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Coca-Cola Financial Analysis


In the United States, the Coca-Cola Company manufactures and sells the sweetened carbonated beverage known as Coca-Cola, which has become a cultural touchstone and global symbol of American taste. The company was founded in 1892. Other soft drinks and citrus beverages are also produced and sold by the corporation. Over 200 countries around the world have access to more than 2,800 Coca-Cola beverages. This makes Coke one of the largest American enterprises. Located in Atlanta, Georgia, the company’s headquarters are its headquarters. John S. Pemberton (1831–88), an Atlanta pharmacist, founded the Pemberton Chemical Company in 1886 and patented the recipe for Coca-Cola. Frank Robinson, his accountant, came up with the drink’s name and trademarked the flowing writing for its recording. Cocaine and caffeine-rich kola nut extracts were included in the original formulation of Coca-Cola, which was sold as an antidote to a wide range of illnesses in the early 1900s. Pemberton was able to make a fortune selling his syrup to local soda fountains. With the help of Atlanta’s second pharmacist, Asa Griggs Candler (1851–1929), who invested $2,300 and exchanged certain property rights, the Coca-Cola Company was born in 1892. Candler died in 1939. The trademark “Coca-Cola” was authorized by the US Patent Office in 1893.

Non-GAAP (organic) revenues, on the other hand, climbed by 18% to $10.5bn. Price/mix boosted revenue by 7%, whereas concentrate sales grew revenue by 11% With less than three days in the quarter, concentrate sales outpaced unit case volume by three points in this quarter.. Operating margin (non-GAAP) was 31.4 percent compared to 31.0 percent last year, while operating margin (including factors affecting comparability) was 32.5 percent compared to 30.2 percent last year. Increased marketing expenses, the BODYARMOR acquisition, and currency changes partially offset operating margin expansion due to the company’s strong revenue growth. All operating segments saw increases in the 8 percent increase in the volume of individual cases. Investments in the firm and the positive effects of the pandemic contributed to volume growth in the previous year, (Chu, 2020). In both developed and developing and emerging markets, high single-digit growth was observed. Countries like the United Kingdom and Mexico grew more quickly than new and emerging economies like the United States.

Developments during COVID:

Keeping Coca-brands Cola’s “within a click’s grasp of desire” is no surprise as COVID-19 sees a surge in online sales. Since the most recent lockdowns, many customers have looked into non-contact options like c, restaurant takeout and delivery click-and-collect, r, meal kit subscriptions, e-grocery, curbside pickup shipping, and more. This year, a substantial percentage of online shoppers are completely unfamiliar with the concept of making purchases online. Because they have no other option, customers of all generations, not just the millennial generation, utilize their cellphones and computers to place orders. Consumers of all ages are rethinking their purchasing patterns as a result of the surge in convenience, (Chu, 2020).

They’ve been compelled to experiment whether they like it or not, Chairman and CEO James Quincey remarked during a recent Consumer Goods Forum webcast on the post-pandemic future of food service. A sizable portion of that will also continue to exist for the foreseeable future. Revenues at Wall-digital Mart more than doubled in the first three months of this year compared to the same period last year. Walmart’s sales rise in North America was driven by click-and-collect, and the Walmart app swiftly climbed to the top of the Apple Store’s download charts. As individuals become adjusted to their new habits, the click-and-collect method, which in 2020 will cover both food and home improvement projects, is anticipated to gain appeal (Chu, 2020).

The ease of having your groceries delivered to your car rather than filling a shopping cart and going through the checkout line in the store seemed to be preferred by customers, Bowers Coventry said. Ecommerce channels have doubled in some nations due to a rise in customers ordering necessities for home delivery. Increased investment in digital images and in-app visibility with e-delivery grocers will help the Coca-Cola system support this expansion, as will trial digitally enabled fulfilment solutions, (Serodio, et al, 2020).

Digital B2B solutions are being used by bottlers to manage client orders and deliveries because customers expect the same level of ease and simplicity when they place an order. In the second quarter of this year, MyCoke’s digital ordering platform attracted more than 8,000 new venues.

Enhancing Product Presence on the ‘Effective Aisle’

A company’s brands will be represented online in the same way they would be in a physical store if it makes an investment in high-quality content. Visitors will be more likely to become customers if Bowers Coventry can create an environment that “at the absolute least” simulates a typical shopping trip. Across all of our digital touch points, we’re applying the same ad and shopper disciplines. As part of this approach, Coca-Cola is making its products more visible on screens, optimizing material for search engines, distributing and encouraging digital best practices (Serodio, et al, 2020). Coca-Cola the 618 Festival, China’s biggest mid-year shopping holiday, saw a 65 percent rise in revenue thanks to a partnership with a large ecommerce site.

Coke is working with restaurants and third-party aggregators to make sure that their beverages are prominently featured on digital menus and in combos as customers increasingly opt for mobile delivery of groceries and cooked meals. Value bundles were added to more than 4,500 meals by Coke North America in the second quarter by collaborating with major delivery intermediaries such as UberEats, (Serodio, et al, 2020).

Prioritizing Favored Brands and Wrapping

The Coca-Cola Company is working with retail clients to adapt supply chains and prioritise the delivery and advertising of core brands and SKUs, such as multipacks, as people become more accustomed to home-based living. Because customers are sticking with tried-and-true brands in these uncertain times, the company is putting its efforts into stocking up on its best-selling items and postponing or cancelling the introduction of new ones. Deutsche Bank CFO John Murphy said last month that clients are focused on what moves. As a result, larger companies and SKUs get more attention. Because of this, we had to change our approach.”

Triggering Impulse Purchases on Digital Path to Purchase

With targeted offers, food and beverage bundles, and social commerce solutions, the Coca-Cola system leverages its extensive knowledge of the physical retail environment when it comes to online buying. According to her, “We’re changing our strategies as consumer behavior shifts and moving forward with the necessary capabilities that deliver value to our consumers.”. In the past, people predicted that the future would arrive more slowly, (Serodio, et al, 2020).

Dividend Policy and Sources of Finance

Dividend Policy:

Third-quarter earnings from Coca-Cola (NYSE: KO) have drawn attention from investors. This unique mix of brand strength and category inflationary resistance appears to be succeeding in the current climate. The profit margin rose as a result of the higher revenue. Even though the company’s earnings per share have climbed by 14 percent on an annual average, the share price has only increased by 6 percent over the past three years, (Serodio, et al, 2020).

Even before the pandemic, Coca-organic Cola’s sales and volume grew in the third quarter of 2019. The company’s CEO, James Quincey, maintains his belief that long-term growth is achievable. In light of the positive results, Credit Suisse has ranked the company as one of its top recommendations. An analyst praised the team’s achievements in a tough logistical context, Kaumil Gajrawala. Meanwhile, Coca-Cola is in the market for $1 billion of sports drink producer Body Armor. At US$8 billion in 2018, a buyer might get their hands on the remaining 70% of the company’s stock for roughly $5.6 billion. With this acquisition, Gatorade, the industry leader in sports drinks, hopes to increase market share. As a result of this change, PowerAde, the Body Armor brand, will surely benefit from it.

Dissecting the Coca-Cola’s Dividend

Despite the low yield, investors are confident that Coca-Cola will be able to pay its bills. You should do the following tests before investing in equities based on their dividends. Developing an opinion on the sustainability of dividends in relation to net profit after tax is necessary. Coca-Cola paid out 82 percent of its profits in dividends in the past year. A tiny amount of profits can be reinvested as a result. Or, it’s possible the corporation just needs the money for the long term. To ensure dividend payments are covered, ensure that the company has sufficient free cash flow. In 2013, Coca-Cola paid out 77% of its cash flow. There’s a chance this can work, but there’s not much wiggle space for things to go wrong. In other words, the company may be trying to keep its dividend safe by restricting its operations to stay within the safe zone, (Wood, et al, 2020).

Sources of Finance:

A wide variety of funding alternatives are available to all businesses, whether they are in operation or just starting out. If these sources of money are not leveraged, there will be no investment and no company. The balance statement of the Coca-Cola Company shows that the company has raised money from both internal and external sources. Cash is needed to launch new Olympic activations in 2012. Businesses all throughout the world rely on well-known sources of capital to fund their operations. Global firms have a variety of financing alternatives, including equity capital, long-term debt, and short- and medium-term debt. Different sources of capital are used for a variety of objectives and for many different causes. Because of this, we have outlined the sources of cash Coca-Cola will use to develop abroad, (Wood, et al, 2020).

Stock issuance, re-entry into the stock market, or courting new shareholders are all viable options for raising capital. It’s possible to do the issuing through a rights or public offering bonus issue. Bonus issues are more likely to be issued by companies with substantial financial reserves that can be used to support the project. Due to the fact that bonus shares are subtracted from leftover profits, they might be utilized to fund the project as a result. Current shareholders can purchase more stock in accordance with their current shareholdings through a rights issue. Following the passage of a general resolution permitting the corporations to use specified resources, this document is issued, (Wood, et al, 2020).

When shares are offered for sale by tender, there is no fixed price; instead, the public is allowed to nominate a price of their choice, and the price is subsequently established. As a result, in this scenario, the share price is influenced by supply and demand. Pre-determined subscription prices are offered by prospectors to the general public in order to attract investors. The prospectus offers information about the company’s present and anticipated future performance. Distributing shares to specified institutions that can sell or buy them is another option for getting them into the hands of the general public. There are institutions that allow anyone to purchase their own shares in publicly traded firms. The public is encouraged to apply for the company’s shares, which are being offered for sale based on the prospectus. Non-public companies can raise equity funding through private discussions. It is common for venture capitalists to buy a company’s stock and hold confidential discussions about the company’s future, (Lacy-Nichols, et al, 2020).

Financial Ratios for year 2020:

Current Ratio = Current Asset / Current Liabilities

Current Ratio = 19,240 / 14,601

Current Ratio = 1.32

Quick Ratio = Current Asset – Inventory / Current Labilities

Quick Ratio = 19,240 – 3266 / 14,601

Quick Ratio = 1.09

Net working capital = (Current Asset – Cash) – (Current Liabilities – Debt)

Net working capital = (19240 – 6795) – (14,601 – 485)

Net working capital = 1270

Assets Turnover Ratio = Net Sales / Avg. Total Assets

Assets Turnover Ratio = 33014 / (87,296 + 86,381)/2

Assets Turnover Ratio = 33014 / 86383.50

Assets Turnover Ratio = 38%

Fixed Asset Turnover = Net Sales / Avg. Fixed Assets

Fixed Asset Turnover = 33014 / (28283 + 27602)/2

Fixed Asset Turnover = 33014 / 27942.5

Fixed Asset Turnover = 1.18

Return on Assets = Operating Income / Total Assets

Return on Assets = 12120 / 87296

Return on Assets = 13.88%

Return on Equity = Net Income / Shareholder Equity

Return on Equity = 7786 / 21284

Return on Equity = 36.58%

Gross Profit Margin = (Net Sales – COGS) / Net Sales

Gross Profit Margin = (33014 – 13433) / 33014

Gross Profit Margin = 19580 / 33014

Gross Profit Margin = 59.30%

Current Ratio:

From 2010 through 2022, the history and current ratios of Coca-Cola (KO). For short-term financial responsibilities, the current ratio serves as an indicator. For the quarter ending March 31, 2022, Coke’s current ratio was 1.18. An organization’s ability to pay off short-term debt is demonstrated by this metric. According to the graph, Coca-Cola had a current ratio of 1.28 in 2016, showing that the corporation has the ability to pay down short-term debt. After that, the current ratio fell from 1.34% to 1.05% to 0.66%, which is an encouraging sign. This is a clear indication that the company is having cash flow issues, (Lacy-Nichols, et al, 2020).

Quick Ratio:

For short-term financial obligations, companies use their most liquid assets to calculate their quick ratio. This value is derived by subtracting total current assets from total current liabilities. Coke’s quick ratio in the three months ending March 2022 was 0.98.

Assets Turnover Ratio

TATR (total asset turnover ratio) was 1.18 in 2020 to measure a company’s ability to produce revenue from capital resources. According to the data, Coca-efficiency Cola’s in turning its assets into sales has declined from 0.48 in 2016 to 0.40 the following year and to 0.38 in 2018. Some of the fall may be due to a decrease in inventory turnover. A modest increase in the ratio occurred in 2019.


As Coke CEO James Quincey put it, “we worked relentlessly in 2020” to learn from and respond to the global tragedy, the Coca-Cola Company’s chairman and CEO said. “We are certain that our company will return to growth in the future year after making considerable progress in 2020. For as long as there is immediate uncertainty, we are well-positioned to emerge stronger from the crisis, thanks to our purpose and our passion for life-enriching beverages that will continue to exist.”

Consumer mobility and the strength of channels outside the house continue to be closely connected to global trends in unit volume. Even though volume volatility has been rather consistent, the coronavirus pandemic rebound, which began in several parts of the world at the end of last year, has put further pressure on the company’s results thus far this year. A reduction of approximately 10% in global volume has been recorded due to the increased competition in away-from-home channels, which continues to outpace at-home sales in early February 2021.

References List

Chu, B., 2020, November. Analysis on the Success of Coca-Cola Marketing Strategy. In 2020 2nd International Conference on Economic Management and Cultural Industry (ICEMCI 2020) (pp. 96-100). Atlantis Press.

Serodio, P., Ruskin, G., McKee, M. and Stuckler, D., 2020. Evaluating Coca-Cola’s attempts to influence public health ‘in their own words’: analysis of Coca-Cola emails with public health academics leading the Global Energy Balance Network. Public Health Nutrition23(14), pp.2647-2653.

Wood, B., Ruskin, G. and Sacks, G., 2020. How Coca-Cola shaped the international congress on physical activity and public health: an analysis of email exchanges between 2012 and 2014. International journal of environmental research and public health17(23), p.8996.

Lacy-Nichols, J., Scrinis, G. and Carey, R., 2020. The evolution of Coca-Cola Australia’s soft drink reformulation strategy 2003–2017: A thematic analysis of corporate documents. Food Policy90, p.101793.


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