Financial Analysis: Coca-Cola

Section 10-K Analysis: Coca-Cola

David Ranger

ACCT 301

Prof. Dorsey, Alicia

Contents

I. The Company 3

II. Objectives and Core capabilities 3

III. Review of Operations 4

IV. Financial Liquidity and Capital Resources 6

V. Appendix 8

VI. References 11

I. The Company

The Coca-Cola Company provides non-alcoholic beverages. Its products are primarily sparkling (carbonated) beverages, but they also offer still beverages such as juice, water, ready-to-drink teas and coffees and energy and sports drinks. Its most popular brands include Coca-Cola, Diet Coke, Fanta and Sprite. From 2012-2014, more than 73% of the company’s sales volume is on sparkling beverages while the rest accounts for the still beverages segment.

The company prides itself with its

Concentrates refer to syrups and concentrates that are used to produce sparkling or flavored still beverages. These are sold to bottling companies who produce the beverages and authorize distributors to install and operate soda fountains in restaurant chains. Finished beverages, on the other hand, are packaged drinks in cans and bottles that bear the company logo, and sold to wholesalers, distributors or retailers in its geographical area of coverage. Of the two main categories, finished products operations generate more revenues (62% or worldwide revenue) despite the lower volume (27% of worldwide volume cases sold) compared to concentrates.

In addition to company-owned and company-controlled entities, The Coca-Cola Company also entered into licensing, joint ventures and partnership agreements with other brands. It capitalizes on its distribution network as an asset to provide marketing support and participate in sales of other non-alcoholic beverages. Some agreements include a joint venture with Nestle to distribute Nestea brand, a partnership with Aujan to produce and distribute flavored malt drinks in the Middle East and to produce and distribute certain DSPG and Monster brand products in the United

This increase in gross profit margin is a combination of a favorable geographical mix of high margin sparkling products in emerging markets and the low commodity cost in North America. The percentage of SG&A is almost flat, but the larger Other Operating Charges in 2014 decreased the Operating Income by 5% from 2013. Almost 50% of this Other Operating Charges are for an investment in Productivity and Efficiency program which is expected to generate $1B productivity benefit in 2016. About 30% ($314million) of the charges are due to the write off of the receivables in