Coca Cola Company : The World 's Largest Beverage Company

1141 Words5 Pages
Founded in 1886 by pharmacist John Stith Pemberton, multinational beverage manufacturer The Coca-Cola Company is headquartered in Atlanta, Georgia. Today they are the world’s largest beverage company. Their current Chairman and CEO is Muhtar Kent. Other notable people are Board of Directors member Robert Kotick and Executive Vice President Ahmet Bozer. The Coca-Cola Company offers over hundreds of brands across over 200 countries worldwide. Soft drink brands include Coca-Cola, Fanta, Sprite, and Fresca. Other beverages brands include Minute Maid, Powerade, and FUZE. The Coca-Cola Company also offers three water brands: the more traditional Dasani and smartwater brands and the flavored brand, VitaminWater. The corporation offers its…show more content…
The market value of equity for Coca Cola is $180,978.76 million which calculated by (Shares outstanding * price per share). The shares outstanding of Coca Cola is 4342 million shares by looking up on the Bloomberg. The price per share is the 30-day average price from last 30 days. The market value of debt for Coca Cola is $28,641 which calculated by (current maturities of long-term debt + Long-term debt). So the total debt and equity of Coca Cola is ($180,978.76 + $28,641) = $209,619.76. The weight of debt equals to $28,641/$209,619.76 = 13.7%. The weight of equity equals to $180,978.76/$209,619.76 = 86.3%. In order to calculate the cost of equity of Coca Cola, we need to use CAPM formula. The beta of the Coca Cola is 0.49, which calculate from Coca Cola’s 5-year monthly return and S&P500 monthly index. The risk-free rate is the 10-year Treasury bond rate which is around 2.2%. Market risk premium is using 6.25% for this calculation. So estimated cost of equity = (2.2% + 0.49 * 6.25% = 5.26%. By looking up on the Finra market data, the L-T bond yield of Coca Cola is 3.14% which matures on October 2025. By looking up on the Bloomberg, the historical effective tax rate of Coca Cola is 15.77%. The after-tax cost of debt is calculated by (3.14%*(1-15.77%)). So the estimated WACC = (5.26%*86.3%+13.7%*2.64%) = 4.9%. By calculating the different revenue between last year and current year, and divided by the revenue from current year, we get the revenue
Open Document