Financial Analysis Of Coca Cola Company, Using Ratios - 550 Words

Coca-Cola vs. Pepsico-Reference From Coca-Cola Annual Report Analysis (Term Paper Sample) Content: FINANCIAL ACCOUNTINGNameCourse codeInstructorInstitutionCity/StateDateCoca cola vs. PepsiCo-reference from Coca-Cola annual report analysis * Working capital =Current assets / current liabilitiesYear 2014 2013 Workings 32986/32374 31304/27811 Ratio 1.02 1.25 Normally, a ratio that is less than 1 makes a company to face liquidity issues. Therefore, Coca-Cola Company is in a good position to settle its debtors and that it has no reason of selling its assets to pay debts and therefore the firm has no liquidity problems. CITATION Ano1411 \l 1033 (Anonymous, 2014) Ordinarily the greater the working capital, the more likely it will be to make its payments on time. Its competitor has working capital of 0.95 meaning it is facing liquidity problems. * Quick ratio. The quick ratio measures the firms ability to meet its short term obligations with its liquid assets. Quick ratio= {(Cur.Ass-Invt)/Cur.lia)Year 2014 2013 Workings 32986-3100/32374 31304-3277/27811 Ratio 1.01 1.00 Th is ratio 1 is good and it implies that the Coca cola Companys liquidity is in good position. On the other hand, its competitor 1.5 ratio puts it at competitive advantage. * Gross Profit Margin =Gross Profit/Total SalesYear 2014 2013 2012 Workings 28109/17889 28433/18421 28964/19053 Ratio 1.57 1.54 1.51 Gross margin has increased significantly meaning that the business is doing well and rising in profitability as the years progresses. This also implies that the company has a lot of money to spend on other business operations including marketing * Inventory Turnover =Cost of Sales/Average Inventory.Year 2014 2013 Workings 17889/3100/2 18421/3277/2 Ratio 11.5 11.6 This is a good indication of production and purchasing efficiency. A high ratio of 11 indicates inventory is selling quickly and that little unused inventory is being stored. There are no overstocking, obsolete inventories or selling issues. * Turnover =Revenue/Average Total Assets.Year 2014 2013 Workings 45998/92023/2 46854/ 90055/2 Ratio 1.04 .99 This rising ratio means that the Coca-Cola Company is using its assets more productively * Debt to Equity = Short Term Debt + Long Term Debt/Total Equity.Year 2014 2013 Workings 17889/3100/2 18421/3277/2 Ratio 11.5 11.6 The ratio is moderate and balanced, therefore the business is safe.Ordinarily, too much debt put the firm at risk, but too little debt may limit your potential. CITATION Pol08 \l 1033 (Gregor, 2008) Owners want to get some leverage on their investment to boost profits. This has to be balanced with the ability to service debt * Accounts Payable Turnover =Cost of Sales/Average Accounts Payable.