Shareholder Equity
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
= 0.0777 0.0706 0.0726
Profitability Ratios
o. Gross Profit Mangin Ratio: =
Gross ProfitNet Sale
= 0.6611 0.6453 0.6522
p. Operating Profit Ratio: =
Earning Before Interest & Taxes (EBIT)Net Sale
= 0.2822 0.2999 0.2922
q. Profit Margin Ratio: =
Net ProfitNet Sale
= 0.2109 0.2109 0.2207
The Coca-Cola Company Financial Analysis
2006 2005 2004(A) (A-B) (B) (B-C) (C)
r. Return on Investment(Assets): =
Net incomeAvg. Total Assets
* Avg. Total Assets = 29695000 30377000
= 0.1711 0.1604
s. Return on Equity: =
Net incomeAvg. Shareholders
* Avg. Shareholders = 16637500 16145000
= 0.3053 0.3018
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