On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of the drink with "New Coke". Follow-up taste tests revealed that most consumers preferred the taste of New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared for the public's nostalgia for the old drink, leading to a backlash. The company gave in to protests and returned to a variation of the old formula, under the name Coca-Cola Classic on July 10, 1985.
On February 7, 2005, the Coca-Cola Company announced that in the second quarter of 2005 they planned to launch a Diet Coke product sweetened with the artificial sweetener sucralose, the same sweetener currently used in Pepsi One. On March 21, 2005, it announced another diet product, Coca-Cola Zero, sweetened partly with a blend of aspartame and acesulfame potassium. In 2007, Coca-Cola began to sell a new "healthy soda": Diet Coke with vitamins B6, B12, magnesium, niacin, and zinc, marketed as "Diet Coke Plus”. On July 5, 2005, it was revealed that Coca-Cola would resume operations in Iraq for the first time since the Arab League boycotted the company in 1968.
In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "Coca-Cola." The word "Classic" was truncated because "New Coke" was no longer in production, eliminating the need to differentiate between the two. The formula remained unchanged.
In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16-ounce bottles sold in parts of the southeastern United States. The change is part of a larger strategy to rejuvenate the product's image. In November 2009, due to a dispute over wholesale prices of Coca-Cola products, Costco stopped restocking its shelves with Coke and Diet Coke.
PRODUCTS AND BRANDS
Coca-cola has more than 500 brands and more than 3500 beverages in over 200 countries.
Some of the few Brands are listed below:
Coca-cola
Minute maid
Kinley
Limca
Tab
Some of the Beverages are:
Pulpy orange
Fanta
Ice dew
Maaza
Nestea
Thumsup
Sprite
Sunfill
Vanilla Coke
ORGANIZATION
Muhtar Kent, Chairman of the Board and Chief Executive Officer of Coca-cola company leads the company into the new century with a firm commitment to the values and spirit of the world's greatest brand. The Board of Directors consists of 17 members including chairman. The Board of Directors are:
Muhtar Kent
Herbert A. Allen
Ronald W. Allen
Howard G. Buffett
Richard M. Daley
Barry Diller
Evan G. Greenberg
Alexis M. Herman
Donald R. Keough
Robert A. Kotick
Maria Elena Lagomasino
Donald F. McHenry
Sam Nunn
James D. Robinson III
Peter V. Ueberroth
Jacob Wallenberg
James B. Williams
Each Region has different operational heads and there are 8 different operational groups such as:
Eurasia & Africa Group
Europe Group
Latin America Group
North America Group
Pacific Group
Coca-Cola Refreshments
Bottling Investments Group
McDonald's Division
Each functional Department has different Senior functional heads. They are:
Harry L. Anderson
Alexander B. Cummings
Ceree Eberly
Gary P. Fayard
Bernhard Goepelt
Ingrid Saunders Jones
Joseph V. Tripodi
Clyde C. Tuggle
Guy Wollaert
COMPETITORS
The major competitor for Coca-cola is Pepsico which stands second after Coca-cola in the market share worldwide. The other competitor is RC Cola which is owned by Dr Pepper Snapple Group, which is the third largest group. It has many local competitors in different areas like:
Big Cola in Mexico
Corsico Cola in Corsico
Breizh ccola in Brittany
Irn Bru in Scottland
Tropicola in Cuba
Laranjada in Madiera
MISSION AND VISION STATEMENTS
Mission Statement
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.
To refresh the world
To inspire moments of optimism and happiness
To create value and make a difference
Vision Statement
Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.
People: Be a great place to work where people are inspired to be the best they can be.
Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.
COCA-COLA'S POLICIES
DIVIDEND POLICY
The declaration, amount and payment of dividends are subject to approval by holders of Coca-Cola FEMSA’s Series A Shares and Series D Shares voting as a single class, generally upon the recommendation of its board of directors, and will depend upon its operating results, financial condition, capital requirements, general business conditions and the requirements of Mexican law. Accordingly, the company’s historical dividend payments are not necessarily indicative of future dividends.
CAPITAL POLICY
Coca-cola uses both the debt and equity as its sources of funds. It has over $13,356 million long term Debt and total debt of $48,339 million. The Company issued long-term notes in the principal amounts of $900 million at a rate of 3.625% and $1,350 million at a rate of 4.875% due March 15, 2014, and March 15, 2019, respectively. It issued long term debt to replace certain amounts of commercial papers and short term debt in 2009. The company also issued equity from the NYSE with 4,501 million outstanding shares with Total Equity amounting to $31,365 million. The Debt Equity ratio for past 5 years is
PROJECTIONS
These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends of stocks. Like any investment strategy or philosophy, both have their advocates and adversaries. Here are the defining principles of each of these methods of stock analysis:
is a method of evaluating securities by attempting to measure the of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies.
is the evaluation of securities by means of studying statistics generated by market activity, such as past . Technical analysts do not attempt to measure a security's but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.
In the world of stock analysis, fundamental and technical analysis are on completely opposite sides of the spectrum. , , and are all important characteristics to fundamental analysts, whereas technical analysts could not care less about these numbers. Which strategy works best is always debated, and many volumes of textbooks have been written on both of these methods. So, do some reading and decide for yourself which strategy works best with your investment philosophy.
SWOT ANALYSIS
STRENGTHES
WORLD’S LEADING BRAND:
Coca-Cola has strong brand recognition across the globe. The company has a leading brand
value and a strong brand portfolio. Business-Week and Inter-brand, a branding consultancy,
recognize. Coca-Cola as one of the leading brands in their top 100 global brands ranking in
2006.The Business Week-Inter-brand valued Coca-Cola at $67,000 million in 2006. Coca-Cola ranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of $12,690 million Furthermore; Coca-Cola owns a large portfolio of product brands. The company owns four of the top five soft drink brands in the world: Coca-Cola, Diet Coke, Sprite and Fanta.
Strong brands allow the company to introduce brand extensions such as Vanilla Coke, Cherry
Coke and Coke with Lemon. Over the years, the company has made large investments in brand promotions. The
company’s strong brand value facilitates customer recall and allows Coca-Cola to penetrate new markets and consolidate existing ones.
LARGE SCALE OF OPERATIONS:
With revenues in excess of $24 billion Coca-Cola has a large scale of operation. Coca-Cola is the largest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886 in the US. The company currently sells its products in more than 200 countries.
The company’s operations are supported by a strong infrastructure across the world. Coca-Cola owns and operates 32 principal beverage concentrates and/or syrup manufacturing plants located throughout the world.
ROBUST REVENUE GROWTH IN 3 SEGMENTS:
Coca-Cola’s revenues recorded a double digit growth, in three operating segments. These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments. Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the same period, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from the bottling investments segment by 19.9%.
Together, the three segments of “Latin America”, “East, South Asia” and “Pacific Rim” bottling investments, accounted for 34.8% of total revenues during fiscal 2006. Robust revenues growth rates in these segments contributed to top-line growth for Coca-Cola during 2006.
WEAKNESS
NEGATIVE PUBLICITY:
The Coca-Cola Company has been involved in a number of controversies and lawsuits related to its relationship with human rights violations and other perceived unethical practices. There have been continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and U.S. foreign policy. The company received negative publicity in India during September 2006.The company was accused by the Centre for Science and Environment (CSE) of selling products containing pesticide residues. Coca-Cola products sold in and around the Indian national capital region contained a hazardous pesticide residue.
In January 2009, the US consumer group the Centre for Science in the Public Interest filed a class-action lawsuit against Coca-Cola. The lawsuit was in regards to claims made, along with the company's flavours, of Vitamin Water. Claims say that the 33 grams of sugar are more harmful than the vitamins and other additives are helpful.
SLUGGISH PERFORMANCE IN NORTH AMERICA:
Coca-Cola’s performance in North America was far from robust. North America is Coca-Cola’s core market generating about 30% of total revenues during fiscal 2006. Therefore, a strong performance in North America is important for the company.
In North America the sale of unit cases did not record any growth. Unit case retail volume in North America decreased 1% primarily due to weak sparkling beverage trends in the second half of 2006 and decline in the warehouse-delivered water and juice businesses. Moreover, the company also expects performance in North America to be weak during 2007. Sluggish performance in North America could impact the company’s future growth prospects and prevent Coca-Cola from recording a more robust top-line growth.
DECLINE IN CASH FROM OPERATING ACTIVITIES:
The company’s cash flow from operating activities declined during fiscal 2006. Cash flows from operating activities decreased 7% in 2006 compared to 2005. Net cash provided by operating activities reached $5,957 million in 2006, from $6,423 million in 2005. Coca-Cola’s cash flows from operating activities in 2006 also decreased compared with 2005 as a result of a contribution of approximately $216 million to a tax-qualified trust to fund retiree medical benefits.
The decrease was also the result of certain marketing accruals recorded in 2005.Decline in cash from operating activities reduces availability of funds for the company’s investing and financing activities, which, in turn, increases the company’s exposure to debt markets and fluctuating interest rates.
OPPORTUNITIES
ACQUISITIONS:
During 2006, its acquisitions included Kerry Beverages, (KBL), which was subsequently, reappointed Coca-Cola China Industries (CCCIL). Coca-Cola acquired a controlling shareholding in KBL, its bottling joint venture with the Kerry Group, in Hong Kong.
The acquisition extended Coca-Cola’s control over manufacturing and distribution joint ventures in nine Chinese provinces.
In Germany the company acquired Apollinaris which sells sparkling and still mineral water. Coca-Cola has also acquired a 100% interest in TJC Holdings, a bottling company in South
Africa. Coca-Cola also made acquisitions in Australia and New Zealand during 2006. These acquisitions strengthened Coca-Cola’s international operations.
GROWING BOTTLED WATER MARKET:
Bottled water is one of the fastest-growing segments in the world’s food and beverage market owing to increasing health concerns. The market for bottled water in the US generated revenues of about $15.6 billion in 2006.Market consumption volumes were estimated to be 30 billion litres in 2006. The market's consumption volume is expected to rise to 38.6 billion units by the end of 2010. This represents a CAGR of 6.9% during 2005-2010.
In terms of value, the bottled water market is forecast to reach $19.3 billion by the end of 2010. In the bottled water market, the revenue of flavored water (water-based, slightly sweetened refreshment drink) segment is growing by about $10 billion annually.
GROWING HISPANIC POPULATION IN U.S:
Hispanics are growing rapidly both in number and economic power. As a result, they have become more important to marketers than ever before. In 2006, about 11.6 million US households were estimated to be Hispanic. This translates into a Hispanic population of about 42 million.
The US Census estimates that by 2020, the Hispanic population will reach 60 million or almost 18% of the total US population. The economic influence of Hispanics is growing even faster than their population. Nielsen Media Research estimates that the buying power of Hispanics will exceed $1 trillion by 2008- a 55% increase over 2003 levels.
Coca-Cola has extensive operations and an extensive product portfolio in the US. The company can benefit from an expanding Hispanic population in the US, which would translate into higher consumption of Coca-Cola products and higher revenues for the company.
THREATS
INTENSE COMPETITION:
Coca-Cola competes in the non-alcoholic beverages segment of the commercial beverages industry. The company faces intense competition in various markets from regional as well as global players. Also, the company faces competition from various non-alcoholic sparkling beverages including juices and nectars and fruit drinks. In many of the countries in which Coca-Cola operates, including the US, PepsiCo is one of the company’s primary competitors. Other significant competitors include Nestle, Cadbury Schweppes, Groupe DANONE and Kraft Foods.
DEPENDENCE ON BOTTLING PARTNERS:
Coca-Cola generates most of its revenues by selling concentrates and syrups to bottlers in whom it doesn’t have any ownership interest or in which it has no controlling ownership interest. In 2006, approximately 83% of its worldwide unit case volumes were produced and distributed by bottling partners in which the company did not have any controlling interests.
If Coca-Cola is unable to provide an appropriate mix of incentives to its bottling partners, then the partners may take actions that, while maximizing their own short-term profits, may be detrimental to Coca-Cola. These bottlers may devote more resources to business opportunities or products other than those beneficial for Coca-Cola. Such actions could, in the long run, have an adverse effect on Coca-Cola’s profitability. In addition, loss of one or more of its major customers by any one of its major bottling partners could indirectly affect Coca-Cola’s business results. Such dependence on third parties is a weak link in Coca-Cola’s operations and increases the company’s business risks.
SLIGGISH GROWTH OF CARBONATED BEVERAGES:
US consumers have started to look for greater variety in their drinks and are becoming increasingly health conscious. This has led to a decrease in the consumption of carbonated and other sweetened beverages in the US. The US carbonated soft drinks market generated total revenues of $63.9 billion in 2005, this representing a compound annual growth rate (CAGR) of only 0.2% for the five-year period spanning 2001-2005. The performance of the market is forecast to decelerate, with an anticipated compound annual rate of change (CAGR) of -0.3% for the five-year period 2005-2010 expected to drive the market to a value of $62.9 billion by the end of 2010.
Moreover in the recent years, beverage companies such as Coca-Cola have been criticized for selling carbonated beverages with high amounts of sugar and unacceptable levels of dangerous chemical content, and have been implicated for facilitating poor diet and increasing childhood obesity. Moreover, the US is the company’s core market. Coca-Cola already expects its performance in the region to be sluggish during 2007. Coca-Cola’s revenues could be adversely affected by a slowdown in the US carbonated beverage market.
DU-POINT ANALYSIS
A method of performance measurement that was started by the DuPont Corporation in the 1920. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity (ROE). It is also known as “DuPont identity”.
There are different types of DuPont analysis. Two of them are
Two-component Disintegration of ROE
Three-component Disintegration of ROE
TWO-COMPONENT DISINTEGRATION OF ROE:
DuPont analysis tells us that ROE is affected by three things:
Asset use effeciency, which is measured by Return on Assets
Financial Leverage, which is measured by Leverage
ROE = Return on Assets (Profit/Total Assets) * Leverage (Assets/Equity)
THREE-COMPONENT DISINTEGRATION OF ROE:
DuPont analysis tells us that ROE is affected by three things:
Operating efficiency, which is measured by profit margin
Asset use efficiency, which is measured by total asset turnover
Financial leverage, which is measured by the equity multiplier
ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity)
The DuPont Analysis is important determines what is driving a company's ROE; shows the operating efficiency, turnover shows the asset use efficiency, and factor shows how much leverage is being used.
The method goes beyond profit margin to understand how efficiently a company's assets generate sales or cash and how well a company uses debt to produce incremental returns.
Using these three factors, a DuPont analysis allows analysts to dissect a company, efficiently determine where the company is weak and strong and quickly know what areas of the business to look at (i.e., inventory management, debt structure, margins) for more answers. The measure is still broad, however, and is not a substitute for detailed analysis.
The DuPont analysis looks uses both the as well as the to perform the examination. As a result, major asset purchases, acquisitions, or other significant changes can distort the ROE calculation. Many analysts use average assets and shareholders' equity to mitigate this distortion, although that approach assumes the balance sheet changes occurred steadily over the course of the year, which may not be accurate either.
RATIO ANALYSIS
LIQUIDITY RATIOS
CURRENT RATIO
Defined as ratio of current assets to current liabilities. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio, the better.
Following is the summary of current ratio for the last five years:
Calculations:
Interpretation:
Current Ratio for the year 2010-2011 is 1.05. This ratio shows efficient utilization of the firm. Ideal current ratio is 1.In 2009-2010 current ratio is 1.17 which shows that the firm has optimum utilization of resources. In 2008-2009 it is 1.28 which again shows the firm has optimum utilization of resources. During the years 2006-2008 there has been a decline in the current ratio may because of the recession of 2008. The current ratio has been nearly 1 all throughout the period.
QUICK RATIO
A liquidity indicator that further refines the current ratio by measuring the amount of the most liquid current assets there are to cover current liabilities. The quick ratio is more conservative than the current ratio because it excludes inventory and other current assets, which are more difficult to turn into cash. Therefore, a higher ratio means a more liquid current position.
Following is the summary of current ratio for the last 5 years:
Calculations:
Interpretation:
Quick ratio for Coca-cola is fluctuating during the years. It is very low during the recession of 2008 and has picked up well after the recession time. The comparison between quick ratio and current ratio tells us that company holds lot of inventory, which is not good for the liquidity component of the company. So, the company should take some action in controlling the inventory levels. A small value of quick ratio also signifies efficient utilization of cash. An ideal ratio is 1:1 hence Dell is efficiently utilizing its assets against the liabilities. So, Coca-cola should try getting its value to 1 by reducing the level of inventories.
NET WORKING CAPITAL
Net working capital is calculated as the difference between current assets and current liabilities. It shows the daily cash required for day to day operating of the business.
Following is the summary of net working capital for the last 5 years:
Calculations:
Interpretations:
We can see that NWC is in negative during 2006-08, because of the recession, and has a tremendous increase in 2009 and gradual decline in 2010 and 2011.
PROFITABILITY RATIOS
GROSS PROFIT MARGIN
The gross profit margin ratio is used as one indicator of a business's financial health. It shows how efficiently a business is using its materials and labour in the production process and gives an indication of the pricing, cost structure, and production efficiency of your business. The higher the gross profit margin ratio the better.
The following is the summary of current asset turnover ratio for the last 5 years:
Calculations:
Interpretations:
The gross profit margin has been stable till 2010 and declined in 2011, though the change is very small , the effect is assumed to be because of the increase in the expenses of the company.
NET PROFIT MARGIN
The net profit margin ratio is the net profit as a proportion of sales. It shows the proportion of every dollar of sales that is left after all expenses have been paid, and remains as net profit. Net profit is used to pay for interest, tax and distribution to the owners. The higher the net profit margin ratio the better.
The following is the summary of current asset turnover ratio for the last 5 years:
Calculations:
Interpretations:
The Net profit has not changed in first few years and has shown an uplift in 2010 and back to its average in 2011. The range of the NP margin is between 18% to 33%, which is a good sign for the company.
RETURN ON ASSETS
This ratio indicates how profitable a company is relative to its total assets. The return on assets (ROA) ratio illustrates how well management is employing the company's total assets to make a profit. The higher the return, the more efficient management is in utilizing its asset base. The ROA ratio is calculated by comparing net income to average total assets, and is expressed as a percentage.
The following is the summary of current asset turnover ratio for the last 5 years:
Calculations:
Interpretations:
The Return on Assets is a very efficient ratio for a stake holder to further invest in the company and to know the profits earned by them. It is stable over the years with small decline in 2011. As, the ROA is above 10% all over 5 years it is good sign to invest in the company.
RETURN ON EQUITY
This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors.
The following is the summary of current asset turnover ratio for the last 5 years:
Calculations:
Interpretations:
It is very important ratio for an investor to invest in any company. The ROE of this company is high in all the years with little increase in 2010 and decline in 2011. It shows that coca-cola is a good company for an investor to invest his money in.
LEVERAGE RATIOS
DEBT RATIO
Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt
Following is the summary of debt ratio for the last 5 years:
Calculations:
Interpretations:
Lower the debt ratio, less risky is the company as the company is free from the burden of debt and even less tax shield. Hence the ratio should be balance of both, we see that the burden of interest on debt is 50% in 2008 because of the global recession and currently it has come up to 60%. Hence, currently the company has close ideal ratio of 0.66.
DEBT EQUITY RATIO
It is a measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets
Following is the summary of debt equity ratio for the last 5 years:
Calculations:
Interpretations:
Debt/equity ratio depicts the capital structure of the company. It shows the portion of debt and equity out of the capital employed. Ideal ratio is 1 , so company maintained ideal ratio till2009 and has increased the portion of debt in 2010 and 2011.
INTEREST COVERAGE RATIO
A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period
Following is the summary of debt ratio for the last 5 years:
Calculations:
Interpretations:
The lower the interest coverage ratio, the higher the company's debt burden and greater is the possibility of bankruptcy or default. Hence we see that over the years there has been an increase in the interest coverage ratio hence reducing the burden of debt on the company. It decreased in 2010 and again increased in 2011with 26.15 times which means its debt equity ratio is balanced properly.
ACTIVITY RATIOS
ACCOUNTS RECEIVABLES TURNOVER RATIO
An accounting measure used to quantify a firm's effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.
The following is the summary of current asset turnover ratio for the last 5 years:
Calculations:
Interpretations:
The Accounts Receivables turnover indicates the management of the accounts receivables from the debtors. It is stable over the years and the values are also ideal for an company to maintain its accounts receivables. The avg. Accounts Receivables turnover is nearly 10 times which is a good indicator.
FIXED ASSETS TURNOVER RATIO
It is an indicator that defines whether a firm is utilizing its fixed assets efficiently or not. It is an activity ratio which suggests that whether the fixed assets of the firm are operating as desired and is contributing to the sales of the firm.
The following is the summary of fixed asset turnover ratio for the last 5 years:
Calculations:
Interpretations
The fixed assets turnover ratio is used to determine how efficiently a company or operation is at using its fixed assets to generate sales. A low turnover suggests that the fixed assets are being underutilized or that there are more assets than can be effectively used. On the other hand, a very high turnover ratio may suggest that the operation is running at peak efficiency, a high turnover may also mean that the plant is running at full capacity or is bursting at the seams and will need further capital investments or upgrades. There is an increase in the ratio followed by decline in 2008 till 2010 and then a raise in 2011. Though the turnover is less, company can adopt new strategies to utilize its fixed assets properly.
MARKET RATIOS
PRICE EARNING RATIO
It is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. The P/E ratio can therefore be calculated aggregately by dividing the company's market capitalization by its total annual earnings.
The following is the summary of PE ratio for the last 5 years:
Calculations :
Interpretations:
In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E).The ratio shows a gradual decline from 2007-10 and a raise in 2011. This shows that investors are expecting higher earnings growth as company announced issue of dividend in 2012.
DIVIDEND YEILD
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock.
Dividend yield is calculated as follows:
Calculations:
Interpretation
The Yield Dividend is an indicator that reflects the return of a stock and is expressed in %. Higher the yield the better. Coca-cola always maintained the level of dividend issued to keep the investors happy.
COMPETITORS ANALYSIS
LIQUIDITY RATIOS:
Interpretation:
The Liquidity Ratios of Coca-cola is better than the Pepsico but less than the industry. The quick ratio of the company is nearly equal to its industry avg. and more than the competitor. So, it is managing its current assets properly.
PROFITABILITY RATIOS:
Interpretation:
The Gross profit margin and Net profit margin of Coca-cola are higher than the Industry Avg. and its competitor Pepsico, we can conclude that company's profitability is good.
Interpretation:
The ROA of the company is higher than industry avg. and Pepsico. which makes the stakeholders of the company, but the ROE of the company is little less than Pepsico, but he difference is negligible.
LEVERAGE RATIOS
Interpretation:
The Debt Ratio of Coca-cola is less than Pepsico but the Debt Equity is more than Pepsico which signifies that company might be risky but managing its sources of funds efficiently.
MARKET RATIOS
Interpretations:
The Price/Earnings Ratio of coca-cola is more than Pepsico and the industry avg. which tells that the investors of Coca-cola are expecting high rate of dividends as the company has declared giving dividends in 2012. The interest coverage ratio is also far high than the Pepsico and of the industry avg. so the company is maintaining the leverage properly and not exceeding the limits of debt which makes company very risky. So, the Marketability position of Coca-cola is better than the Pepsico.
CONCLUSIONS
Though there were certain limitations in the study that was conducted. The study of the company allowed to draw some conclusions on the basis of analysis that was done on the data collected.
The SWOT analysis gave a clear picture of the company's position in the market while the other analysis like DuPoint analysis, Ratio analysis and competitors analysis gave a clear picture on the financial position of the Company. The Dupoint clearly described about the interdependence of the ratios on one another by disintegration of the ratios. The Ratio analysis gave the Liquidity, Profitability and leverage Positions of the company. It also mentioned about the marketability of company's shares and also some activity ratios which describes the efficiency in management of the resources of the company. The Competitors analysis clearly indicates that Coca-Cola company is financially stronger than Pepsi.
Coca-cola's products are more popular than the products of Pepsi mainly because of its TASTE, BRAND NAME, INNOVATIVENESS and AVAILABILITY, thus it should focus on good taste so that it can capture the major part of the market. Coca-cola is also market leader in many regions in the world than Pepsico.
In today’s scenario, investor is the king because he has got various choices around him. If you are not capable of providing him the desired result he will definitely switch over to the other investing option. Therefore to survive in this cutthroat competition, you need to be the best. Investor is no more loyal in today’s scenario, so you need to be always on your toes.
REFERENCES
The following information has been obtained from:
http://www.thecoca-colacompany.com/
http://money.msn.com/
Various articles on Coca-Cola
Fundamental analysis pdf( general)
