Coca-Cola Financial Analysis
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Coca-Cola Financial Analysis
This analysis will examine the financial statements of the Coca-Cola Company and utilize comparative and ratio analyses to best assess the company’s liquidity, profitability, and overall financial health. Liquidity refers to the ability of a company to access cash and meet near-term obligations, whereas profitability refers to a company’s capacity to turn a profit.
Examining comparative financial data extrapolated from financial statements will help determine
both the current financial position and predictive prospects of Coca-Coca Company. The
following will evaluate these prospective terms using specific liquidity and profitability
ratios, as well as comparative measures of vertical and horizontal analyses.
Liquidity
Liquidity is an important financial measurement of a company’s capacity to pay current
obligations and have available cash to keep operations going. When we look at the liquidity of
Coca-Cola, three of the ratios stand out as being most notably important to financial analysis of
the company’s liquidity. These significant measures include current ratio, quick ratio and the
cash ratio. Current ratio, calculated by (current assets/current liabilities), measures a company’s
ability to pay current obligations with current assets. As we look at the current ratio, we can see
that the highest in the past five years was in 2009 at 1.28 and the lowest was in 2011 at 1.05, but
since 2011, it has increased to 1.13 so it would look as if the current ratio is on the rise. Quick
ratio, calculated by ({cash + cash equivalents + market securities + accounts receivable}/current
liabilities), provides a tighter measurement on a company’s capacity to meet current obligations.
When looking at the quick ratio we can see that the highest again was back in 2009 at 0.95 and
the lowest was in 2012 at 0.77. When we look at 2013,...