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Coca Cola Cost
Coca Cola Cost
RATIO ANALYSIS
Issued December 2018
COPYRIGHT © 2018
Copyright in all publications originated by The South African Institute of Chartered Accountants rests in the
Institute. Apart from the extent reasonably necessary for the purposes of research, private study, personal
or private use, criticism, review or the reporting of current events, as permitted in terms of the Copyright Act
(No. 98 of 1978), no portion may be reproduced by any process without written permission.
ISBN 978-0-86983-424-4
DISCLAIMER
All publications in this toolkit are commissioned by the South African Institute of Chartered Accountants (SAICA). This toolkit p
not intended to be all encompassing. It is intended to serve as guidance and not as a form or recommendation.
Introduction
This financial toolkit aims to assist the user in calculating some general financial ratios pertaining to the user’s smaller and less
to serve as a starting point by computing and analysing some key ratios that can assist different stakeholders (e.g. managemen
relevant to their circumstances. The main sources that were consulted in order to identify key ratios are included in the 'Refer
Financial ratios assist in identifying qualitative and quantitative factors (numeric outcomes) which are relevant to understand
contained in the entity's financial statements.
In short, financial ratios are tools to assess the relative (and potential) strengths or weaknesses of an entity. They assist in mea
It is important not to miss the bigger picture by only relying on ratios, especially with a complex set of information. Financial ra
conditions and future amendments should also be taken into account when interpreting ratios and making decisions.
Quick Ratio
Liquidity Ratios
Current ratio
Debt-to-equity ratio
Solvency Ratios
Interest Coverage
Adequacy of Resources
Sales Growth %
Operational Efficiency
Revenue Growth %
Bank Overdraft
Cash and Cash equivalents
Cash Sales
Credit Sales
Cost of Sales
Current portion of Long-term Borrowings
Current Tax Payable
Deferred Tax Asset
Deferred Tax Liability
Depreciation & Amortisation
Employee Costs
Goodwill
Impairments
Income Tax Expense
Interest Expense
Intangible Assets
Investments
Investment Income
Investment Property
Inventories
Loans Receivable - Long Term
Loans Receivables - Short Term
Long-term Borrowings
Long-term Provisions
Other Components of Equity
Other Current Assets
Other Current Liabilites
Other Expenses
Other Income
Other Intangible Assets
Other Non-current Assets
Other Non-current Liabilites
Property, Plant and Equipment
Retained Earnings
Revenue
Share capital/Capital Account/Members Contributions
Short-term Borrowings
Short-term Provisions
Trade Payables
Trade Receivables
me general financial ratios pertaining to the user’s smaller and less complex entities. The toolkit is not aimed to include an exhaustive list o
e key ratios that can assist different stakeholders (e.g. management, the board of directors, shareholders, investors, providers of finance)
e consulted in order to identify key ratios are included in the 'References' tab.
tive factors (numeric outcomes) which are relevant to understanding and providing different perspectives regarding the information conta
potential) strengths or weaknesses of an entity. They assist in measuring operational efficiency, liquidity, stability and profitability.
me respects ratios serve to 'level the playing field' as they go beyond the numbers in revealing key messages regarding an entity's operation
on ratios, especially with a complex set of information. Financial ratios are based on past performance and can indicate trends, however t
o account when interpreting ratios and making decisions.
Credit Sales /
Average Accounts receivable
365 days /
Accounts receivable turnover
Purchases /
Average
Cost ofAccounts payable
Goods Sold /
Average Inventory
365 days /
Inventory Turnover ratio
365 days /
Accounts payable turnover
(Cash plus Marketable Securities plus
Accounts Receivable) /
Monthly Expenses
Sales
Total fixed costs (in/Rands) divided
Total expenses
Contribution Margin Ratio
(Contribution Margin
Sales / or Gross Profit
divided
Average number by Revenue)
Sales /of customers
Average number of employees
Total cost /
Average number of employees
user’s smaller and less complex entities. The toolkit is not aimed to include an exhaustive list of ratios, but rather
lders (e.g. management, the board of directors, shareholders, investors, providers of finance) in making decisions
e included in the 'References' tab.
elevant to understanding and providing different perspectives regarding the information contained in or to be
tity. They assist in measuring operational efficiency, liquidity, stability and profitability.
field' as they go beyond the numbers in revealing key messages regarding an entity's operational efficiency,
ured.
nformation. Financial ratios are based on past performance and can indicate trends, however the present
ing decisions.
Explanation
(2) misappropriation of merchandise either by staff or suppliers in delivery; or
(3) unauthorized discounts, misappropriation of cash revenue and free handouts.
The profit margin ratio is a percentage that shows an entity's earnings after deducting all expenses.
Profit
profits.margins varythis
The higher by business,
ratio the thought it couldanbe
more efficient useful
entity is to compare
at using to industry
its assets averages.
to make money.
ROI
This compares the amount
is a very useful measure of of
money an investment
comparison within anbrings into an
industry. entity
A low to compared
ratio how muchto is industry
paid for the
may
investment. This ratio shows the entity's investment and the profit received in return based on the
investment. Thus a higher ROI, the more income is generated by investments.
The quick ratio measures short-term liquidity. Liquidity is the ability to pay off current liabilities with
current assets (excluding inventory).
Important to note that the current assets used in calculating the quick ratio excludes inventory.
The current ratio is similar to the quick ratio, but measures your ability to pay long-term debts.
So the current
funding. ratiocompares
This ratio looks at how
howmany
muchassets youowe
an entity havetocompared
how muchtothey
liabilities.
own.
Current ratio includes inventory.
income.
If the debt-to-equity ratio is greater than 1, the entity has more capital from lenders. This could be
Ratios close to 1 indicates that an entity is having difficulty in generating enough cash flow to pay
This activity ratio measures how quickly an entity collects its accounts receivable (evaluate issue of
credit and the collection thereof).
A high ratio indicates that the entity is efficient in collecting its debt, while lower ratios can lead to
accounts unnecessarily tying up working capital.
Day sales outstanding indicates how many days an entity's clients (on credit) take to pay.
An entity should aim to collect payment quicker for which they are extending credit for.
73 days. This ratio increases when more purchases are made or an entity decreases its accounts
An inventory turnover ratio reveals how frequently inventory is converted into sales. It shows how
payable.
much product is sold and how efficiently inventory is managed.
The greater the inventory turnover ratio, the more frequently inventory converts into cash.
Day Inventory outstanding indicates average number of days the entity holds its inventory before
selling it.
An entity should aim to turn over inventory quickly since this indicates the number of days funds are
tied up in inventory.
Day expenses outstanding indicates how many days an entity take to pay creditors back.
An entity should aim to extend payment as late as possible to ensure they have sufficient cash on
hand.
This ratio determines the number of months an entity could operate without further funds received
(burn rate).
Sales growth indicates a percentage increase (decrease) in sales between two time periods.
If overall costs and inflation are increasing, an entity should see a corresponding increase in sales. If
not, they may need to adjust pricing policy to keep up with costs.
Revenue growth indicates a percentage increase (decrease) in revenue between two time periods.
If overall costs and inflation are increasing, an entity should see a corresponding increase in revenue. If
not, they may need to adjust pricing policy to keep up with costs.
Operating self-sufficiency measures the degree to which an organisation’s expenses are covered by its
core business and is able to function independent of grant support.
For
The this
Many calculation,
small businesses
break-even business
formula miss revenue
the
helps should
opportunity
determine exclude
thefor ofany
multiple
value non-operating
sales
operating byincome revenuesinorproducts
selling required
associated contributions
order and
because
to ensure
total
they expenses
don't should
measure include
and all expenses (operating and non-operating) including social costs.
your entitycan
This ratio willbebreak
used totrack
even. theformula
This
compare average customer
can
the entity sales
help youothers
against results.
set targets By
in theand
samemeasuring
industry.the
minimums. average
Ideally, the customer
entity
sales the entity may become more aware of significantly improving profits every time
want the highest revenue per employee possible as it indicates higher productivity and effective an associated
use of
sale is made (i.e. belts with trousers, drinks with food).
resources.
This is a simple
Revenue way to seamlessly improving the employee
bottom line.
This ratioper
canemployee
be used toisanalyse
affectedthebytotal
an entity's
cost per employee.turnover rate, and turnover is defined as
the percentage of the total workforce that leaves voluntarily each year and must be replaced.
How to use the toolkit
Link
Step 1: Complete Company information tab with the required information Company information
debit balance as a possitive figure)
> Revenue per employee ratio
> Cost per employee ratio
Step 2:
Populate the "Trail balance" tab by including the account information and
selecting the account from the drop-down menu.
Both positive and negative balance can be captured and note the balance check
built in on LINE 4. Trialbalance
It is important to take note of the following:
Sale of Goods (Revenue) needs to be split between:
1) Credit Sales
2) Cash Sales
calculation" trial balance, otherwise the accuracy of the resulting financial ratios will be
advesely affected.
Step 3: It is important to take note of the following:
Allocate a positive Bank Balance to "Cash and Cash Equivalents" and a negative Bank
Retained earnings captured on the trailbalance should be that of the previous year, thus
the current year's opening balance.
Step 4: The following tabs will be automatically updated with the information from the Statement of Financial Position
trail balance, no additional information required.
Statement of profit or loss
do not present formal financial statements for external reporting purposes, e.g. as would
'Statement of changes in Equity
be required in the case of an entity's statutory financial statements.
Step 5: From the statements the ratios are automatically calculated. Ratios
It is important to take note of the following:
The "Accounts Receivable Turnover", "Accounts payable turnover" and "Inventory
Step 6: Last tabs of the documents include graphs for comparing ratios
(1) Yearly Per ratio_year on year
(2) Quarterly 'Per ratio_quarterly
(3) Monthly for the last financial year Analysis_monthly
Company Information
Company name: XYZ 123 (Pty) Ltd
Current financial year end 31-déc.-17
Prior year end 31-déc.-16
Year 3 31-déc.-15
Year 4 31-déc.-14
R value R'000
2017 2016
ASSETS R'000 R'000
Non-current assets - -
Property, plant and equipment - -
Investment Property - -
Intangible assets - -
Deferred Tax Asset - -
Goodwill - -
Investments - -
Loans Receivable - Long Term - -
Other Intangible Assets - -
Other Non-current Assets - -
Current assets - -
Inventories - -
Trade receivables - -
Other current assets - -
Loans Receivables - Short Term - -
Cash and cash equivalents - -
Total assets - -
Non-current liabilities - -
Long-term borrowings - -
Deferred Tax Liability - -
Other Non-current Liabilites - -
Long-term provisions - -
Current liabilities - -
Trade payables - -
Other current liabilites - -
Bank Overdraft - -
Short-term borrowings - -
Current portion of long-term borrowings - -
Current tax payable - -
Short-term provisions - -
Total Liabilities - -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
XYZ 123 (Pty) Ltd
Statement of profit/(loss) for year ended
The Statement of financial position, Statement of profit or loss and Statement of changes
in equity are products of the information that is entered into this trial balance, whether it
be information for a specific period / interim period or for a full financial year, in order to
provide a generic overview of the entity's assets, liabilities, equity, revenue, expenses and
profit or loss for puprposes of calculating the financial ratios included in this toolkit. They
do not present formal financial statements for external reporting purposes, e.g. as would
be required in the case of an entity's statutory financial statements.
2017 2016
R'000 R'000
Cash Sales - -
Credit Sales - -
Total Sales - -
Cost of Sales - -
Gross Profit - -
Revenue - -
Other Income - -
Employee costs - -
Other expenses - -
Earning before Interest, tax, depreciation and amortisation (EBITDA) - -
Depreciation & Amortisation - -
Impairments - -
Operating profit / (loss) - -
Investment income - -
Interest expense - -
Profit before Tax - -
Income Tax Expense - -
Profit/(Loss) for the year - -
2015 2014
R'000 R'000
- 0
- -
- -
- -
###
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
###
- -
- -
###
- -
XYZ 123 (Pty) Ltd
Statement of Changes in Equity as at year end
The Statement of financial position, Statement of profit or loss and Statement of changes in equity are products of the information that is entered into this
trial balance, whether it be information for a specific period / interim period or for a full financial year, in order to provide a generic overview of the entity's
assets, liabilities, equity, revenue, expenses and profit or loss for puprposes of calculating the financial ratios included in this toolkit. They do not present
formal financial statements for external reporting purposes, e.g. as would be required in the case of an entity's statutory financial statements.
Other
Share Capital Components of Retained Earnings Total Equity
R'000 Equity
R'000 R'000 R'000
Balance at the beginning of the year - - - -
Issue of shares - - - -
Profit / (loss) for the year - - - -
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1