coca presentation bouhia 2
TRANSCRIPT
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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