coca presentation bouhia 2

8/2/2019 Coca Presentation Bouhia 2

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Prsent par:Youssef RECHOYounes BEKKALIGabriel THOMAS


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Outline

Introduction SWOT, market & industry Analysis Financial Analysis Recommendations


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Introduction

Coca-Cola Company The companys History Founders The name of Coca-Cola


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SWOT Analysis

Strenghts*A high presence worldwide

* Brand leading in the industry

* An effective strategy of bottling

Weaknesses*Decrease sales in the carbonates market* A distribution system not appropriate

Opportunities

* Many intangible product advantages

* Modern way of advertising should be reached

* More helpful organizations match with brand value

Threats*Rising health-conscience society

* Boycott in the Arab countries (middle east)


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Comparison of Market share

Company % Share

The Coca-Cola Company 30%

Pepsi&Co,Inc 22,6%

Cadburry Shweppes 10,6%

Private Label 0,7%

Other 36,2%

Total 100%


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Comparative Analysis Coke & Pepsi revenues Decrease in the carbonates drinks Pepsi Large portfolio

http://www.youtube.com/watch?v=IXDSWhobbfc


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Financial Analysis


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Income statement

The income statement of the pastthree years show a positiveincome

between 2009 and 2010, itincreases from 6 824M$ to 11809M$ (x 2)

the company generates a lot ofmoney

But, Isthat money enough tohonor the commitments?


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Balance Sheet


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Liquidity Net working Capital: Current assetscurrent

liabilities

The NWC of an organization is considered as a cushion,An indicator of ability to pay short-term debts.

Being (-) its alarming (2008), in 2010 it decreases after ahigh increase : itsnot very risky because the level is

acceptable: the company owns more assets than short termliabilities it has to pay.

-812

3830

3071

-2000

-1000

0

1000

2000

3000

4000

5000

2008 2009 2010

Net Working Capital


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Capital employed Capital employed = NonCurrent assets + Working Capital orCapital employed = Total assetscurrent liabilities

The CE represents the capital investment necessary for thebusiness to function.

Here the CE is continuously increasing, that means higherneeds for the company to function.

2010 2009 2008

54 413 34 950 27531


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27531

34950

54413

0

10000

20000

30000

40000

50000

60000

Capital Employed


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Current ratio: Current assets/Current liabilities

The current ratio shows the ability of a company tocover its current debts.

the coca-cola current ratio is very low in 2008 (1).

2010 2009 2008

1, 17 1, 28 0,94


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Quick ratio (Acid test): (Current assetsInventory)/Current liabilities

This ratio is used to measure the capacity of a firm tosell most of its current assets to pay its current liabilitiesquickly.

The liquidity ratios show a weak position to pay back itscreditors in short term

if the situation continue on the same way the could bea serious issue for the company

2010 2009 20081, 02 1, 11 0, 77


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0

0.2

0.4

0.6

0.8

1

1.2

1.4

2010 2009 2008

Liquidity ratios

Current ratio

Acid test


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Inventory turnover Inventory turnover=

sales/Inventory

it shows how many timesinventory is replaced over a period(one year in this case). Here wecan see a small decrease; inventory

grows faster than sales.

2008 2009 2010

14.6 13.16 13.25


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Days sales outstanding DSO=receivables/(sales/365)

serious increase in 2009 due to abig grow of receivables

2008 2009 2010

35.41 43.56 46


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Solvency

The solvency is the companys ability to meet its long-

term obligations. Debt Ratio = Total Liabilities / Total Assets

This ratio compares the total liabilities (total debt) tototal assets. It shows the percentage of total fundsobtained from the creditors for business operations.

reduces from 0,495 to 0,490 (2009). But in 2010, thecompany slightly increased its debt ratio from 0,490 to0,575.

This shows that the degree of debt increased 57,5 % ofbusiness operation money is given to creditors.

2010 2009 2008

0, 575 0, 490 0,495


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Debt Equity Ratio = Total Liabilities / Total Equity

In high debt result, it will less flexibly for companyto obtain more funds.

High debt equity ratio also makes it difficult for thecompany to meet interest charges and principalpayments at maturity.

The Coca-Cola Companys debt equity ratio shows aslight improvement between 2009 and 2010, which is

not necessarily a good thing.

2010 2009 2008

1, 352 0, 963 0, 979


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0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2008 2009 2010

Debt ratios

Debt ratio

Debt equity ratio


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LT Debt to Equity Ratio = Long Term Debt / TotalShareholder Equity*

*(Preferred stock + common stock)

Generally, companies with higher ratios are thoughtto be more risky because they have more liabilitiesand less equity.

- For our Case the ratio is increasingvery significantly, especially in 2010,

which means that Coca-cola would be atrisk. The debt situation is dangerous.

2010 2009 2008

15, 96 5, 78 3, 16

LT d b i i


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0

2

4

6

8

10

12

14

16

18

2008 2009 2010

LT debt to equity ratio

LT debt to equity

ratio


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Proftability

Profit Margin=Net income/Sales

The part of the sales that representNet income increases during the

period; but still keep an acceptablelevel.

2008 2009 2010

18% 20% 34%


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Return On Equity

ROE= Net income/Total Equity

In 2010 every dollar invested by theequity, earns 0,38 cents. This is a very good ratio showing that

the company generates a lot of profit

from its equity. this figure increases over the period

which means the profitability isincreasing

2008 2009 2010

0,28 0,27 0,38


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Equity Ratio

Equity Ratio = Stockholdersequity/Total Assets

This ratio shows the part of assetsfinanced by stockholders. Its anoverview of the capital structure.

This part declined between 2009 and2010 certainly due to a high borrowingfor an investment

2008 2009 2010

50% 50% 42%


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COCA PEPSI

LIQUIDITY

Quick ratio 1,02 0.89

Current ratio 1,17 1.11

Inventory turnover 13,25 17.15

Day sales outstanding 46 39.9

LEVERAGE

Debt ratio 0,575 0.69

Debt equity ratio 1,35 2.22

LT Debt to equity ratio 15,96 -256

PROFIT/ PERFORMANCEProfit margin 34% 11%

ROE 0,38 0.3

Equity Ratio 42% -30%

Coca Versus Pepsi


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Recommendation

Optimizing control of major processes Significantly reducing the internal malfunctioning Reducing waste Reducing loans by diversifying sources of money to

invest. Especially to reduce losses of financing cashflows. Enlarge its portfolio target new customers, compete

with Pepsi&Co. nuts


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Thank you

coca presentation bouhia 2

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