Essay on Coca-Cola Financial Analysis

2267 Words Mar 20th, 2014 10 Pages
Introduction
The Coca-Cola recipe was originally founded and formulated by John Pemberton at the Pemberton’s Eagle Drug and Chemical House. By 1885, the product was registered as a French Wine Coca as a patent medicine. Pemberton claimed Coca-Cola cured morphine addiction, dyspepsia, neurasthenia, headaches and impotence. The carbonated drink began its first sales at Jacob’s Pharmacy in Atlanta, Georgia on May 8, 1886 for 5 cents a glass with its first advertisement in the Atlanta Journal on May 29, 1886. It wasn’t until 1955 when cans of Coke started to make its first appearance (Official Coca-Cola website).
By the 21st century, Coca-Cola is proclaimed to be the world’s largest beverage company sold in more than 200 countries.
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(In millions) 2011 2012
Cash $12,803 $8,442
Short term investments 1,088 5,017
Marketable securities 4,920 4,759
Trade accts. receivables 3,092 3,264
Inventories 3,450 2,781
Prepaid expenses and other assets 144 3,092
Assets held for sale 0 2,973
TOTAL CURRENT ASSETS $25,497 $30,328

TOTAL CURRENT ASSETS $25,497 $30,328
LESS CURRENT LIABILITIES $24,283 $27,821
WORKING CAPITAL $1,214 $2,507

CURRENT RATIO 1.0 1.1
($25,497/$24,283)

Coca-Cola’s Quick Ratio for FY2011 and FY2012 were calculated by also utilizing the company’s consolidated balance sheets. The ‘quick assets’ for the company were added together to get a total which included the cash assets, temporary investments, and accounts receivable. The quick assets were divided into the current liabilities to get the ‘quick’ ratio’s indicated above.
Coca-Cola’s quick ratio deteriorated from 2011 to 2012. Quick ratio shows the extent of cash and other current assets that are readily convertible into cash in comparison to the short term obligations of an organization. A quick of 0.5+ would suggest that a company is able to settle half of its current liabilities instantaneously. However, it is better for a company to have at least a 1.0+
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