The Platypi Present: Coca-Cola

Background  Founded in 1886 by Dr. John Smith Pemberton  Developed a syrup that was sampled by his customers at the local pharmacy  Customers loved it, so it was placed on sale for five cents a glass  Later combined with carbonated water to produce what we now know as soda  Since grown into the largest beverage manufacturer in the world  Founded in 1886 by Dr. John Smith Pemberton  Developed a syrup that was sampled by his customers at the local pharmacy  Customers loved it, so it was placed on sale for five cents a glass  Later combined with carbonated water to produce what we now know as soda  Since grown into the largest beverage manufacturer in the world

(7) Coca Cola has an ROE of 31.7% and P/E Ratio of 29.34, which are higher than our major competitor—Pepsi. Coca Cola Pepsi (7) Coca Cola has an ROE of 31.7% and P/E Ratio of 29.34, which are higher than our major competitor—Pepsi. Coca Cola Pepsi Return on Equity 31.7% Return on Invested Capital 28.1% Gross Profit Margin 69.3% Pre-Tax Profit Margin 28.0% Post-Tax Profit Margin 20.8% Net Profit Margin 20.8% Debt/Equity Ratio 0.13 Return on Equity 31.7% Return on Invested Capital 28.1% Gross Profit Margin 69.3% Pre-Tax Profit Margin 28.0% Post-Tax Profit Margin 20.8% Net Profit Margin 20.8% Debt/Equity Ratio 0.13 Return on Equity 30.9% Return on Invested Capital 25.9% Gross Profit Margin 59.6% Pre-Tax Profit Margin 18.3% Post-Tax Profit Margin 13.9% Net Profit Margin 14.0% Debt/Equity Ratio 0.19 Return on Equity 30.9% Return on Invested Capital 25.9% Gross Profit Margin 59.6% Pre-Tax Profit Margin 18.3% Post-Tax Profit Margin 13.9% Net Profit Margin 14.0% Debt/Equity Ratio 0.19

(3) Recently, Coca Cola is not in highly risk situation, because the net income, pre-tax income and sales have been increasing, while cost of goods sold is not really increasing. Coca Cola still has concerns about the major competitors in the soft drink industry, while they try to gain more sales and market share.

CocaCola CocaCola Current= Current Assests/Current Liabilities Current= Current Assests/Current Liabilities Liquidity: Coca-Cola’s liquidity has been rising. Currently it’s current ratio tells us Coke has enough liquidity to cover it’s current liabilities. This number is well in line with the industry average of 1.8.

CocaCola CocaCola Total Asset turnover= net sales/average total assets Total Asset turnover= net sales/average total assets Asset Management: Coke turned over it’s assets 1.03 times in This is above the industry average of.81, which is positive for Coke.

CocaCola CocaCola Times Interest earned=EBIT/interest Times Interest earned=EBIT/interest Debt Management: Coca-Cola’s times interest earned of 2.05 is in line with the industry average. Their debt management is good.

CocaCola CocaCola Net Profit Margin on Sales=net income/sales Net Profit Margin on Sales=net income/sales1.66%1.74%2.54%1.83%0.93% Return on equity=net income/stock holder's equity Return on equity=net income/stock holder's equity30.55%33.90%58.51%69.44%55.44% Equity multiplier=total assets/equity Equity multiplier=total assets/equity Return on assets=net Income/average assets Return on assets=net Income/average assets1.73%1.64%2.27%1.89%0.89% Profitability: Coca-cola’s profitability is very good for it’s industry. Their profit margin is higher than the industry average. Coke’s return on equity is nearly equal to the industry average of Their equity multiplier is high, and their return on assets is also higher than the industry.

DuPont DuPont (Net Income/Sales) (Net Income/Sales)1.66%1.74%2.54%1.83%0.93% (Sales/Total Asset) (Sales/Total Asset) (Total Asset/Common Equity) (Total Asset/Common Equity) ROE= ROE=30.55%33.90%58.51%69.44%55.44% In the past 5 years, Coca Cola’s ROE is higher than Pepsi. The trend of Coca Cola’s ROE is declining from And our major competitor’s ROE is going very constant and flat.

Pepsi ROE Net Income 4,0784,2123,5683,313 Common Equity 14,32013,57211,8339,298 ROE28.48%31.03%30.15%35.63% Coca Cola ROE Net Income ROE30.55%33.90%58.51%69.44%

EVA=EBIT(1-Tax rate)-total capital*12% (given) (48.67) MVA=market value-book value P/E=price/earnings The book value is 11.31, and the MVA is Net income is 22.95, and the EVA is Stock is selling in the market for higher than it was sold from the company. EVA is lower because it shows a, single, given period. The book value is 11.31, and the MVA is Net income is 22.95, and the EVA is Stock is selling in the market for higher than it was sold from the company. EVA is lower because it shows a, single, given period.

Tax Rate 36.87% FCF Debt to Assets Ratio 57.90% NOWC NOPAT

Free Cash Flow vs. Net Income Free Cash Flows Net Income

Area to improve Lower long term debt Areas of concern High long term debt Overall, no major concerns High long term debt Overall, no major concerns