UNIVERSIDAD AUTÓNOMA DE NUEVO LEÓN
FACULTAD DE CONTADURÍA PÚBLICA Y ADMINISTRACIÓN
FINANCES I
Project
COCA COLA
Teacher: Alberto Nava
Group: 4xi Complete name and ID Cid Vergara, Edwin. 1648752 Fidalgo Ponce, Grecia Gisela. 1552214 Gómez Vélez, Alexia Karina. 1549372 Medrano Ortiz, Sonia Giselle. 1649032
Mota Garza, Leonel Alan. 1555877
2
INDEX
INTRODUCTION ... 3
THE COMPANY ... 4
COMPANY BACKGROUND ... 5
OVERVIEW OF THE ANNUAL REPORT... 13
BUSINESS ENVIRONMENT. ... 18
THE AUDITORS ... 20
INDUSTRY BACKGROUND ... 22
OPERATING ACTIVITIES ... 24
ANALYSIS OF OPERATING ACTIVITIES ... 35
INVESTING ACTIVITIES... 42
ANALYSIS OF INVESTIG ACTIVITIES ... 49
EQUITY FINANCING. ... 64
ANALYSIS OF FINANCING ACTIVITIES. ... 70
COMPARISON TO INDUSTRY BENCHMARKS ... 78
CONCLUSIONS ... 81
3
INTRODUCTION
This is a project where you‘re going to see Coca-Cola in many ways, talking about finance, you will have an opportunity to meet this company in different positions. As you read this project, you will see what it‘s learned in finance, but in real life event, applying the knowledge it‘s gotten, to analyze all the financial information we got and how it is analyzed.
You will see here how well they do with those with whom they do business and their other stakeholders, we took the support from the reports they publish annually regarding their performance in various aspects of their business, but focusing in the financial performance. These reports reflect, among other things, their performance and accomplishments in the areas of product safety, quality and integrity, marketing and innovation, community support, workplace rights and protecting the environment, that just were useful in one or other points, but as we have said, we focused in the financial area.
We review detailed financial information and learn about the scale of their organization, their operating groups, the scope of their business and relationships with their bottling partners.
Through the read, you will find the healthy financial issues of Coca-cola Co. has benefits not just with the income and the success, they have many other way to make people keep buy his products, by participating in events in most of the times globally, like the world cup of soccer, event in which they are participating.
The Environmental care of Coca-cola co. and his bottling partners is remarkable, nowadays they are transform his bottles in to
In any case, financially talking, the health of the company is well maintained, such as their products all over the world, and we can learn about this project as a motivator in the future to be part of the graphics that we just research, about Financial highlights and get to understand them well.
4
THE COMPANY
Sector: Food and Drinks Industry: Beverages Industry
Coca Cola Company is related with beverage industry, I think beverage industry has been growing since 2000, but not just in the soft-drinks area, the main industry has been growing. Nowadays Coca Cola is leading the beverage industry with more than 500 beverage brands, including four of the world's top-five sparkling brands.Besides, every second of the day, people consume nearly 8 thousand drinks brands of the Coca-cola Company.
We are more interested in knowing about Coca-cola Company, because is not just a company dedicated to elaborate carbonated and flavored drinks, They concern about the environment and the ecosystem, and have create already an ‗‘eco-bottle‘‘ which is designed and made off recycled bottles.
With the Coca Cola Civic Action Network (CAN) they provide information to the Coca-Cola family about national, state and local issues that could affect the industry, as well as each of us individually.
In any case, who do not know about Coca Cola Company, Or any drink related with... Coca cola and their products are around the whole world. If you not know about it, i think you might be a little disconnected to the world. They even have a World cup 2014 campaign already. That‘s another reason to be interested about.
Mexico have the World record of consumers of Coca cola with 675 bottles Annual per capita, next to Mexico is Malta with 606, Then Chile with 445, and finally United States with 394 Annually consumed.
5
COMPANY BACKGROUND
The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of nonalcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia. The Coca-Cola formula and brand was bought in 1889 by Asa Griggs Candler (December 30, 1851 - March 12, 1929), who incorporated The Coca-Cola Company in 1892.
The Coca-Cola Company, incorporated on September 5, 1919, is a beverage company. The Company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports ready-to-drinks. It owns and markets a range of nonalcoholic sparkling beverage brands, which includes Coca-Cola, Diet Coke, Fanta and Sprite. The Company‘s segments include Eurasia and Africa, Europe, Latin America, North America, Pacific, Bottling Investments and Corporate. On December 30, 2011, the Company acquired Great Plains Coca-Cola Bottling Company (Great Plains) in the United States
Founded: 1892
Founders: Asa Griggs Candler Initial public offering: 1919
Headquarters: 384 Northyards Blvd NW #690, Atlanta, GA 30313, United States. Independent Audit Firm: Ernst & Young LLP
6 Company size.
Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy its beverages at a rate of more than 1.8 billion servings a day. With an enduring commitment to building sustainable communities, the Company is focused on initiatives that reduce its environmental footprint, support active, healthy living, create a safe, inclusive work environment, and enhance the economic development of the communities where it operates. Together with its bottling partners, it ranks among the world's top 10 private employers with more than 700,000 system associates.
AnnualSummary Data (Millions)
Year Sales Net Income EPS
12/2009 30,990.00 7,605.00 1.46 12/2010 35,119.00 11,787.00 2.53 12/2011 46,542.00 8,584.00 1.84 12/2012 48,017.00 9,019.00 1.97 12/2013 46,854.00 8,584.00 1.90 GrowthRates 10.89 3.07 6.81
7 Coca-Cola Board of Directors.
Muhtar Kent
Muhtar Kent is Chairman of the Board and Chief Executive Officer of The Coca-Cola Company, a position he has held since April 2009. Previously he was President and Chief Executive Officer and earlier, President and Chief Operating Officer.
Mr. Kent joined The Coca-Cola Company in Atlanta in 1978, holding a variety of marketing and operations leadership positions over the course of his career. In 1985, he became General Manager of Coca-Cola Turkey and Central Asia. Beginning in 1989, he served as President of the Company's East Central Europe Division and Senior Vice President of Coca-Cola International, with responsibility for 23 countries.
Herbert A.Allen
President and Chief Executive Officer
Herbert A. Allen has been director of The Coca-Cola Company since 1982. Mr. Allen is President, Chief Executive Officer and a Director of Allen & Company Incorporated, a privately held investment firm, and has held these positions for more than the past five years.
Ronald W. Allen
Ronald W. Allen has been a Director of The Coca-cola Company since 1991. In November 2012, Mr. Allen was appointed Chairman of the Board of Aaron‘s, Inc., where he has served as a Director since 1997. Mr. Allen as served as President and Chief Executive Officer of Aaron‘s, Inc. since February 2012 and as interim President and Chief Executive Officer of Aaron‘s, Inc. from November 2011 until February 2012. Mr. Allen retired as the Chairman of the Board, President and Chief Executive Officer of Delta Air Lines, Inc., one of the world‘s largest global airlines, in July 1997. From July 1997 through July 2005, Mr. Allen was a consultant to and Advisory Director of Delta. He previously served as a Director of Interstate Hotels & Resorts, Inc. from 2006 to 2010.
8 Ana Botín
Ms. Botín has been a director of The Coca-Cola Company since July 18, 2013. Ms. Botín is Chief Executive Officer and a Director of Santander UK plc, a leading financial services provider in the United Kingdom and subsidiary of Banco Santander, S.A., and has held these positions since December 2010. Ms. Botín served as Executive Chairman of Banco Español de Crédito, S.A., also a subsidiary of Banco Santander, S.A., from 2002 to 2010. She started her 32-year career in the banking industry at JP Morgan in New York in 1981 and in 1988 joined Banco Santander, S.A., a global, multinational bank, where she established and led its international corporate banking business in Latin America in the 1990‘s. She previously served as a director of Assicurazion iGeneraliS.p.A., a global insurance company based in Italy, from 2004 to 2011. She is a Director of Banco Santander, S.A.
Howard G. Buffet
Howard G. Buffett has been a Director of The Coca-Cola Company since 2010. Mr. Buffett is President of Buffett Farms, a commercial farming operation, and Chairman and Chief Executive Officer of the Howard G. Buffett Foundation, a charitable foundation that supports initiatives focused on food and water security, conservation and conflict management, and has held these positions for more than the past five years. He is a Director of Berkshire Hathaway Inc. and Lindsay Corporation.
Richard M. Daley
Richard M. Daley has been a Director of The Coca-Cola Company since 2011. Mr. Daley was the Mayor of Chicago from 1989 to 2011. Mr. Daley is the Executive Chairman of Tur Partners LLC, an investment and advisory firm focusing on sustainable solutions within the urban environment, and has held this position since May 2011. He is an Of Counsel at Katten Muchin Rosenman LLP, a full-service law firm with more than 600 attorneys in locations across the United States and an affiliate in London and Shanghai, and has held this position since June 2011. In October 2011, he was appointed a senior advisor to JPMorgan Chase & Co., where he chairs the ―Global Cities Initiative,‖ a joint project of JPMorgan Chase & Co. and the Brookings Institution to help cities identify and leverage their greatest economic development resources. Mr. Daley also has been a distinguished senior fellow at the University of Chicago Harris School of Public
9 Policy since May 2011. He is also a Director of Diamond Resorts International, Inc.
Barry Diller
Barry Diller has been a Director of The Coca Cola Company since 2002. Mr. Diller is Chairman of the Board and Senior Executive of IAC/InterActiveCorp, a leading media and Internet company. Mr. Diller held the positions of Chairman of the Board and Chief Executive Officer of IAC/InterActiveCorp and its predecessors since August 1995 and ceased serving as Chief Executive Officer in December 2010. Mr. Diller is also Chairman of the Board and Senior Executive of Expedia, Inc., an online travel company. Mr. Diller has served as Special Advisor to Trip Advisor, Inc., an online travel company, since April 2013 and served as its Chairman of the Board and Senior Executive from December 2011, when it was spun off from Expedia, Inc., until December 2012, and was a member of its Board until April 2013. Mr. Diller served as the non-executive Chairman of the Board of Ticketmaster Entertainment, Inc. from 2008 to 2010, when it merged with Live Nation, Inc. to form Live Nation Entertainment, Inc. Mr. Diller served as the non-executive Chairman of the Board of Live Nation Entertainment, Inc. from January 2010 to October 2010 and was a member of its Board until January 2011. Mr. Diller also is a Director of Graham Holdings Company (formerly The Washington Post Company).
Helen D. Gayle
Dr. Gayle has been a director of The Coca-Cola Company since April 24, 2013. Dr. Gayle has been President and Chief Executive Officer of CARE USA, a leading international humanitarian organization, since 2006. From 2001 to 2006, she served as senior advisor in the Global Health Program at the Bill & Melinda Gates Foundation. Dr. Gayle started her 20-year career in public health at the U.S. Centers for Disease Control and Prevention (―CDC‖) in 1984 where she held various positions, ultimately becoming the director of the CDC‘s National Center for HIV, STD and TB Prevention in 1995.
Evan G. Greenberg
Evan G. Greenberg has been a Director of The Coca-Cola Company since 2011. Mr. Greenberg is the Chairman and Chief Executive Officer of ACE Limited, the parent company of the ACE Group of Companies, a global insurance and reinsurance organization. He served as President and Chief Operating Officer of ACE Limited from June 2003 to May 2004, when he was elected to the position of President and Chief Executive Officer. Mr. Greenberg has served on the Board of ACE Limited since 2002 and was elected as Chairman of the Board of Directors in May 2007. Prior to joining the ACE Group in 2001, Mr. Greenberg held a number of
10 senior management positions at American International Group, Inc., most recently serving as President and Chief Operating Officer from 1997 until 2000.
Alexis M. Herman
Alexis Herman has been a Director of The Coca Cola Company since 2007. Ms. Herman is the Chair and Chief Executive Officer of New Ventures LLC, a corporate consulting company, and has held these positions since 2001. She serves as Chair of the Business Advisory Board of Sodexo, Inc., an integrated food and facilities management services company, and as Chair of Toyota Motor Corporation's North American Diversity Advisory Board. As chair of the Company's Human Resources Task Force from 2001 to 2006, Ms. Herman worked with the Company to identify ways to improve its human resources policies and practices following the November 2000 settlement of an employment lawsuit. From 1997 to 2001, she served as U.S. Secretary of Labor. She is also a Director of Cummins Inc., Entergy Corporation and MGM Resorts International.
Robert A. Kotick
Robert A. Kotick has been a Director of The Coca-ColaCompany since 2012. Mr. Kotick is President, Chief Executive Officer and a Director of Activision Blizzard, Inc., an interactive entertainment software company, and has held these positions since 2008. Mr. Kotick served as Chairman and Chief Executive Officer of the predecessor to Activision Blizzard, Inc. from 1991 to 2008.
Maria Elena Lagomasino
Maria Elena Lagomasino has been a Director of The Coca-Cola Company since 2008. Ms. Lagomasino is the Chief Executive Officer and Managing Partner of WE Family Offices, a multi-family office serving global high net worth families, and has held these positions since March 2013. Ms. Lagomasino served as Chief Executive Officer of GenSpring Family Offices, LLC, an affiliate of SunTrust Banks, Inc., from November 2005 through October 2012. From September 2001 to March 2005, Ms. Lagomasino was Chairman and Chief Executive Officer of JPMorgan Private Bank, a division of JPMorgan Chase & Co., a global financial services firm. Prior to assuming this position, she was Managing Director of The Chase Manhattan Bank in charge of its Global Private Banking Group. Ms. Lagomasino had been with Chase Manhattan since 1983 in various positions in private banking. She is a Director of Avon Products, Inc. and served as a Director of the Company from April 2003 to April 2006.
11 Sam Nunn
Sam Nunn has been a Director of The Coca Cola Company since 1997. Mr. Nunn is Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative, a position he has held since 2001. The Nuclear Threat Initiative is a nonprofit organization working to reduce the global threats from nuclear, biological and chemical weapons. He has served as the Chairman of the Board of the Center for Strategic & International Studies since 1999. He served as a member of the United States Senate from 1972 through 1996. He previously served as a Director of Chevron Corporation from 1997 to 2011, Dell Inc. from 1999 to 2011, General Electric Company from 1997 to April 2013 and Hess Corporation from 2012 to May 2013.
James D. Robinson III
James D. Robinson III has been a Director of The Coca Cola Company since 1975. Mr. Robinson is Co-Founder and General Partner of RRE Ventures, an early stage technology-focused venture capital firm, and has held this position since 1994. He is also President of J.D. Robinson, Inc., a strategic advisory firm. He served as non-executive Chairman of the Board of Bristol-Myers Squibb Company from 2005 to 2008 and as Chairman and Chief Executive Officer of American Express Company from 1977 to 1993. He previously served as a Director of Novell, Inc. from 2001 to 2009.
Peter V. Ueberroth
Peter V. Ueberroth has been a Director of The Coca Cola Company since 1986. Mr. Ueberroth is an investor and Chairman of the Contrarian Group, Inc., a business management company, and has held this position since 1989. He serves as Chairman of the Board of Aircastle Limited and non-executive Co-Chairman of Pebble Beach Company. He previously served as a Director of Adecco SA from 2004 to 2008 and Ambassadors International, Inc. from 2005 to 2008.
12 Coca-Cola Majority-owned Subsidiaries
Holder Shares %
Out
Value* Reported Berkshire Hathaway Inc 400,000,000 9.10 16,524,00,000 Dec 31
2013 Vanguard Group Inc. 218,661,801 4.98 9,032,918,999 Dec 31
2013 State Street Corporation 176,901,346 4.02 7,307,794,603 Dec 31
2013
FMR, LLC 124,359,813 2.83 5,137,303,875 Dec 31
2013 BlackRock Institutional Trust
Company, N.A.
98,853,867 2.25 4,083,653,245 Dec 31 2013 Northern Trust Corporation 70,816,142 1.61 2,925,414,826 Dec 31
2013 Bank of New York Mellon
Corporation
54,975,213 1.25 2,271,026,049 Dec 31 2013 Yacktman Asset Management
LP
43,243,371 0.98 1,786,383,656 Dec 31 2013 BlackRock fund advisors 42,427,078 0.97 1,752,662,592 Dec 31
2013 Grantham Mayo Van
Otterloo&Company
38,425,687 0.87 1,587,365,129 Dec 31 2013
13
OVERVIEW OF THE ANNUAL REPORT
1.- Financial Highlights:
Financial information: 10 years.
Company and products
As we know The Coca-Cola Company is the world's largest beverage company, which offers consumers 500 brands of soft drinks without gas.
Growth Profitability and Financial Ratios for Coca-Cola Co Financials
2004-12 2005-12 2006-12 2007-12 2008-12 2009-12 2010-12 2011-12 2012-12 2013-12 TTM Revenue USD Mil 21,962 23,104 24,088 28,857 31,944 30,990 35,119 46,542 48,017 46,854 46,395 Gross Margin % 65.2 64.5 66.1 63.9 64.4 64.2 63.9 60.9 60.3 60.7 60.8 Operating Income USD Mil 5,698 6,085 6,308 7,252 8,446 8,231 8,449 10,154 10,779 10,228 10,196 Operating Margin % 25.9 26.3 26.2 25.1 26.4 26.6 24.1 21.8 22.4 21.8 22 Net Income USD Mil 4,847 4,872 5,080 5,981 5,807 6,824 11,809 8,572 9,019 8,584 8,452 Earnings Per Share USD 1 1.02 1.08 1.29 1.25 1.47 2.53 1.85 1.97 1.9 1.88 Dividends USD 0.5 0.56 0.62 0.68 0.76 0.82 0.88 0.94 1.02 1.12 1.15
Payout Ratio % 50 55 57.4 53 61.2 56 34.8 50.9 51.8 58.8 60.9
Shares Mil 4,858 4,786 4,700 4,662 4,672 4,658 4,666 4,646 4,584 4,509 4,493 Book Value Per Share USD 3.29 3.44 3.61 4.7 4.42 5.38 6.76 6.99 7.34 7.54 7.43 Operating Cash Flow USD Mil 5,968 6,423 5,957 7,150 7,571 8,186 9,532 9,474 10,645 10,542 11,130 Cap Spending USD Mil -755 -899 -1,407 -1,648 -1,968 -1,993 -2,215 -2,920 -2,780 -2,550 -2,501 Free Cash Flow USD Mil 5,213 5,524 4,550 5,502 5,603 6,193 7,317 6,554 7,865 7,992 8,629 Free Cash Flow Per Share USD 1.07 1.15 0.97 1.18 1.2 1.33 1.57 1.41 1.72 1.77
14 Along with Coca-Cola, recognized as the world's most valuable brand, the product portfolio of the company includes 12 other brands worth several billion dollars, including Coca-Coca Light, Fanta, Sprite, Coca -Cola Zero, vitamin water, Powerade and Minute Maid.
Globally, Coke is the leading supplier of soft drinks, juices and juice-based drinks as well as tea and coffee ready to drink. Through more beverage distribution system in the world, consumers in more than 200 countries enjoy the Company's beverages at a rate of nearly 1,600 billion servings a day. In its ongoing commitment to building sustainable communities, Coca Cola focuses on a series of initiatives to protect the environment, conserve resources and enhance the economic development of the communities where it operates.
Management Discussion and Analysis:
Coca cola has being the #1 of nonalcoholic beverage companies, as well as one of the world's most recognizable brands. Coca cola has many competitors throughout the world, the majoritarian these are small, true coca cola competitors globally are:
DPS = Dr Pepper Snapple Group, Inc.
NSRGY = Nestl
PEP = Pepsico, Inc.
15
Coca-Cola Co.'s net operating revenues increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.
Coca-Cola Co.'s operating income increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.
Coca-Cola Co.'s income before income taxes increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.
Coca-Cola Co.'s consolidated net income increased from 2011 to 2012 but then declined significantly from 2012 to 2013.
Coca-Cola Co., Consolidated Income Statement
USD $ in millions
12 months ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Cost of goods sold -18,421 -19,053 -18,216 -12,693 -11,088
Gross profit 28,433 28,964 28,326 22,426 19,902
Selling, general and administrative expenses -17,310 -17,738 -17,440 -13,158 -11,358
Other operating charges -895 -447 -732 -819 -313
Operating income 10,228 10,779 10,154 8,449 8,231
Interest income 534 471 483 317 249
Interest expense -463 -397 -417 -733 -355
Equity income, net 602 819 690 1,025 781
Other income (loss), net 576 137 529 5,185 40
Income before income taxes 11,477 11,809 11,439 14,243 8,946
Income taxes -2,851 -2,723 -2,805 -2,384 -2,040
Consolidated net income 8,626 9,086 8,634 11,859 6,906
Net income attributable to noncontrolling interests -42 -67 -62 -50 -82
Net income attributable to shareowners of The
16
Coca-Cola Co.'s net income attributable to shareowners of The Coca-Cola Company increased from 2011 to 2012 but then slightly declined from 2012 to 2013 not reaching 2011 level.
Coca-Cola Co.'s trade accounts payable declined from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co.'s current liabilities increased from 2011 to 2012 but then slightly declined from 2012 to 2013.
Coca-Cola Co.'s noncurrent liabilities increased from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co.'s total liabilities increased from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co.'s equity attributable to shareowners of The Coca-Cola Company increased from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co.'s total equity increased from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co., Consolidated Statement of Financial Position, Liabilities and Stockholders' Equity
USD $ in millions
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Accrued marketing 2,407 2,231 2,286 2,250 1,912
Other accrued expenses 3,515 2,711 2,749 2,920 1,883
Trade accounts payable 1,933 1,969 2,172 1,887 1,410
Accrued compensation 933 1,045 1,048 1,068 720
Sales, payroll and other taxes 450 389 405 401 375
Container deposits 339 335 349 333 357
Accounts payable and accrued expenses 9,577 8,680 9,009 8,859 6,657
Loans and notes payable 16,901 16,297 12,871 8,100 6,749
Current maturities of long-term debt 1,024 1,577 2,041 1,276 51
Accrued income taxes 309 471 362 273 264
Liabilities held for sale – 796 – – –
Current liabilities 27,811 27,821 24,283 18,508 13,721
Long-term debt, excluding current maturities 19,154 14,736 13,656 14,041 5,059
Other liabilities 3,498 5,468 5,420 4,794 2,965
Deferred income taxes 6,152 4,981 4,694 4,261 1,580
Noncurrent liabilities 28,804 25,185 23,770 23,096 9,604 Total liabilities 56,615 53,006 48,053 41,604 23,325
Common stock, $0.25 par value 1,760 1,760 880 880 880
Capital surplus 12,276 11,379 11,212 10,057 8,537
Reinvested earnings 61,660 58,045 53,550 49,278 41,537
Accumulated other comprehensive loss -3,432 -3,385 -2,703 -1,450 -757
Treasury stock, at cost -39,091 -35,009 -31,304 -27,762 -25,398
Equity attributable to shareowners of The
Coca-Cola Company 33,173 32,790 31,635 31,003 24,799
Equity attributable to noncontrolling interests 267 378 286 314 547
Total equity 33,440 33,168 31,921 31,317 25,346 Total liabilities and equity 90,055 86,174 79,974 72,921 48,671
17 The net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities.
Coca-Cola Co.'s net cash provided by operating activities increased from 2011 to 2012 but then slightly declined from 2012 to 2013.
Coca-Cola Co., Consolidated Statement of Cash Flows
USD $ in millions
12 months ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Consolidated net income 8,626 9,086 8,634 11,859 6,906
Depreciation and amortization 1,977 1,982 1,954 1,443 1,236
Stock-based compensation expense 227 259 354 380 241
Deferred income taxes 648 632 1,028 617 353
Equity income, net of dividends -201 -426 -269 -671 -359
Foreign currency adjustments 168 -130 7 151 61
Significant (gains) losses on sales of assets, net -670 -98 -220 -645 -43
Other significant (gains) losses, net – – – -4,713 –
Other operating charges 465 166 214 264 134
Other items 234 254 -335 477 221
(Increase) decrease in trade accounts receivable 28 -33 -562 -41 -404
(Increase) decrease in inventories -105 -286 -447 182 -50
(Increase) decrease in prepaid expenses and other
assets -163 -29 -350 -148 -332
Increase (decrease) in accounts payable and
accrued expenses -158 -556 63 656 319
Increase (decrease) in accrued taxes 22 770 -132 -266 81
Increase (decrease) in other liabilities -556 -946 -465 -13 -178
Net change in operating assets and liabilities -932 -1,080 -1,893 370 -564 Net cash provided by operating activities 10,542 10,645 9,474 9,532 8,186
Purchases of investments -14,782 -14,824 -4,798 -4,711 -2,152
Proceeds from disposals of investments 12,791 7,791 5,811 5,004 240
Acquisitions of businesses, equity method
investments and nonmarketable securities -353 -1,486 -971 -2,511 -300 Proceeds from disposals of businesses, equity
method investments and nonmarketable securities 872 20 398 – –
Purchases of property, plant and equipment -2,550 -2,780 -2,920 -2,215 -1,993 Proceeds from disposals of property, plant and
equipment 111 143 101 134 104
Other investing activities -303 -268 -145 -106 -48
Net cash used in investing activities -4,214 -11,404 -2,524 -4,405 -4,149
Issuances of debt 43,425 42,791 27,495 15,251 14,689
Payments of debt -38,714 -38,573 -22,530 -13,403 -12,326
Issuances of stock 1,328 1,489 1,569 1,666 664
Purchases of stock for treasury -4,832 -4,559 -4,513 -2,961 -1,518
Dividends -4,969 -4,595 -4,300 -4,068 -3,800
Other financing activities 17 100 45 50 -2
Net cash used in financing activities -3,745 -3,347 -2,234 -3,465 -2,293
Effect of exchange rate changes on cash and cash
equivalents -611 -255 -430 -166 576
Cash and cash equivalents, net increase
(decrease) during the year 1,972 -4,361 4,286 1,496 2,320
Cash and cash equivalents, balance at beginning of
year 8,442 12,803 8,517 7,021 4,701
Cash and cash equivalents, balance at end of
18
BUSINESS ENVIRONMENT.
The Coca-Cola Company is the world‘s largest beverage company. They own or license and market more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. They own and market four of the world‘s top five non-alcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite.
They make their branded beverage products available to consumers throughout the world through their network of Company-owned or controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers, the world‘s largest beverage distribution system. Beverages bearing trademarks owned by or licensed to us account for 1.9 billion of the approximately 57 billion beverage servings of all types consumed worldwide every day.
In their concentrate operations, they typically sell concentrates and syrups to their bottling partners, who use the concentrate to manufacture finished products which they sell to distributors and other customers. Outside the United States, their concentrate operations also include the sale of concentrates for fountain beverages to their bottling partners who are typically authorized to manufacture fountain syrups, which they sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers.
In addition, from time to time they make equity investments representing non-controlling interests in selected bottling operations with the intention of maximizing the strength and efficiency of the Coca-Cola system‘s production, marketing, sales and distribution capabilities around the world. These investments are intended to result in increases in unit case volume, net revenues and profits at the bottler level, which in turn generate increased concentrate sales for our Company‘s concentrate and syrup business. When this occurs, both they and their bottling partners benefit from long-term growth in volume, improved cash flows and increased shareowner value.
19 Competitive factors impacting their business include, but are not limited to, pricing, advertising, sales promotion programs, product innovation, increased efficiency in production techniques, the introduction of new packaging, new vending and dispensing equipment, and brand and trademark development and protection. Their competitive strengths include leading brands with high levels of consumer acceptance; a worldwide network of bottlers and distributors of Company products; sophisticated marketing capabilities; and a talented group of dedicated associates. Their competitive challenges include strong competition in all geographic regions and, in many countries, a concentrated retail sector with powerful buyers able to freely choose among Company products, products of competitive beverage suppliers and individual retailers‘ own store or private label beverage brands.
Consumer demand determines the optimal menu of Company product offerings. Consumer demand can vary from one locale to another and can change over time within a single locale. Employing their business strategy, and with special focus on core brands, the Company seeks to build its existing brands and, at the same time, to broaden its historical family of brands, products and services in order to create and satisfy consumer demand locale by locale.
20
THE AUDITORS
Ernst & Young has one of the world‘s largest tax practices, serving multinational clients that have to comply with multiple local tax laws. It looks like Ernst &Younng has been with Coca-cola since the 90‘s till today.
E&Y is one of the Big four accountant firms of the world; third in revenue behind Price waterhouse coopers and Deloitte Touche Tohmatsu, And ahead of KPMG. It has some 700 offices that provide Auditory and accounting services in 140 countries. It also provides legal services and advisory services relating to emerging growth companies, human resources issues, and corporate transactions, mergers and acquisitions, etc.
In The next article from 1990 we can prove that E&Y has been collaborating with Coca-cola Co. since that date.
Ernst Drops Pepsi for Coke As Auditor
A Coke executive, Carlton L. Curtis, disputed Pepsi's account. ''That was an Ernst & Young decision,'' he said. Mort Meyerson, a spokesman for the accounting firm, said, ''We have made a decision to make a choice between two valued clients because we understood the Coca-Cola Company's concerns.'' The auditor change was disclosed yesterday in documents that Pepsico filed with the Securities and Exchange Commission.
This is the most prominent account conflict since the merger fever struck the accounting profession last spring. To the accounting firms that were weighing mergers, some shuffling of clients was viewed as unavoidable under the rules governing the profession because of the conflicts that the combinations would create. But accounting experts also predicted that other clients would be uncomfortable being served by the same accounting firm that handled their archrivals.
''They're taking the ad agency attitude, namely we wouldn't have the same ad agency for Pepsi and Coke, so why should we have the same accountants,'' Spencer Harris, a Menlo Park, Calif., publisher who tracks auditor changes, said of Coca-Cola.
Arthur Young's relationship with Pepsico spans two and a half decades, while Ernst &Whinney has reviewed Coca-Cola's books since the 1920's. $9 Million Account Ernst & Young is giving up an account that has generated nearly $9 million in each of the last two years in audit and tax fees, according to Pepsico's latest proxy.
21 Coca-Cola and its affiliates are believed to spend about $14 annually. Both numbers are less than 1 percent of Ernst's $4.5 billion in revenues last year.
In a deal with the government signed this week, accounting firm Ernst & Young agreed to pay $123 million to the government and admitted to wrongful conduct by some of its partners and employees in connection with the firm‘s participation, from 1999 to 2004, in the promotion of abusive tax shelters to rich individuals. In return, the firm itself won‘t face criminal charges.
As part of a non-prosecution agreement that U.S. Attorney for the Southern District of New York PreetBharara announced today, E&Y acknowledged that in league with various law firms, banks and investment advisors, it developed and sold four different tax shelter products designed to save 200 high net worth clients $2 billion in tax. For its efforts, E&Y received gross fees of about $123 million—the amount it‘s now forking over to the government. As part of its deal, E&Y agreed to continue to cooperate with prosecutors and to keep certain restrictions on its tax practice. The accounting firm, one of the four largest in the world, has cooperated with the government investigation since 2004, but acknowledged in the agreement that E&Y employees misled the Internal Revenue Service when it first began investigating the shelters.
In a statement, E&Y said, it was ―pleased to put this matter from a decade ago behind us‖ adding that ―as the settlement with the US Attorney‘s office recognizes, these activities represent an isolated period in the firm‘s long history of providing ethical and professional tax services.‖ Indeed, the ―Statement of Facts‖‗ that is part of the agreement concludes with this nod to E&Y: ―The wrongdoing in this case by a small group of professionals at E&Y represented a deviation from the more than 100-year history of ethical and professional conduct by E&Y and its partners.‖
The E&Y deal is just the latest in a long line of settlements relating to the promotion of over the edge-tax-shelters during the late 1990s and early 2000s. In 2005, KPMG agreed to pay what was then a record $456 million fine in a deferred prosecution deal covering its role in promoting shelters. Deutsche Bank agreed to pay a record $554 million in a deferred prosecution deal in 2010. And last June, accounting firm BDO USA paid $50 million, and admitted generating $6.5 billion in phony losses in its own deferred prosecution agreement. In a different line of tax
22 abuse cases, in February 2009, Swiss Bank UBS entered into a deferred prosecution deal and paid $780 million in fines, for its role in helping Americans hide assets offshore. Deferred prosecution, also known as pretrial diversion, has been the feds‘ preferred method of dealing with wrongdoing by prominent corporations since the Department of Justice came under fire for causing the 2002 collapse of accounting firm Arthur Andersen, which was convicted of obstruction of justice in the Enron scandal. This past January, Switzerland‘s oldest bank, Wegelin & Co., went out of business after it was forced to plead guilty to helping to hide $1.2 billion for American tax cheats.
In any case, wether the Articles are Negative, Or Positive reads we have to recognize that E&Y has been on Auditing and Accounting issues since long time on and it‘s a Global Firm working around the world with companies like Coke, Pepsi before the incident, Google, and many more offering their services.
But, we all now that Avoid taxes is a Crime that by the power of the law have a sentence. Reading about cheating and helping wealthy companies to not pay taxes and not having the punishment that they deserve isn‘t the image that we were expecting to know.
You only have one chance to give a good impression, and suddenly reading 2 articles with this information of corrupted firms and companies is kind of disappointing, also the government corruption and the power to the company with money.
INDUSTRY BACKGROUND
As we know coke falls within the beverage industry because has a variety of soft drinks: such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks, having a ―great competition‖ involved. Although we know that there are thousands of similar products for coca cola and it does not mean they are "competition" its real competition within this industry is Pepsi in first place. Second place Dr. Pepper, Nestle.
Look a little competition between Coke and Pepsi .
Pepsi 's birth in 1893 was the largest competition problem for the company , Coca Cola. Although the beginnings were nothing to Pepsi positive after two consecutive
23 failures the company was acquired by a distributor of Coca Cola , who managed to stand up to his former company.
Pepsi began an aggressive attitude, increasing the amounts of product and reducing prices compared to Coca Cola, increasing sales
However the power of Coca Cola still prevalent in U.S. Pepsi finally managed to catch up with Coke changing its position thanks to unify its flavor and an aggressive advertising strategy.
The marketing strategy is mainly rely on differentiate Pepsi Cola of Coca Cola trying to make an approach to the youth segment identifying the Coca Cola drink with traditional parents . This approach was a tremendous success
Currently Coca -Cola and Pepsi offer similar, at the same price products, almost always attack the same market segment and its coverage is almost identical worldwide.
The 2 companies compete in a much wider range of products including energy drinks, juices and even coffee and tea brands. But the more recognized for us the Mexicans are the following:
Coca Vs. Pepsi Coca Light Vs. Pepsi Light
Sprite Vs. 7Up Fanta Vs.Mirinda Coca Zero Vs. Pepsi Max
Despite the strong competition between Pepsi and Coke, Coke is what continues to dominate the market for this style of drinks the Coca Cola Company is known for its marketing expertise and the company has always followed a great marketing strategy that is responsible for bringing the success to the company for over a century. The biggest strength of Coca Cola is its brand. It has taken a lot of effort and good strategy to create the widely known brand. Apart from this, there are various strategies that Coca Cola has followed over the years in order to achieve competitive advantage using its Strategic capabilities.
24
OPERATING ACTIVITIES
Coca-Cola‘sIncomeStatement.
12 monthsended Dec 31, 2013 Dec 31, 2012
Net operatingrevenues 46,854 48,017
Cost of goodssold -18,421 -19,053
Gross profit 28,433 28,964
Selling, general and administrative expenses -17,310 -17,738
Other operating charges -895 -447
Operating income 10,228 10,779
Interest income 534 471
Interest expense -463 -397
Equity income, net 602 819
Othe rincome (loss), net 576 137
Income before income taxes 11,477 11,809
Income taxes -2,851 -2,723
Consolidated net income 8,626 9,086
Net income attribute able to non-controlling interests -42 -67
Net income attribute abletoshareowners of The Coca-Cola
25
Coca Cola‘s BALANCE SHEET.
Dec 31, 2013 Dec 31, 2012
Cash and cash equivalents 10,414 8,442
Short-term investments 6,707 5,017
Cash, cash equivalents and short-term investments 17,121 13,459
Marketable securities 3,147 3,092
Trade accounts receivable, less allowances 4,873 4,759
Inventories 3,277 3,264
Prepaid expenses and other assets 2,886 2,781
Assets held for sale – 2,973
Current assets 31,304 30,328
Equity method investments 10,393 9,216
Other investments, principally bottling companies 1,119 1,232
Other assets 4,661 3,585
Property, plant and equipment, net 14,967 14,476
Trademarks with indefinite lives 6,744 6,527
Bottlers' franchise rights with indefinite lives 7,415 7,405
Goodwill 12,312 12,255
Other intangible assets 1,140 1,150
Noncurrent assets 58,751 55,846
Total assets 90,055 86,174
Accrued marketing 2,407 2,231
Other accrued expenses 3,515 2,711
Trade accounts payable 1,933 1,969
Accrued compensation 933 1,045
26
Container deposits 339 335
Accounts payable and accrued expenses 9,577 8,680
Loans and notes payable 16,901 16,297
Current maturities of long-term debt 1,024 1,577
Accrued income taxes 309 471
Liabilities held for sale – 796
Current liabilities 27,811 27,821
Long-term debt, excluding current maturities 19,154 14,736
Other liabilities 3,498 5,468
Deferred income taxes 6,152 4,981
Noncurrent liabilities 28,804 25,185
Total liabilities 56,615 53,006
Common stock, $0.25 par value 1,760 1,760
Capital surplus 12,276 11,379
Reinvested earnings 61,660 58,045
Accumulated other comprehensive loss -3,432 -3,385
Treasury stock, at cost -39,091 -35,009
Equity attributable to shareowners of The Coca-Cola
Company 33,173 32,790
Equity attributable to non-controlling interests 267 378
Total equity 33,440 33,168
27
Coca Cola‘s Cash Flow.
12 months ended Dec 31, 2013 Dec 31, 2012
Consolidated net income 8,626 9,086
Depreciation and amortization 1,977 1,982
Stock-based compensation expense 227 259
Deferred income taxes 648 632
Equity income, net of dividends -201 -426
Foreign currency adjustments 168 -130
Significant (gains) losseson sales of assets, net -670 -98
Other significant (gains) losses, net – –
Other operating charges 465 166
Other items 234 254
(Increase) decrease in trade accounts receivable 28 -33
(Increase) decrease in inventories -105 -286
(Increase) decrease in prepaid expenses and otherassets -163 -29
Increase (decrease) in accountspayable and accrued
expenses -158 -556
Increase (decrease) in accrued taxes 22 770
Increase (decrease) in other liabilities -556 -946
Net change in operatingassets and liabilities -932 -1,080 Net cash provided by operating activities 10,542 10,645
Purchases of investments -14,782 -14,824
Proceeds from disposals of investments 12,791 7,791
Acquisitions of businesses, equitymethodinvestments and
nonmarketablesecurities -353 -1,486
Proceedsfromdisposals of businesses,
28
Purchases of property, plant and equipment -2,550 -2,780
Proceedsfromdisposals of property, plant and equipment 111 143
Other investing activities -303 -268
Net cash used in investingactivities -4,214 -11,404
Issuances of debt 43,425 42,791
Payments of debt -38,714 -38,573
Issuances of stock 1,328 1,489
Purchases of stock for treasury -4,832 -4,559
Dividends -4,969 -4,595
Other financing activities 17 100
Net cash used in financingactivities -3,745 -3,347
Effect of exchangeratechangeson cash and cash
equivalents -611 -255
Cash and cash equivalents, net increase (decrease)
duringtheyear 1,972 -4,361
Cash and cash equivalents, balance at beginning of year 8,442 12,803
29
Coca Cola‘sConsolidatedIncomeStatement.
*This shows that Coca Cola Company decreased in the net income during the years 2012-2013, the company has the same revenues, all the loosses are in the operating area as you can see. They have more expenses during 2013.
12 months ended Dec 31, 2013 Dec 31, 2012
Net operating revenues 100.00% 100.00%
Cost of godos sold -39.32% -39.68%
Gross profit 60.68% 60.32%
Selling, general and administrative expenses -36.94% -36.94%
Other operating charges -1.91% -0.93%
Operating income 21.83% 22.45%
Interest income 1.14% 0.98%
Interest expense -0.99% -0.83%
Equity income, net 1.28% 1.71%
Other income (loss), net 1.23% 0.29%
Income before income taxes 24.50% 24.59%
Income taxes -6.08% -5.67%
Consolidated net income 18.41% 18.92%
Net income attribute ableto non-controlling interests -0.09% -0.14%
Net income attribute abletoshareowners of The
30
Consolidated Cash Flow
12 monthsended
Dec 31, 2013
Dec 31, 2012
Net cash provided by operating activities
10,542 10,645Consolidated Income Statement.
12 monthsended
Dec 31, 2013
Dec 31, 2012
Net income from continuing operations
8,584 9,01912 monthsended
Dec 31, 2013
Dec 31, 2012
31
Consolidated Balance Sheet of Financial Position, Assets.
Dec 31, 2013 Dec 31, 2012
32 Trade Accounts Receivable, less Allowances.- Amount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, which ever is longer),for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.
Inventories.- The Coca-Cola Company determines cost on the basis of the average cost or first-in, first-out methods.
As it is showed in the following chart:
Dec 31, 2013 Dec 31, 2012
Raw materials and packaging 1,692 1,773
Finished goods 1,240 1,171
Other 345 320
Inventories 3,277 3,264
The income taxes on undistributed earnings of foreign subsidiaries not deemed to be indefinitely reinvested:
Dec 31, 2013 Dec 31, 2012
Statutory U.S. federal taxrate 35.00% 35.00%
State and local incometaxes, net of federal benefit 1.00% 1.10%
Earnings in jurisdictionstaxed at
ratesdifferentfromthestatutory U.S. federal rate -10.30% -9.50%
Reversal of valuation allowances – -2.40%
33
CCE transaction – –
Sale of Norwegian and Swedishbottlingoperations – –
Other operating charges 1.20% 0.40%
Other, net -0.70% 0.50%
Effective tax rates 24.80% 23.10%
Coca-Cola Co.'s effective tax rates declined from 2011 to 2012 but then increased from 2012 to 2013 exceeding 2011 level, as a result that can be in earnings. Their effective tax rate reflects the tax benefits of having significant operations outside the United States, which are generally taxed at rates lower than the U.S. statutory rate of 35 percent. As a result of employment actions and capital investments made by the Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Swaziland. The terms of these grants expire from 2015 to 2022. We expect each of these grants to be renewed indefinitely. Tax incentive grants favorably impacted our income tax expense by $279 million, $280 million and $193 million for the years ended December 31, 2013, 2012 and 2011, respectively. In addition, their effective tax rate reflects the benefits of having significant earnings generated in investments accounted for under the equity method of accounting, which are generally taxed at rates lower than the U.S. statutory rate.
They evaluate their ability to realize the tax benefits associated with deferred tax assets by analyzing their forecasted taxable income using both historical and projected future operating results; the reversal of existing taxable temporary differences; taxable income in prior carry back years; and the availability of tax planning strategies. A valuation allowance is required to be established unless management determines that it is more likely than not that the Company will ultimately realize the tax benefit associated with a deferred tax asset. As of December 31, 2013, the Company‘s valuation allowances on deferred tax assets were $586 million and primarily related to uncertainties regarding the future realization of recorded tax benefits on tax loss carry forwards generated in various jurisdictions.
34 The Company believes it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheets.
In 2013, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $872 million. These proceeds primarily included the sale of a majority ownership interest in our previously consolidated Philippine bottling operations, and separately, the deconsolidation of our Brazilian bottling operations, purchases of property, plant and equipment net of disposals for the years ended December 31, 2013, 2012 and 2011 were $2,439 million, $2,637 million and $2,819 million, respectively.
Net income from Operating activities. 10,542 10,645
Net income from Investing activities. -4,214 -11,404
35
ANALYSIS OF OPERATING ACTIVITIES
Gross Profit Margin
( )
Ratio Description The company
Gross Profit Margin Gross profit margin indicates the percentage
of revenue available to cover operating and other
expenditures.
Coca-Cola Co.'s gross profit margin deteriorated
from 2011 to 2012 but then improved from 2012
to 2013 not reaching 2011 level. Coca-Cola Co., Gross Profit Margin
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Selected Financial Data (USD $ in millions)
Gross profit 28,433 28,964 28,326 22,426 19,902
Net operating revenues 46,854 48,017 46,542 35,119 30,990
36 Operating Profit Margin
Ratio Description The company
Operating Profit Margin A profitability ratio calculated as operating
income divided by revenue.
Coca-Cola Co.'s operating profit margin improved from 2011 to 2012 but then slightly deteriorated from 2012 to
2013 not reaching 2011 level.
Coca-Cola Co., Operating Profit Margin
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Operating income 10,228 10,779 10,154 8,449 8,231
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Operating Profit Margin, Comparison to Industry
Coca-Cola Co. 21.83% 22.45% 21.82% 24.06% 26.56%
37 Net Profit Margin
1
Ratio Description The company
Net Profit Margin
An indicator of
profitability, calculated as net income divided by revenue.
Coca-Cola Co.'s net profit margin improved from 2011 to 2012 but then deteriorated significantly from 2012 to 2013.
Coca-Cola Co., Net Profit Margin
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions) Net income attributable to shareowners of The
Coca-Cola Company 8,584 9,019 8,572 11,809 6,824
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Net Profit Margin, Comparison to Industry
Coca-Cola Co. 18.32% 18.78% 18.42% 33.63% 22.02%
38 Receivables turnover
Ratio Description The company
Receivables Turnover An activity ratio equal to revenue divided by receivables.
Coca-Cola Co.'s receivables turnover improved from 2011 to 2012 but then slightly deteriorated from 2012 to 2013 not reaching 2011 level.
Coca-Cola Co., Receivables Turnover
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Trade accounts receivable, less allowances 4,873 4,759 4,920 4,430 3,758 Receivables Turnover, Comparison to Industry
Coca-Cola Co. 9.62 10.09 9.46 7.93 8.25
39 Inventory Turnover
Ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Coca-Cola Co.'s inventory turnover deteriorated from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co., Inventory Turnover
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Cost of goods sold 18,421 19,053 18,216 12,693 11,088
Inventories 3,277 3,264 3,092 2,650 2,354
Inventory Turnover, Comparison to Industry
Coca-Cola Co. 5.62 5.84 5.89 4.79 4.71
40 Total asset turnover
Ratio Description The company
Total asset turnover An activity ratio calculated as total revenue divided by total assets.
Coca-Cola Co.'s total asset turnover
deteriorated from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co., Total Asset Turnover
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Total assets 90,055 86,174 79,974 72,921 48,671
Total Asset Turnover, Comparison to Industry
Coca-Cola Co. 0.52 0.56 0.58 0.48 0.64
41 Equity Turnover
Ratio Description The company
Equity turnover An activity ratio calculated as total revenue divided by shareholders' equity.
Coca-Cola Co.'s equity turnover deteriorated from 2011 to 2012 and from 2012 to 2013.
Information was found in: http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Profile
Coca-Cola Co., Equity Turnover
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net operating revenues 46,854 48,017 46,542 35,119 30,990
Equity attributable to shareowners of The
Coca-Cola Company 33,173 32,790 31,635 31,003 24,799
Equity Turnover, Comparison to Industry
Coca-Cola Co. 1.41 1.46 1.47 1.13 1.25
42
INVESTING ACTIVITIES
Cash Equivalents
The Coca-Cola Company classifies time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. The Coca-Cola Company manages exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor credit risk concentrations
.
Short-Term Investments
The Coca-Cola Company classifies time deposits and other investments that have maturities of greater than three months but less than one year as short-term investments.
Investments in Equity and Debt Securities
The Coca-Cola Company uses the equity method to account for investments in equity securities if investment gives The Coca-Cola Company the ability to exercise significant influence over operating and financial policies of the investee. The Coca-Cola Company includes proportionate share of earnings and/or losses of equity method investees in equity income (loss) — net in consolidated statements of income. The carrying value of The Coca-Cola Company's equity investments is reported in equity method investments in consolidated balance sheets.
The Cola Company accounts for investments in companies that The Coca-Cola Company does not control or accounts for under the equity method either at fair value or under the cost method, as applicable. Investments in equity securities, other than investments accounted for under the equity method, are carried at fair value if the fair value of the security is readily determinable. Equity investments carried at fair value are classified as either trading or available-for-sale securities with their cost basis determined by the specific identification method. Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in other income (loss) — net in The Coca-Cola Company's consolidated statements of income. Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in The Coca-Cola Company's consolidated balance sheets as a component of accumulated other comprehensive income (loss) ("AOCI"). Trading securities are reported as either marketable securities or other assets in The Coca-Cola Company's consolidated balance sheets. Securities classified as available-for-sale are reported as either marketable securities, other investments or other assets in
43 consolidated balance sheets, depending on the length of time The Coca-Cola Company intends to hold the investment.
Investments in equity securities that The Coca-Cola Company does not control or accounts for under the equity method and does not have readily determinable fair values for are accounted for under the cost method. Cost method investments are originally recorded at cost and The Coca-Cola Company records dividend income when applicable dividends are declared. Cost method investments are reported as other investments in The Coca-Cola Company's consolidated balance sheets, and dividend income from cost method investments is reported in the line item other income (loss) — net in consolidated statements of income.
The Coca-Cola Company's investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity.
Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale.
Each reporting period The Coca-Cola Company reviews all of investments in equity and debt securities, except for those classified as trading, to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment. When such events or changes occur, The Coca-Cola Company evaluates the fair value compared to cost basis in the investment. The Coca-Cola Company also performs this evaluation every reporting period for each investment for which cost basis exceeded the fair value in the prior period. The fair values of most of The Coca-Cola Company's investments in publicly traded companies are often readily available based on quoted market prices. For investments in non-publicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. The Coca-Cola Company considers the assumptions that The Coca-Coca-Cola Company believes hypothetical marketplace participants would use in evaluating estimated future cash flows when employing the discounted cash flow or estimates of sales proceeds valuation methodologies.
In the event the fair value of an investment declines below The Coca-Cola Company's cost basis, management determines if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the
44 extent to which the market value has been less than The Coca-Cola Company's cost basis, the financial condition and near-term prospects of the issuer, and intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value.
45
Item Description Coca Cola Company
Non-Current Assets Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer.
Coca-Cola Co.'s noncurrent assets increased from 2011 to 2012 and from 2012 to 2013.
Coca-Cola Co., Consolidated Statement of Financial Position, Assets USD $ in millions
Dec 31, 2013 Dec 31, 2012
Cash and cash equivalents 10,414 8,442
Short-term investments 6,707 5,017
Cash, cash equivalents and short-term
investments 17,121 13,459
Marketable securities 3,147 3,092
Trade accounts receivable, less allowances 4,873 4,759
Inventories 3,277 3,264
Prepaid expenses and other assets 2,886 2,781
Assets held for sale – 2,973
Current assets 31,304 30,328
Equity method investments 10,393 9,216
Other investments, principally bottling companies 1,119 1,232
Other assets 4,661 3,585
Property, plant and equipment, net 14,967 14,476 Trademarks with indefinite lives 6,744 6,527 Bottlers' franchise rights with indefinite lives 7,415 7,405
Goodwill 12,312 12,255
Other intangible assets 1,140 1,150
Noncurrent assets 58,751 55,846
Total assets 90,055 86,174
46
Coca-Cola Co., Common-Size Consolidated Statement of Financial Position, Assets
Dec 31, 2013 Dec 31, 2012
Cash and cash equivalents 11.56% 9.80%
Short-term investments 7.45% 5.82%
Cash, cash equivalents and short-term investments
19.01% 15.62%
Market able securities 3.49% 3.59%
Trade accounts receivable, less allowances 5.41% 5.52%
Inventories 3.64% 3.79%
Prepaid expenses and other assets 3.20% 3.23%
Assets held for sale – 3.45%
Current assets 34.76% 35.19%
Equity method investments 11.54% 10.69%
Other investments, principally bottling companies 1.24% 1.43%
Other assets 5.18% 4.16%
Property, plant and equipment, net 16.62% 16.80%
Trade marks within definite lives 7.49% 7.57%
Bottlers' franchise rights with indefinite lives 8.23% 8.59%
Goodwill 13.67% 14.22%
Other intangible assets 1.27% 1.33%
Non-current assets 65.24% 64.81% Total assets 100.00% 100.00% 46,000 48,000 50,000 52,000 54,000 56,000 58,000 60,000 2010 2011 2012 2013
Non Current Assets
47 (As a Percentage) 26.00% 27.00% 28.00% 29.00% 30.00% 31.00% 32.00% 33.00% 34.00% 35.00% 36.00% 2010 2011 2012 2013