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.

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Coca Cola Financial Report and Analysis by Paul Borosky, MBA.
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Each Public Company Financial Report will include:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
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  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
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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

Column1 2019 2018 2017 2016 2015
Revenues                    37,266                    34,300                    36,212                    41,863                      44,294
COGS                    14,619                    13,067                    13,721                    16,465                      17,482
Gross Profit                    22,647                    21,233                    22,491                    25,398                      26,812
SG&A                    12,103                    11,002                    12,834                    15,262                      16,427
Depreciation                      1,365                      1,086                      1,260                      1,787                        1,970
R & D
Other                         458                      1,079                      1,902                      1,510                        1,657
Operating Expenses                    12,561                    12,081                    14,736                    16,772                      18,084
EBIT                    11,732                      9,175                      7,743                      8,869                      10,461
Other Income
Interest Expense                         946                         950                         853                         733                           856
EBT                    10,786                      8,225                      6,890                      8,136                        9,605
Taxes                      1,801                      1,749                      5,607                      1,586                        2,239
Net Income                     8,985                     6,476                     1,283                     6,550                      7,366

Coca Cola Balance Sheet Summary

Inventory

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

Column1 2019 2018 2017 2016 2015
Cash                        6,480                    9,077                    6,006                    8,555                    7,309
Short Term Investment                        4,695                    7,038                  14,669                  13,646                  12,591
Account Receivable                        3,971                    3,685                    3,667                    3,856                    3,941
Inventory                        3,379                    3,071                    2,655                    2,675                    2,902
Other
Current Assets                    20,411                24,930                36,545                34,010                33,395
Net PPE                      10,838                    9,598                    8,203                  10,635                  12,571
Goodwill                      16,764                  14,109                    9,401                  10,629                  11,289
Other
Total Assets                    86,381                83,216                87,896                87,270                89,996
Accounts Payable                      11,312                    9,533                    8,748                    9,490                    9,660
Accrued Expense
Accrued Taxes                           414                       411                       410                       307                       331
Notes Payable                      10,994                  13,835                  13,205                  12,498                  13,129
LT Debt - Current                        4,253                    5,003                    3,298                    3,527                    2,676
Other
Total Current Liabilities                      26,973                  28,782                  27,194                  26,532                  26,929
LT Debt                      27,516                  25,376                  31,182                  29,684                  28,311
Other
Total Liabilities                    44,185                45,100                49,942                40,830                38,468
Common Stock                      18,914                  18,280                  17,624                  16,753                  15,776
Treasury                      52,244                  51,719                  50,677                  47,988                  45,066
Retained Earnings                      65,855                  63,234                  60,430                  14,993                  14,016
Other
Total Equity                    21,098                19,058                18,977                23,220                25,764
Total Equity & Liability                    65,283                64,158                68,919                64,050                64,232

Coca Cola Financial Ratio Summary and Analysis

Quick Ratio

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.

Inventory Turnover

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

Ratios 2019 2018 2017 2016 2015
Current Ratio                           0.76                    0.87
Cash Ratio                           0.24                    0.32
Quick Ratio                           0.63                    0.76
Net Working Capital                         2,104                  5,889

Coca Cola 2019 Asset Utilization

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.43                    0.41
Fixed Asset Turnover                           3.44                    3.57
Days Sales Outstanding                         38.89                  39.21
Inventory Turnover                         11.03                  11.17
Accounts Receivable Turnover                           9.38                    9.31
Working Capital Turnover                         17.71                    5.82
AP Turnover                           3.29                    3.60
Average Days Inventory                           0.03                    0.03
Average Days Payable                           0.01                    0.01

Coca Cola 2019 Profitability Ratios

Ratios 2019 2018 2017 2016 2015
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%
ROCE 19.75% 16.86%
Capital Employed                       59,408                54,434
ROIC 75.51% 46.65%

Coca Cola 2019 Long-term Debt

Ratios 2019 2018 2017 2016 2015
Debt Ratio 31.85% 30.49%
Debt/Equity 130.42% 133.15%
Times Interest Earned                         12.40                    9.66