Cocoa Cola Analysis

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3/29/15 Week 1 Cocoa-Cola Analysis 1. My “eye-ball” assessment of Coke’s changes over the period from 1996 to 2010 is that they improved their finances in many ways indicating overall growth. Their revenue doubled along with their gross profit while at the same time their retained earnings tripled. They also paid out more dividends. The balance sheet indicates that Coke has added long term assets and some long term debt. They have a capital surplus which did not exist in 1996 and five times the amount of shareholder’s equity indicating they leveraged some of their investments with not just long term debt but shareholder’s equity also. 2. From looking at Coke’s financial statements we can see the growth that they…show more content…
Although they have not been any more efficient in getting their costs down in relation to their sales as seen by the marginal change in gross profit margin. C. Coke managed their assets better in 1996 as evidenced by their inventory turnover of 7.1 compared to 2010 of 4.5. Therefore in 1996 they sold 7.1 times their current inventory while in 2010 only 4.5 times. D. Coke is less leveraged in 2010 as evidenced by the decrease in the debt ratio and debt to equity ratio. Less of their assets and equity is being used to finance their debt. 4. The Du Pont model gives an insight into what processes the company does well and what can be improved. Looking at the ROE for 1996 and 2010 we can see that there were things Coke was doing better in 1996. Although in 2010 Coke has a higher net profit margin they are not doing as well with their asset turnover and has a lower equity multiplier. This gives them a lower ROE in 2010 than they had in 1996. A company wants a ROE as high as possible. 5. Coke had negative working capital in 1996 and positive in 2010. Which means in 1996 their liabilities were higher than their assets. This not what a company wants. Even though they were doing better with their asset turnover in 1996 they obviously were more leveraged and could get into ore debt if they don’t have the working capital they need. 6. Coke did a lot of things in the 14 years that changed their financial
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