Financial Management of Coca Cola
Introduction
The Coca Cola Company is involved in the distribution, manufacture, and marketing of the non-alcoholic concentrates of beverages and syrups worldwide. It is also offering the still and sparkling beverages. Its sparkling beverages include the ready-to-drink beverages with the carbonation of the carbonated waters and energy drinks with the flavored waters also. For its still beverages, its covers the non-alcoholic beverages without the carbonation, the flavored waters, the enhanced waters, and the non-carbonated beverages. The Coca-Cola Company also offers the different fountain syrups and concentrates syrups. It brand names marketing includes the Coca-Cola, Diet Coke, Sprite and Fanta. The company was founded in the year 1886 which had headquartered on Atlanta Georgia (Coca Cola Company Corporate Website, 2008).
The company’s finished beverages products that bear its trademark can be sold into more than 200 countries with the eight segments in the whole world. The company had also been completed the acquisition of the Energy Brands, Inc., and the numerous range of water products. For the past performance of the Coke, it can be determined that it is indeed an excellent firm for having the outstanding products, management, earning, and marketing. In order to have the better overview on this company, it is important to determine and analyze its financial management to see its development (Modern Graham, 2008).
Aims and Purpose
Understanding the financial management of Coca Cola Company can give the overview for the processes and component that had been involved in the financial administration of the company. This has also the aims of determining the process of managing the money and the income of he flows that are associated with the side of business. This can also justified the assurance for the company and its sufficient funds that are availably needed, used in acquisition for resources, and its maintenance. This can also have to determine the Coca Cola Company and its economic productivity and efficiency. This can also be sued by the investors by the investors as a guide for the possible investment in the company and for the future reference for the financial aspect of Coca Cola Company.
Literature Review
Since the company is considered to be one of the Multi National Companies, then its financial resources and management are widely used. The first is the cost of goods that covers the amount of money for Coca Cola in making the syrups and concentrates for the soft drinks. For the second quarter of 2002 it recorded to have .9 billion which rose for almost 0 million for the previous year. This only shows that the cost of the soft drinks rose faster as compared to sales due to charging of the supplies for the cost ingredients in making soft drinks. For the gross profit of the company which is one of the financial management methods, it is only measured by the sales minus the cost of production of the product. For the Coca Cola Company in the 2nd quarter of the Selling, general and administrative expenses or (SG&A) has the amount of .8 billion as 14.6% up from the past 1 year. The company has also the revenues which rose that are faster than its SG&A expenses. This only indicates that the company is tightening its belt in the entire expenses that he control which includes the pay and travel. This can also signifies that the cost produce by all of the soft drinks is fast as compared to the increase sales of the company and means that the company is receiving the price hikes from the suppliers. Through taking the sales, the revenue and less cost of the SG&A and goods expenses, the operating income can be calculated. This can give the business reporter the indication for the performance of the company’s core business. For the case of the operating of Coca-Cola, it increased 9.2% for the second quarter of 2002 as it compared for the past year. This is also less than the sales, the growth, and the increase of the sold goods. The earnings before taxes can be determined by adding as well as subtracting the expense and income and the income losses for the investment. The Coca-Cola Company had recorded the net income of only .3billion which is a gain of 15.4% above the figure of net income that reported in the past year. This can also break down to arrived at the net per share or EPS in order to show every outstanding stock with the company’s recorded EPS of 52 cents per share figure. The company also rose for about 15 percent in the second –quarter of 2002 due to the strong and new products sales in Asia and North America that had overcame the decrease economies in the other markets. According to the brand analysts, the stock of the company fell for about 37 cents with the per share whereas the investors questioned for the many volumes of the Coke that came from the juice brand’s lower margin. The asset less their depreciation can be totaled for .3 billion in the said quarter which is an increase of billion in the assets for the company. This can be seen as impressive, it is also smart in finding for the falling and rising of the assets. The Coca-Cola Company also made the increase in the long-term debt due to the acquisition of bottler (Roush, 2004).
Research Investigations
The analysis for the financial statement of Coca Cola had been starting the year 2000. Based on the financial analysis made, it showed that that there is a declination for the total asset for the year 2000 which is 3.65% as compared in the year 1999. The asset structure and the governing segment has only decreased by 1.69% in the in the investment as well the in the tangible and intangible assets. The current ratio has the increase for about the six percent starting and currently contributing for the extension in the 30 percent of the total assets. The receivables and inventories declines for having the non-significant fraction while the equivalent and cash rise for 2.2 percent. Due to the stated dilemmas in the declination of the asset, there were adjustments that can cause the diminutive effects of the company’s structure. In the same year, the increase in the ratio had also increase fro about 0.7 percent because of the equity reduction o r the income loss. The long term debt and the total capital have also improved 0.5 percent due to the impact of high increase in the short-term liabilities. For the company’s liquidity, the current ratio that measures he ability of the company has the increased of 4.3% n the year 2000. There is also the other important factor to consider as the decrease in the dynamic liquidity of 1.2. For its profitability and efficiency, the sales revenues also increased by 3.3 percent which is moderate decrease in operating profit and to the profit before tax which is 1.1%. The inventory turnover increase for 4.3% while the ROA and ROE had decrease for 7.9 and 9 percent for the order within the inventory efficiency. For its EPS, it fell for 10.2 percent in the same year and suggesting the likelihood for the gaining profit by the shares of investment and most likely will increase in the short-term liabilities with the slow growth pace. With regards to the cash flow of the company, it can be known that during this year, have no experience in the restructuring for the past year. This only shows that it has the stable figures and is presented in the cash flow chart. Although the figures are having almost the same, they still have the tendencies that it was most likely the interest and intentions of the company. In general, for the year 2000, the Coca Cola Company has no experience of extreme changes apart from short-term liabilities which has considerable increase. To be on market for the past decades, these changes cannot affect for the short-term run due to the fact that it already built the good reputation. Additionally, it also lived up to the expectations on showing off for the good results every year. Nevertheless, it is also obvious these are for the time of changes whereas the different strategies need to consider and implemented. Currently, the company is looking for the right direction by improving the different segments (ECheat, 2007).
After 8 years of business production, the first quarter of the report of Coca Cola Company can be analyzed. For the first quarter of the year 2008, EPS had increased of 20 percent or .64 as compared to the previous year right after the consideration of the impact of the comparability. For the worldwide volume of the case had reach for 6 percent for this first quarter and into the international unit case volume which had reached fro about 7 percent. There had also recorded the strong cash generation with the operational increase of 18 percent. The company had begun the year with success which has the solid quarter for the consistent and overriding objective for the creation of long-term sustainable growth. The success of the system of company is the execution of the strategies from the beverage innovation for the effective execution for the sale point and to continue growth drive. Additionally, there is also a balance growth that proves the ability in managing the time and geographies for delivering the results (Coca Cola Company Corporate Website, 2008).
The net operating revenue of the Coca Cola for the forts quarter of this year had increase by 21 percent. The company’s revenue growth only reflects for the 5 percent in the increase for the concentrate sales and the 5 percent for the increase in the structural change due to the relations of bottlers’ acquisition as well as the 9 percent and 2 percent of the currency and pricing mix, respectively. There was also 18 percent in the increase for cash for operation as compared to the previous year which records .1 billion. The company also repurchased its stocks for 9 million in the said quarter and expected to repurchase it for .5 to .0 billion in the stocks for the full year for about .5 and up to .0 billion. There are also the approved annual increased of the dividends that can risen for 12 percent starting 2007.
Conclusion
Based on the aforementioned finding and figure, it cannot be denied that Coca Cola Company is considered to be one of the strongest multinational companies worldwide. It also determined that the international business had been once again led the way with the sparkling and still beverage which contributes in the ample results. This only recognized that there are still more workings that need to be done for the continuing success of the company which is the North America as special mention for its challenging economic environment. This only proves that the company is still optimistic regarding its progress and it can continue to remain to be committed for the development and improvement of the execution of the strategies.
Recommendation
For recommendations to the Coca Cola Company, albeit the facing of the difficult macroeconomic circumstances, the success can be continually gain and achieved if there is a continuous collaboration with the bottling partners. Aside from that, it can also maintain if there is maintenance for the unrelenting focus in the integrated consumer marketing, franchise and commercial leadership. It is also important to leverage the strategic acquisition and leading brands for building the innovation for its pipeline through the productivity driving. There should also be more excellent management financially for the company with existing cultures of the foods.
Bibliography
The Coca-Cola Company Reports First Quarter 2008 Results 2008, Market Watch, viewed 12 June, 2008, http://www.marketwatch.com/news/story/coca-cola-company-reports-first-quarter/story.aspx?guid={610BBF9F-F5E6-4426-B277-DA46C392E419}&dist=TQP_Mod_pressN.
Financial Statement Analysis of Coca-Cola 2002, Echeat, viewed 12 June, 2008, http://www.echeat.com/essay.php?t=29450.
Roush, C 2004, Show Me the Money: Writing Business and Economics Stories For Mass Communication, Routledge, United Kingdom.
Valuation: Coca-Cola Company 2007, Modern Graham, viewed 12 June, 2008, http://www.moderngraham.com/?p=238.
Coca Cola Company Corporate Website 2008, Coca Cola Company, viewed 12 June, 2008, http://www.thecoca-colacompany.com/.
Credit:ivythesis.typepad.com
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