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Prsent par: Youssef RECHO Younes BEKKALI Gabriel THOMAS

Outline

Introduction SWOT, market & industry Analysis Financial Analysis Recommendations

Introduction
Coca-Cola Company

The companys History


Founders The name of Coca-Cola

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)

* More helpful organizations match with brand values

Comparison of Market share


Company The Coca-Cola Company % Share 30%

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

Net Working Capital


3830 3071

-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

Current ratio: Current assets/Current liabilities


2010 1, 17 2009 1, 28 2008 0,94

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).

Quick ratio (Acid test): (Current assets Inventory)/Current liabilities


2010 1, 02 2009 1, 11 2008 0, 77

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

0.8 Current ratio

Acid test
0.6

0.4

0.2

0 2010 2009 2008

Inventory turnover Inventory turnover= sales/Inventory


2008 14.6 2009 13.16 2010 13.25

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.

Days sales outstanding DSO=receivables/(sales/365)


2008 35.41 2009 43.56 2010 46

serious increase in 2009 due to a big grow of receivables

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.

Debt Equity Ratio = Total Liabilities / Total Equity


2010 1, 352 2009 0, 963 2008 0, 979

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

Debt ratio Debt equity ratio

0.6

0.4

0.2

0 2008 2009 2010

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.

LT debt to equity ratio


18

16

14

12

10

LT debt to equity ratio

0 2008 2009 2010

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.

Return On Equity ROE= Net income/Total Equity


2008 0,28 2009 0,27 2010 0,38

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

Equity Ratio Equity Ratio = Stockholders equity/Total Assets


2008 50% 2009 50% 2010 42%

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

Coca Versus Pepsi


COCA LIQUIDITY Quick ratio Current ratio Inventory turnover Day sales outstanding LEVERAGE Debt ratio Debt equity ratio LT Debt to equity ratio PROFIT/ PERFORMANCE Profit margin ROE Equity Ratio 1,02 1,17 13,25 46 0,575 1,35 15,96 34% 0,38 42% PEPSI 0.89 1.11 17.15 39.9 0.69 2.22 -256 11% 0.3 -30%

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

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