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
2018 2017 2016 2015 2014
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 Rate 20.9% 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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
Cash               10,951            15,358            18,150            15,631            18,010
% of Sales 34.4% 43.4% 43.4% 35.3% 39.2%
% of Total Assets 13.2% 17.5% 20.8% 17.4% 19.6%
Accounts Receivable as a % of Sales
Balance Sheet
2018 2017 2016 2015 2014
Accounts Receivables                 3,396             3,667             3,856             3,941             4,466
% of Sales 10.7% 10.4% 9.2% 8.9% 9.7%
Inventory as a % of Sales and Total Assets
Balance Sheet
2018 2017 2016 2015 2014
Inventory                 2,766             2,655             2,675             2,902             3,100
% of Sales 8.7% 7.5% 6.4% 6.6% 6.7%
% of Total Assets 3.3% 3.0% 3.1% 3.2% 3.4%

Coca Cola 2018 Financial Ratios

Liquidity Ratios
Ratios 2018 2017 2016 2015 2014
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
Ratios 2018 2017 2016 2015 2014
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
Ratios 2018 2017 2016 2015 2014
Return on Assets 7.78% 1.46% 7.51% 8.18% 7.74%
Return on Equity 33.98% 6.76% 28.21% 28.59% 23.31%
Net Profit Margin 20.33% 3.62% 15.65% 16.63% 15.49%
Long-term Debt
Ratios 2018 2017 2016 2015 2014
Debt Ratio 30.48% 35.48% 34.01% 31.46% 20.72%
Debt/Equity 133.09% 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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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
2018 2017 2016 2015 2014
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 Equity 33.98% 6.76% 28.21% 28.59% 23.31%

Coca Cola 2018 Profit Margin Analysis:

Net Profit Margin
2018 2017 2016 2015 2014
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 Margin 20.33% 3.62% 15.65% 16.63% 15.49%