Coca Cola Financial Analysis and Financial Report: 2015 to 2019
Coca Cola Financial Report and Financial Analysis started with an in-depth review of Coca Cola's 10k Annual report, specifically, Coca Cola's income statement and balance sheet.
Next Paul Borosky, MBA., summarized their financial information and input it into a proprietary financial model, which shows their income statement and balance sheet trends as well as calculations for Coca Cola's financial ratios, and financial ratio trends covering 5 years.
*No 10k Annual Statements
Call or Text Paul Now!
Tutoring Sessions may be In-Person or online via Skype!
Coca Cola Summary
Coca Cola stock price in Mid-March of 2019 was at $45.14. It ended Mid-March of 2020 with a stock price of $52.35. This is a growth rate annually of 15.97%. From an investor’s perspective, this growth rate well exceeds overall market returns.
Coca Cola has been consistently paying dividends over the last five years. Further, their dividend payments have been growing continuously, as a dollar amount, as well. However, the actual growth rate for dividends has been declining. In 2016, the growth rate for dividends was 6.06%. However, in 2019, this growth rate slowed to 2.56%. Investors should expect this growth rate declined to continue for your seeable future.
Coca Cola Income Statement Summary
Cost of Goods
Coke’s cost of goods, as compared to revenues, was 39.5% in 2015. As of 2019, the cost of goods as a percentage of revenues, fell to approximately 39.2%. This shows that the company is doing an excellent job of aligning the cost of goods with prices. To accomplish this feat, the company is either doing an excellent job with negotiating raw material prices with vendors. Or, the company is passing on increased raw material costs to its customers. Finally, the firm may very well be doing both.
Coca Cola Summary Income Statement 2019
|R & D|
Coca Cola Balance Sheet Summary
Coca-Cola ended 2015 with inventory at about $2.9 billion. In the next several years, their inventory position would fall to about $2.6 billion in 2017. However, in 2018, their inventory jumped up to $3 billion and then increased again in 2019 to $3.4 billion. In a day and age where most large businesses are embracing just-in-time purchases, increasing an inventory position is probably not the best strategic move for the organization. Granted, obsolescence in the soda industry is probably nothing to worry about. Yet, with society’s changing tastes in relation to soft drinks, a better strategy needs to be devised in relation to inventory management.
Coca Cola Summary Balance Sheet 2019
|Short Term Investment||4,695||7,038||14,669||13,646||12,591|
|LT Debt - Current||4,253||5,003||3,298||3,527||2,676|
|Total Current Liabilities||26,973||28,782||27,194||26,532||26,929|
|Total Equity & Liability||65,283||64,158||68,919||64,050||64,232|
Coca Cola Financial Ratio Summary and Analysis
The company’s quick ratio seems to be aligned with the current ratio trend. In 2015, the company’s quick ratio was 1.13. Over the next two years, the quick ratio position would increase to 1.25. From this point, in 2018 and 2019, the quick ratio would decline to end at .63. This tells us that their inventory levels have remained constant in relation to current assets. However, their liquid asset positions, cash, and short-term investments are declining steadily. At least for the last two years.
In 2015, inventory turnover was at 15.3. In 2016, inventory turnover improved to 15.6. However, over the next three years, the company’s inventory turnover would decline to 13.6, 11.2, and then in 2019 to 11. This shows that the firm is holding too much inventory on a long-term trend. To improve this ratio, the firm needs to embrace and optimize just-in-time processing. Without doing this, the company runs the risk of product obsolescence. Also, by holding too much inventory, this increases their warehouse storage usage. As a result, the company will have a harder time divesting underperforming warehouse space.
Net Profit Margin
Net profit margins for Coca-Cola in 2015 were 16.6%. Following previous trends, the net profit margin fell to 3.5% in 2017. Again, through its cost-cutting measures, the company was able to improve its net profit margin to 24.1% in 2019. However, with their sales and cash position continually falling, sustaining an elevated net profit margins such as this may prove insurmountable.
Coca Cola 2019 Liquidity Ratios
|Net Working Capital||2,104||5,889|
Coca Cola 2019 Asset Utilization
|Total Asset Turnover||0.43||0.41|
|Fixed Asset Turnover||3.44||3.57|
|Days Sales Outstanding||38.89||39.21|
|Accounts Receivable Turnover||9.38||9.31|
|Working Capital Turnover||17.71||5.82|
|Average Days Inventory||0.03||0.03|
|Average Days Payable||0.01||0.01|
Coca Cola 2019 Profitability Ratios
|Return on Assets||10.40%||7.78%|
|Return on Equity||42.59%||33.98%|
|Net Profit Margin||24.11%||18.88%|
|Gross Profit Margin||60.77%||61.90%|
|Operating Profit Margin||31.48%||26.75%|
|Basic Earning Power||13.58%||11.03%|
Coca Cola 2019 Long-term Debt
|Times Interest Earned||12.40||9.66|