Professional Documents
Culture Documents
Outline
Introduction
Coca-Cola Company
SWOT Analysis
Strenghts
* A high presence worldwide * Brand leading in the industry * An effective strategy of bottling
Weaknesses * Decrease sales in the carbonates market * A distribution system not appropriate Opportunities * Many intangible product advantages * Modern way of advertising should be reached Threats * Rising health-conscience society * Boycott in the Arab countries (middle east)
Pepsi&Co,Inc
Cadburry Shweppes Private Label Other Total
22,6%
10,6% 0,7% 36,2% 100%
Comparative Analysis
Coke & Pepsi revenues Decrease in the carbonates drinks Pepsi Large portfolio
http://www.youtube.com/watch?v=IXDSWhobbfc
Financial Analysis
Income statement
The income statement of the past three years show a positive income between 2009 and 2010, it increases from 6 824M$ to 11 809M$ (x 2) the company generates a lot of money But, Is that money enough to honor the commitments?
Balance Sheet
Liquidity
Net working Capital: Current assets current liabilities
5000 4000 3000 2000 1000 0 2008 -812 2009 2010
-1000
-2000
The NWC of an organization is considered as a cushion, An indicator of ability to pay short-term debts.
Being (-) its alarming (2008), in 2010 it decreases after a high increase : its not very risky because the level is acceptable: the company owns more assets than short term liabilities it has to pay.
Capital employed
Capital employed = Non Current assets + Working Capital or Capital employed = Total assets current liabilities
2010 54 413 2009 34 950 2008 27531
The CE represents the capital investment necessary for the business to function. Here the CE is continuously increasing, that means higher needs for the company to function.
Capital Employed
60000 54413 50000
40000 34950
30000
27531
20000
10000
The current ratio shows the ability of a company to cover its current debts. the coca-cola current ratio is very low in 2008 (<1), and increases in 2009 before decreasing in 2010 going from 1, 28 to 1, 17. That shows a reduce of the ability of the company to honor its short-term debts. But the firm is still liquid in 2010 (>1).
This ratio is used to measure the capacity of a firm to sell most of its current assets to pay its current liabilities quickly. The liquidity ratios show a weak position to pay back its creditors in short term if the situation continue on the same way the could be a serious issue for the company
Liquidity ratios
1.4
1.2
Acid test
0.6
0.4
0.2
it shows how many times inventory is replaced over a period (one year in this case). Here we can see a small decrease; inventory grows faster than sales.
Solvency
The solvency is the companys ability to meet its longterm obligations. Debt Ratio = Total Liabilities / Total Assets
2010 0, 575 2009 0, 490 2008 0,495
This ratio compares the total liabilities (total debt) to total assets. It shows the percentage of total funds obtained from the creditors for business operations. reduces from 0,495 to 0,490 (2009). But in 2010, the company slightly increased its debt ratio from 0,490 to 0,575. This shows that the degree of debt increased 57,5 % of business operation money is given to creditors.
In high debt result, it will less flexibly for company to obtain more funds. High debt equity ratio also makes it difficult for the company to meet interest charges and principal payments at maturity. The Coca-Cola Companys debt equity ratio shows a slight improvement between 2009 and 2010, which is not necessarily a good thing.
Debt ratios
1.6 1.4
1.2
0.8
0.6
0.4
0.2
LT Debt to Equity Ratio = Long Term Debt / Total Shareholder Equity* *(Preferred stock + common stock)
2010 15, 96 2009 5, 78 2008 3, 16
Generally, companies with higher ratios are thought to be more risky because they have more liabilities and less equity. - For our Case the ratio is increasing very significantly, especially in 2010, which means that Coca-cola would be at risk. The debt situation is dangerous.
16
14
12
10
Proftability
Profit Margin=Net income/Sales
2008 18% 2009 20% 2010 34%
The part of the sales that represent Net income increases during the period; but still keep an acceptable level.
In 2010 every dollar invested by the equity, earns 0,38 cents. This is a very good ratio showing that the company generates a lot of profit from its equity. this figure increases over the period which means the profitability is increasing
This ratio shows the part of assets financed by stockholders. Its an overview of the capital structure. This part declined between 2009 and 2010 certainly due to a high borrowing for an investment
Recommendation
Optimizing control of major processes Significantly reducing the internal malfunctioning Reducing waste Reducing loans by diversifying sources of money to invest. Especially to reduce losses of financing cash flows. Enlarge its portfolio target new customers, compete with Pepsi&Co. nuts
Thank you