Coca Cola Financial Ratios and Financial Statements Analysis and Review

In "Coca Cola 2018 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” that was written by, Paul Borosky, MBA., doctoral candidate, and owner of Quality Business Plan and Finance Homework Help, the author summarized Coke's 2019 10k, Coca Cola's 2018, 10k annual report, Coke's 2017 10k annual report, and Coca Cola's 2016 10k annual reports as the basis for information gathering.  After all of Coca Cola 10k annual statements were collected, which included Coca Cola Income Statements and Coca Cola Balance Sheets, he then used proprietary financial templates to calculate different financial ratios such as Coke's ROE, ROA, and debt ratio.

Coca Cola 2015 to 2018 Income Statement Summarized

Income Statement 2018
20182017201620152014
Revenues             31,856             35,410             41,863             44,294              45,998
COGS             11,770             13,255             16,465             17,482              17,889
Gross Profit             20,086             22,155             25,398             26,812              28,109
 
SG&A             10,307             12,654             15,370             16,427              17,218
Depreciation                   -                   -                   -                   -                    -
R & D                   -                   -                   -                   -                    -
Other                   -                   -                   -                   -                    -
Operating Expenses              1,079              1,902              1,371              1,657              1,183
EBIT              8,700              7,599              8,657             10,998              11,485
Other Income                 682                 677                 642              8,728               9,708
Interest Expense                 919                 841                 733                 613                  594
EBT              7,781              6,758              7,924             10,385              10,891
Taxes              1,623              5,560              1,586              2,239               2,201
Net Income              6,476               1,283               6,550               7,366                7,124
Tax Rate20.9%82.3%20.0%21.6%20.2%

Coca Cola 2018 Revenues Analysis:

In the last several years, Coca-Cola’s revenues have decreased from about $45.9 billion to $31.9 billion.  The revenue decrease very well may have been because of increased competition.  Interestingly enough though, their net profits have managed to stay between $6-$7 billion over the last several years, with one exception during 2017.  In order to achieve these types of profits, while suffering significant revenue loss, the firm may have focused on cost controls over this time span.

Revenues  
Revenues and Growth
20182017201620152014
Revenues             31,856             35,410             41,863             44,294              45,998
Revenue Growth-10.0%-15.4%-5.5%-3.7%N/A
COGS as % of Revenues
Income Statement 2018
20182017201620152014
Revenues             31,856             35,410             41,863             44,294              45,998
COGS             11,770             13,255             16,465             17,482              17,889
COGS %
Revenues
36.9%37.4%39.3%39.5%38.9%
SG&A as % of Revenues
Income Statement 2018
20182017201620152014
Revenues             31,856             35,410             41,863             44,294              45,998
SG&A             10,307             12,654             15,370             16,427              17,218
SG&A %
Revenues
32.4%35.7%36.7%37.1%37.4%

Coca Cola 2015 to 2018 Balance Sheet Summarized

Balance Sheet
20182017201620152014
Cash              10,951           15,358           18,150           15,631           18,010
Short Term Investment                5,013            5,317            4,051            4,269            3,665
Account Receivable                3,396            3,667            3,856            3,941            4,466
Inventory                2,766            2,655            2,675            2,902            3,100
Other                    -                 -                 -                 -                 -
Current Assets              30,634            36,545            34,010            33,393            32,986
Net PPE                8,232            8,203           10,635           12,571           14,633
Goodwill              10,263            9,401           10,629           11,289           12,100
Other                    -                 -                 -                 -                 -
Total Assets              83,216            87,896            87,270            89,996            92,023
 
Accounts Payable                8,932            8,748            9,490            9,660            9,234
Accrued Expense                    -                 -                 -                 -                 -
Accrued Taxes                  378               410               307               331               400
Notes Payable              13,194           13,205           12,498           13,129           19,130
LT Debt - Current                4,997            3,298            3,527            2,676            3,552
Other                    -                 -                 -                 -                 -
Total Current Liabilities              29,223           27,194           26,532           26,929           32,374
 
LT Debt              25,364           31,182           29,684           28,311           19,063
Other                    -                 -                 -                 -                 -
Total Liabilities              64,158            68,919            64,050            64,232            61,462
 
Common Stock                1,760            1,760            1,760            1,760            1,760
Treasury                2,772            2,781            7,040            7,040            7,040
Retained Earnings              63,234           60,430           65,502           65,018           63,408
Other                    -                 -
Total Equity              19,058            18,977            23,220            25,764            30,561
Total Equity & Liability              83,216            87,896            87,270            89,996            92,023

Coca Cola 2018 Balance Sheet Analysis:

In the last five years, Coca-Cola’s cash position has decreased from $18 billion to a little over $10.9 billion.  In some cases, this cash position decrease may be beneficial.  However, because Coca-Cola’s revenues have been falling substantially, the cash position reduction may have been due to covering costs as compared to investing in future growth.

A second interesting aspect of Coca-Cola’s balance sheet analysis would be the company’s long-term debt position.  In 2014, the organization had approximately $19 billion in debt.  As of 2018, their long-term deposition grew substantially to $25.3 billion.  With revenues falling, taking on additional debt may not be the best strategic action for the company.

Cash as a % of Sales
Balance Sheet
20182017201620152014
Cash              10,951           15,358           18,150           15,631           18,010
% of Sales34.4%43.4%43.4%35.3%39.2%
% of Total Assets13.2%17.5%20.8%17.4%19.6%
Accounts Receivable as a % of Sales
Balance Sheet
20182017201620152014
Accounts Receivables                3,396            3,667            3,856            3,941            4,466
% of Sales10.7%10.4%9.2%8.9%9.7%
Inventory as a % of Sales and Total Assets
Balance Sheet
20182017201620152014
Inventory                2,766            2,655            2,675            2,902            3,100
% of Sales8.7%7.5%6.4%6.6%6.7%
% of Total Assets3.3%3.0%3.1%3.2%3.4%

Coca Cola 2018 Financial Ratios

Liquidity Ratios
Ratios20182017201620152014
Current Ratio                  1.05             1.34             1.28             1.24             1.02
Cash Ratio                  0.37             0.56             0.68             0.58             0.56
Asset Utilization
Ratios20182017201620152014
Total Asset Turnover                  0.38             0.40             0.48             0.49             0.50
Fixed Asset Turnover                  3.87             4.32             3.94             3.52             3.14
Days Sales Outstanding                38.91           37.80           33.62           32.48           35.44
Inventory Turnover                11.52           13.34           15.65           15.26           14.84
Profitability Ratios
Ratios20182017201620152014
Return on Assets7.78%1.46%7.51%8.18%7.74%
Return on Equity33.98%6.76%28.21%28.59%23.31%
Net Profit Margin20.33%3.62%15.65%16.63%15.49%
Long-term Debt
Ratios20182017201620152014
Debt Ratio30.48%35.48%34.01%31.46%20.72%
Debt/Equity133.09%164.31%127.84%109.89%62.38%

Coca Cola Summary Ratio Analysis:

Coca-Cola’s current ratio has stayed steady between 1.02 and 1.34.  This shows that the firm should remain financially solvent in the short term.  As for the company’s fixed asset turnover, this shows increased efficiency.  Specifically, their fixed asset turnover has increased from 3.14 to 3.87 over the course of five years.  In important aspect for investors is always the return on equity.  For Coca-Cola, the company has fluctuated between 6.76% to 33.98%.  A driving reason for the companies improved return on equity may be their usage of debt.  In 2014, the company had a debt ratio of approximately 20.7%.  As of 2018, this ratio grew to 30.4%.

Coca Cola 2018 Cash Ratio Analysis:

Cash Ratio
20182017201620152014
Cash              10,951         15,358         18,150         15,631         18,010
/ Current Liabilities              29,223         27,194         26,532         26,929         32,374
Cash Ratio                   0.37              0.56              0.68              0.58              0.56

Coca Cola 2018 Fixed Asset Turnover Analysis:

Fixed Asset Turnover
20182017201620152014
Sales              31,856         35,410         41,863         44,294         45,998
/ Fixed Assets                8,232           8,203         10,635         12,571         14,633
Fixed Asset Turnover                  3.87              4.32              3.94              3.52              3.14

Coca Cola 2018 Days Sales Outstanding Analysis:

Days Sales Outstanding
20182017201620152014
Accounts Receivable                3,396           3,667           3,856           3,941           4,466
/ Annual Sales              31,856         35,410         41,863         44,294         45,998
/365                   365              365              365              365              365
Days Sales Outstanding                38.91            37.80            33.62            32.48            35.44

Coca Cola 2018 Return of Assets Analysis:

Days Sales Outstanding
20182017201620152014
Accounts Receivable                3,396           3,667           3,856           3,941           4,466
/ Annual Sales              31,856         35,410         41,863         44,294         45,998
/365                   365              365              365              365              365
Days Sales Outstanding                38.91            37.80            33.62            32.48            35.44

Coca Cola 2018 Return of Equity Analysis:

Return on Equity
20182017201620152014
Net Income                6,476           1,283           6,550           7,366           7,124
/ Equity              19,058         18,977         23,220         25,764         30,561
Return on Equity33.98%6.76%28.21%28.59%23.31%

Coca Cola 2018 Profit Margin Analysis:

Net Profit Margin
20182017201620152014
Net Income                6,476           1,283           6,550           7,366           7,124
/ Sales              31,856         35,410         41,863         44,294         45,998
Net Profit Margin20.33%3.62%15.65%16.63%15.49%