Coca-Cola Company Financial Analysis Presentation

The Great Recession of between 2007 and 2009 revealed a significant impact on the financials of the Coca-Cola Company. Initially, that is before the recession, the financial performance trend of the company was positive based on the fact that there was an increase in the various tools used to analyze the financial performance of a company. During the recession, the performance of the company declined slightly. After the recession, that is 2010, the company regained to its pre-recession trend up to 2013 when the financial performance started declining again.

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Based on the income statement, the balance sheet, the statement of cash flows, and the statement of the shareholders equity of between 2005 and 2014, the Coca-Cola Company has a relatively strong financial performance. Before the recession, which is between 2005 and 2007, the company reported an increase in its financial performance. As indicated by the financial statement, Coca-Cola reported increasing financial position before recession. The revenues increased from $23.104 billion to 31944 in 2008. This indicated a 38.26% increase in revenue. Additionally, the gross income and the net income also increased by 37.97% and 20.57% respectively.

During the recession, the financials of the company were affected because the revenues declined to $30.990 billion in 2009 from $31.944 billion in 2008. The consolidated income also decreased from $5.981 billion in 2007 to $5.874 billion in 2008.

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The highlighted parts indicate the decreased financial performance of Coca-Cola company

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In 2010 that is immediately after the recession Coca-Cola company reported the highest net income of $11.859 billion. Additionally, the revenues increased from $ 30.990 billion in 2009 to $ 35.119 billion, which is 13.32% increase in revenue. The companys total assets also increased from a value of $48.671 billion in 2009 to $72.921 billion in 2010. the dividends of the company also increase from 38 billion to 40.68 billion. Moreover, the earnings per share (EPS) of the company increased from $2.97 in 2009 to $5.08 in 2010.

The companys financial performance continued to increase in the subsequent year that is 2011 and 2012. However, the companys performance declined again in 2013 and 2014 ($9.086 billion in 2012 to $8.626 billion in 2013 to $7.124 billion in 2014). The company attributed the decreased net operating revenues to the unfavorable foreign currency fluctuations as a result of stronger U.S dollar in relation to other currencies. Other factors that led to the decline in 2013 and 2014 include the low sales volume, the product and geographic mix, the price, and the structural changes.

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The net income of Coca-Cola Company before, during, and after recession

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After a keen analysis of the various financial instruments, Coca-Cola Company regained the pre-recession trend immediately after the recession, which is 2010. This is because as we have seen, Coca-Colas revenues, net income, the total assets, and the dividends portrayed an abnormal increase in 2010 compared to the previous years. Additionally, the companys return on assets also increased from 0.139 in 2009 to 0.145 in 2010. The return on equity also increased from 0.277 to 0.282. After 2010, the company reported an increasing trend in its financial position up to 2013 when it started declining. This is evidenced by the increasing revenues and the net income from 2010 to 2012.

Therefore, Coca-Cola regained from the recession in 2010. Nevertheless, in 2013, its financial performance started declining, which was also experienced in 2014. The company attributed the favorable increase in profits and revenue to the foreign currency exchange rates, which was caused by a weaker U.S dollar compared to other foreign currencies. Additionally, the company reported that the emerging markets recovered quickly from the recession, which boosted the consolidated net income.

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The Coca-Cola Company balance sheet from 2005 to 2014

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A chart showing the growth in total assets of the company

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Coca-Cola increased its investments in securities with an aim of increasing its value. One of the activities was increase in both short-term and long-term investments. In 2010, Coco-Cola increased short term investments to $4579 million from $2130 million in 2009. The net cash out flow from the investment fetched $547 million.

Another strategy is acquisitions. On 2nd October, 2010, Coca-Cola acquired 67% of CCEs North American business in a bid to increase its shareholders value. The merger also helped Coca-Cola reach its brand products in markets that were initially dominated by CCE. Other acquisitions include Coca-Cola Hellenic (23%), Coca-Cola FEMSA (32%), and Coca-Cola Amatil (30%).

Additionally, Coca-Cola repurchased its shares from the common stock to increase the shareholders value. For instance, in 2008, the company repurchased 18 million shares, in 2009 it repurchased 26 million shares, while in 2010 49 million shares were repurchased, which increased the companys price per share to $58.01, $57.09, and $63.85 respectively.

Other strategies include the cash flow hedging aimed at minimizing the fluctuations in cash flows as a result of variability in exchange rates, foreign currency, interest rates, or commodity prices. The fair-value hedging is aimed at reducing the fluctuations in the fair value of fixed rate debt as a result of fluctuations in benchmark interest rates. The economic hedging strategies include other methods used to minimize the impact of fluctuations in foreign currencies and exchange rates on the companys foreign investments.

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Various financial ratios of Coca-Cola from 2005 to 2014