AU Financial Statement Analysis Essay

Description

Provide a summary of the issue that Coca-Cola face. Prepare a 3-5-page report that analyzes the
financial condition of Coca-Cola. Included in the memo should be a section describing the company’s liquidity. Make sure that you include the heading of each section in your
report. Also include the following financial exhibits in excel:
o Vertical (common size) analysis of income statement and balance sheet
o Horizontal (percent-change) analysis of income statement and balance sheet
company’s liquidity,
I need analysis of the following:
Vertical (common size) analysis of income statement and balance sheet
Horizontal (percent-change) analysis of income statement and balance sheet
And the company’s liquidity.

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(In Millions)
Sales
Cost of goods sold
Gross Profit
KO Income Statement
2020
33,014
13,433
19,581
2019
37,266
14,619
22,647
2018
34,300
13,067
21,233
Selling, and administrative expenses
Other operating expenses
Operating Income (EBIT)
Non-operating income (loss)
Interest Expense
9,731
853
8,997
2,189
1,437
12,103
458
10,086
1,646
946
11,002
1,079
9,152
23
950
Earnings before taxes (taxable income)
Income Taxes
Net income
9,749
1,981
7,768
10,786
1,801
8,985
8,225
1,749
6,476
Additional Information
Price
Shares Outstanding
Dividends
DPS
49.95
4,295
7,047
1.64
50.83
4,276
6,845
1.60
45.41
4,259
6644
1.56
Coca-Cola’s Balance Sheet (in millions)
Assets
2020
Cash and cash equivalents
6,795
Short-term investment
4,119
Accounts receivable
3,144
Inventories
3,266
2019
6,480
4,695
3,971
3,379
2018
9,077
7,038
3,685
3,071
Prepaid expanses and other current assets
Total Current Assets
Gross plant and equipment
Less accumulated depreication
Net plant and equipment
Goodwill and other intangible assets
Other Assets
1,916
19,240
19,700
8,923
10,777
28,550
28,729
1,886
20,411
18,921
8,083
10,838
26,766
28,366
2,059
24,930
17,611
8,013
9,598
21,587
27,101
Total Assets
87,296
86,381
83,216
Liabilities and Equity
Accounts Payable
Accrued Liabilities
Short-term Notes
Other Current Liabilities
Total Current liabilities
Long-term Debt
Other Liabilities
Deferred income tax liability
Total Liabilities
Stockholders’ Equity:
Common Stock
Paid-in capital
Retained earnings
Treasury Stock
Other Equity
Minority Interest
Total Equity
2020
3,517
609
2,990
7,485
14,601
40,125
9,453
1,833
66,012
2019
3,804
1,021
15,528
6,620
26,973
27,516
8,510
2,284
65,283
2018
2,719
1,280
18,838
5,945
28,782
25,376
7,646
2,354
64,158
1,760
17,601
66,555
-52,016
-14,601
1,985
21,284
1,760
17,154
65,855
-52,244
-13,544
2,117
21,098
1,760
16,520
63,234
-51,719
-12,814
2,077
19,058
Total Liabilities and Equity
87,296
86,381
83,216
Ratios
Current Ratio
Quick Ratio
Industry Average
1.107
0.626
Total Asset Turnover
Fixed Asset Turnover
Days Sales Outstanding
Inventory Turnover
0.521
3.787
32.038
5.708
Liability to Asset Ratio
Times Interest Earned
80.00%
5.802
Profit Margin
ROA
ROE
12.61%
5.70%
11.34%
P/E
M/B
57.40
3.43
Last Name 1
The Financial Statement Analysis
Vertical (common size) analysis of income statement and balance sheet
Vertical analysis (also known as common-size analysis) is a popular form of financial
statement analysis that displays each item on a statement as a percentage of the statement’s base
number.
Our company’s vertical analysis of income statement research reveals that our net income
was 18 percent in 2018, 24 percent in 2019, and the same net income percentage in 2020.
While a vertical analysis of our balance sheet reveals that our total current assets for the
year 2018 are 30 percent, they are 24 percent in 2019 and just 6 percent in 2020.
Horizontal (percent-change) analysis of income statement and balance sheet
Horizontal analysis is a method of analyzing financial statements that compares particular
financial information from one accounting period to information from prior periods.
Our company’s horizontal income statement analysis indicates that we had a 39 percent
loss from 2018 to 2019, however we had a 14 percent profit from 2019 to 2020.
Company liquidity ratio analysis
1. Current Ratio:
A ratio higher than 1.0 shows that a company can at least satisfy its current obligations
with its current assets. A decent current to current ratio is between 1.2 and 2. In our case, it is
about 1.107, indicating that they have more current assets than current liabilities.
2. Quick Ratio:
The quick ratio assesses a company’s capacity to satisfy its short-term commitments
using its most liquid assets and is an indication of its short-term liquidity situation.
Last Name 2
A quick ratio of 1 or above is regarded satisfactory. In our situation, it is about 0.626,
indicating that the company’s capacity to service its short-term loans is deteriorating and that
action to increase liquidity is required.

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Income Statement

Financial Statement Analysis

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