Financial Management Coca-Cola Company, Ratio Analysis - 5500 Words

Financial Management: Coca-Cola Company, Ratio Analysis (Term Paper Sample) Content: Name Tutor CourseDateCoca-Cola CompanyRatio AnalysisLiquidity Ratio Analysis (figures in millions)Current Ratio = Current Assets/Current Liabilities 2012 = (30,328/27,821) = 1.09 2013 = (31,304/27,811) = 1.13 2014 = (32,986/32,374) = 1.02Net Working Capital Ratio = Net Working Capital/Total AssetsNet Working Capital = Current Assets Current Liabilities 2012 = (30,328 - 27,821)/86,174 = 0.029 2013 = (31,304 - 27,811)/90,055 = 0.039 2014 = (32,986 32,374)/92,023 = 0.0067Profitability Analysis Ratios (figures in millions)Return on Assets (ROA) = Net Income/Average Total Assets where the latter = (beginning total assets + ending total assets)/2 2012 = {(7,124/ [92,023 + 90,055]/2)} =0.078 2013 = {(8,626/ [90,055 + 86,174]/2)} = 0.098 2014 = {9,086 / [86,174 + 83,675]/2)} = 0.107Return on Equity (ROE) = Net Income/Average Stockholders Equity where the latter is given by (beginning stockholders equity + ending stockholders equity)/2. In the coca cola company, 7,04 0 million shares were disbursed at 0.25 par value for the years 2014, 2013, and 2012. Therefore, the average would just be 1,760 for stockholders equity. 2012 = 9,086/1,760 = 5.16 2013 = 8,626/1,760 = 4.9 2014 = 7,124/1,760 = 4.05Profit Margin = Net Income/Sales 2012 = 9.086/48.07 = 0.19 2013 = 8.626/46.7 = 0.18 2014 = 7.124/45.93 = 0.16Earnings per Share (figures in billions) = Net Income/Number of Common Shares Outstanding 2012 = 9.086/4.5 = 2.02 2013 = 8.626/4.43 = 1.95 2014 = 7.124/4.39 = 1.62Activity Analysis RatiosAsset Turnover Ratio = Sales/Average Total Assets 2012 = 48,070/ (92,023 + 90,055]/2) = 0.528 2013 = 46,700/ (90,055 + 86,174]/2) = 0.52999 2014 = 45,930/ (86,174 + 83,675]/2) = 0.541Capital Structure Ratio AnalysisDebt to Equity Ratio = Total Liabilities/ Total Stockholders Equity 2012 = 86,174/ 33,168 = 2.6 2013 = 90,055/ 33,440 = 2.69 2014 = 92,023/ 30,561 = 3.01Note that the total assets = total liabilities in the net working capital and the debt equity ratioInte rest Coverage Ratio = Income Before Interest and Tax (EBIT)/ Interest Expense 2012 = 11,809/397 = 29.75 2013 = 11,477/463 = 24.79 2014 = 9,325/483 = 19.31Capital Market Ratio AnalysisPrice Earnings Ratio = Market Price of Common Stock per Share/ Earnings per Share 2012 = 40/2.02 = 19.8 2013 = 40/1.95 = 20.51 2014 = 40/1.62 = 24.69Dividend Yield = Annual Dividends per Common Share/Market Price of Common StockWhere the former must be dived by the number of common shares 2012 = (4,595/1,760)/40 = 0.06 2013 = (4,959/1,760)/40 = 0.07 2014 = (5,350/1,760)/40 = 0.076Coca-Cola CompanyCommon Size AnalysisDec 31 2014Dec 31 2013Dec 31 2012Net Operating Revenues100.00100.00100.00Cost of goods sold-38.89-39.32-39.68Gross profit61.11%60.68%60.32%Selling, general, and -37.43-36.94-36.94administrative expensesOther operating expenses-2.57-1.91-0.93Operating Income21.11%21.83%22.45%Interest Income1.291.140.98Interest Expense-1.05-0.99-0.83Net E quity Income1.671.281.71Other Income -2.571.230.29Income before tax liability20.27%24.50%24.59%Income taxes-4.78-6.08-5.67Consolidated Net Income15.49%18.41%18.92%Net Income attributable to-0.06-0.09-0.14Non-controlling interestsNet Income attributable to15.43%18.32%18.78%shareowners of The Coca-ColaCompanyCoca-Cola CompanyTrend Analysis (in millions)201420132012$$$Net Operating Revenues45,99846,85448,017Trend Percentage98.17%97.58%100.00%Cost of goods sold17,88918,42119,053Trend Percentage97.11%96.68%100.00%Gross profit28,10928,43328,964Trend Percentage98.86%98.17%100.00%Selling, general, and 17,21817,31017,738administrative expensesTrend Percentage99.47%97.59%100.00%Other operating expenses1,183895447Trend Percentage132.18%200.22%100%Operating Income9,70810,22810,779Trend Percentage94.92%94.89%100.00%Interest Income594534471Interest Expense483463 397Net Equity Income769602819Other Income -1,263576137Income before tax liability9,32511,47711,809Trend Percentage81.25%97.19%100.00%Income taxes2,2012,8512,723Consolidated Net Income7,1248,6269,086Trend Percentage82.59%94.94%100.00%Net Income attributable to264267Non-controlling interestsNet Income attributable to7,0988,5849,019shareowners Trend Percentage82.69%95.18%100.00%Calculation of the Companys BetaThe beta of Coca-Cola Company has had significant changes over the last three years. The following formula was used to calculate it: R k o = R f + Beta k o (R m R f) R k o is the required rate of return and is calculated as the (normalized free cash flow/ price) + growth rate. This gives: (1.662/42.22) + 0.005 = 4.44% in 2014. The figures for 2013 and 2012 were calculated (and also given in Coca-Cola Companys Form 10-K) to give 13.2 and 17.92 respectively. The rate of return on the stock market from 1950 -2013 has alw ays been 7% and the risk free rate for a ten year bond is 2.74%. Therefore, Year 2014: 4.44 = 2.74 + Beta k o (7 - 2.74) = 0.4 Year 2013: 13.2 = 2.74 + Beta k o (7-2.74) = 2.46Year 2012: 17.92 = 2.74 + Beta k o (7 2.74) = 3.56It is to note that the rate of return is linearly related to its Beta. The market portfolio is the reference for measuring the volatility of individual risky assets. That is why the difference between the market rate of return and the risk free rate of return stays the same for all base years.Industrial AnalysisThe industry that Coca-Cola operates in is the soft drink industry. For years, the industry has had two main competitors, Coke and Pepsi. Both companies have been relying on their non-carbonated drinks and new flavors to increase market share and dominance strength in the industry. The company boasts of having the largest market share in the entire industry (52.68 percent) whereas a decade ago the level was 46.8 percent. However, the companys market sh are is likely to decelerate due to the stagnation in prices. Cadbury Schweppes is another competitor in the industry but has a very significant margin between it and Pepsi. Coca-Cola Company has a market share of approximately 50 percent, followed by Pepsi at an estimated 21 percent and Cadbury Schweppes at around 6 percent. None of the companies depends on US being their largest market. Therefore, competition is strategized on a global perspective (Hein 112).From the Porters Five Forces Model, freedom of entry and exit is very difficult for new and established firms respectively. Entry is made difficult due to the high capital investments, the already established brand names, and the distribution worldwide channels. Furthermore, exit is also deemed unthinkable due to the large sums of fixed costs, machinery, fixed assets, and advertising costs, exit is just unthinkable. Besides, the industry is already well established.Since Pepsi has a very great market share in the US, Coca-Cola struggles with adverts and new flavors to maintain its place in that particular region. Pepsi records around $32 billion in average sales per year compared to the $5.6 billion Coca Cola makes (Hein 113). Diet Pepsi ranks 14th on the Brand Name Loyalty Leaders Survey while Diet Coke is the highest in the Coca-Cola brand in the 36th position. Rivalry is the greatest source of competition in the industry.All in all, the leading firms have been trying to diversify to increase revenue growth. This way, they can also increase market share, indirectly. One popular method of doing this is through merging. For example, when Pepsi Company merged with Quaker Oats, its market share increased with a significant 1.6% margin within the first year. Internet and the globalization phenomenon has played a very crucial role in the expansion of markets in this industry. However, firms still have no choice but to differentiate their products to increase sales in a stagnant soft drink market. Over the la st decade, obesity has been said to a major disease among the youth and the young adults. This poses a very big threat to carbonated drinks, including the biggest market dominators. This has led to a very big change in the business environment of soft drinks. Therefore, the constant product innovation all companies are doing is probably the most important tool of their steady revenue streams (Hein 118).Financial Strengths, Weaknesses, Opportunities, and ThreatsCoca-Cola has been retaining profits over the last ten years despite the fact that the company faced a reduction in revenue streams the previous year (2014). Regardless, it is in a strong position to always invest in the ploughed back profits. This way, their long term growth rate might gradually increase again. Despite the companys decrease in profits in the period 2012-2014, the company has invested substantially in the media segment and has expanded savings through global supply chain optimization, data and information tech nology systems standardization, and cost reallocation. The company also uses derivative financial instruments to reduce exposure on exchange rate, commodity prices, and interest rate fluctuations among many market risks. As can be seen from the income statements, despite their huge expenses the interest rate is still fairly the same throughout with a close margin (Coca-Cola Company 61). One on the major financial weaknesses the company is going through is a weak balance sheet. In 2012, the company started a four year productivity and reinvestment program designed to strengthen the brand and re...

Chaos and Structure in A Clockwork Orange and Paradise Lost - Literature Essay Samples

The battle between the need for structure and the creative freedom of chaos is one that sits at the heart much of great literature. They are never discussed as harmonious or complimenting; they must be in conflict and locked in eternal struggle. Literature has always depicted this clash of ideologies. Keats, for example, wrote in contrasting Apollonian and Dionysian styles which are effectively representative of chaotic ecstasy and powerful reason. Burgess also adds his thoughts on this debate running through the core of human existence with his novel ‘A Clockwork Orange’. The accepted critical view of the novel is that it is an argument for free will, which is true. However, I believe Burgess explores it much further as he delves into whether free will leads to chaos due to humans’ innate attraction to it or whether the positive aspects of structure appeal to our rational selves. Milton, on the other hand, steps outside the already established debate and investigates, through ‘Paradise Lost’, whether chaos and structure can be looked at objectively and also presents them as having a type of duality, as if one is a doppelganger of the other to truly attack the reader’s assumptions. What is certainly true of both pieces of literature is that they are products of their environment as well as being critiques of possible future environments. In the socio-political climate in which both were shaped and formed there was extreme turmoil as well as devoted following of organisation and strict limitations. ‘Paradise Lost’ was first published in 1667, only seven years after the monarchy had been restored in England after 18 years of civil war during which England had been in chaos. Milton is, on the surface, evaluating which era was better for the country but on a deeper level exploring what happens when chaos and structure actually inte ract. Burgess’ novel was also born out of a time of insecurity and complex change; the Berlin Wall had just been erected and the USSR had just exploded the biggest hydrogen bomb ever and on home soil Britain was in the uncertain world of the 60’s dominated by teen individualism. Burgess himself clearly struggled internally with what free will meant to safety and ultimately happiness. This is why his novel moves from one extreme to another; his reader can see how appealing both chaos and structure are and then evaluate each for themselves. Burgess’ novel isn’t so much a plea for chaos or a plea for structure but rather a plea for thought on the matter. On the surface of ‘Paradise Lost’ the reader is presented with a love for structure, Milton’s form and structure is very typical. The literature is in the form of a classic epic poem, written in iambic pentameter, which most closely resembles ordinary speech. However Milton often breaks it using caesura to give Satan a more human voice. Milton has deliberately chosen these established and organised techniques to contrast against other poetic devices within the poem such as heavy use of punctuation and lack of patterned rhyme scheme to develop his first point on chaos and structure; that they are innately linked and co-exist. It is widely thought that ‘Paradise Lost’ is beautiful; it has wonderful archaic language and incredible imagery whilst effortlessly moving around Biblical references, making it an instantly recognisable work of art. Milton has tried hard to make his epic poem beautiful in order to show that structure and chaos work in harmony to create something aesthetically pleasing. It is wrong, in the eyes of Milton, that his readers should assume that chaos and structure are opposed and so a person may only side with one standpoint and believe that it is appealing. Within the first page Milton has already destroyed any stigma his readers had on the topic he is going to explore further. The approach Burgess takes with form and structure is strikingly similar to that of Milton. Burgess uses an established method of presenting his novel. It has chapters clearly numbered, it has a linear chronology and a first person narrator which is all very usual, and some may say conventional, but just like Milton with caesura and rhyme Burgess puts the structured novel at a kilter by making the language of the novel so drastically strange and alien to his English audience. ‘Nadsat’ is the type of argot Alex the narrator uses and contains some words which have roots in common English such as ‘eggiwegg’ but also some perplexing words such as ‘Kleb’ and ‘lovet’ which have roots in Slavic languages. Burgess’ new language has many purposes but initially it is to place the reader in a structure which they recognise but to confuse them with the chaotic nadsat. Burgess’ reason for this peculiar technique is different from t hat of Milton’s; it is to highlight that together structure and chaos makes people feel uneasy, it would be a lot more usual to have an equally strange form and structure but Burgess is showing how initially the two cannot be accepted at the same time. Burgess also emphasises this point by making his novel a parallel to an operatic aria which follows an A/B/A structure. Alex’s story begins at home, then to jail, then back to home. Alex rapes and beats people, but also loves beautiful structured music, Burgess’s choice of the aria structure compliments this; inside the book is rape and violence but it is created like an opera, something a reader associates with a calm and peaceful environment. Once again structure and chaos are uncomfortably alongside each other; Burgess did not believe they could be one in the same, unlike Milton. For Burgess only chaos could be appealing, or only structure could be appealing. Initially, the statement isn’t true for †˜A Clockwork Orange’ because the reader craves for a language they can understand, they need structure to find meaning. However, the statement is actually true for Milton’s structure in ‘Paradise Lost’. Milton, by demolishing the reader’s assumptions, through his dual use of chaos and structure, has placed them metaphorically in a desolate and chaotic world, one of their core beliefs has been lost, and they are effectively in hell with Satan as they are stripped of all that they know. This is why Milton begins ‘Paradise Lost’ with this section after the fall. This realm of uncertainties reflects the uncertainty created when Charles returns from France. The ambiguity is appealing for Milton because it is the beginning of a new life, but perhaps not for the reader. Both writers use difficult main characters to develop meaning. Satan in literature and in human art is depicted as simplistic and one-dimensional, but in ‘Paradise Lost’ Milton depicts the idea of Satan as incredibly different; he has added more depth to the character. Equally Burgess has not simply designed a thug; with Alex he has created a complex human being who struggles to grasp some aspects of life. Alex loves Beethoven and Mozart; he even describes them to us as a preacher taken by a sudden surge of religious faith. Burgess uses language such as ‘O! My brothers.’ to accentuate how powerfully Alex feels about classical music, despite Alex also associating it with the acts of violence he commits. This is shown by the line that he could hear music in his head as he describes ‘there came the blood’. Burgess, using the technique of Alex, is showing how both structure and chaos can be appealing but together in tandem they only create acts of h orror; there can be no middle ground. Burgess actually stated that he believed in ‘duality as the ultimate reality’ which means that the reality as we know is made up of conflicts, such as structure against chaos. However, Alex is evidence for the fact that slowly chaos becomes more appealing and is stronger than structure. Alex’s desires for violence are so strong that he defeats the behavioural conditioning he receives from the Department for the Interior. The society in ‘A Clockwork Orange’ also reflects this desire for chaos, the police are corrupt shown by Dim becoming a police officer as well as the ‘old babushkas’ in the pub who are willing to reject society in order for alcohol which is a symbol of distorted reality and chaos. Satan’s language appears to be very intelligent, perceptive and persuasive. We as a reader almost begin to adore him; his rousing speeches to his people and his apparent sacrifice at embarking on the ‘dangerous journey’ to Eden by himself are all virtuous. However, as Milton states: Satan’s language is ‘ambiguous and double-sense deluding’ his language is chaotic and erratic, it is never consistent and sincere unlike Christ’s later on in the epic poem. However, Satan appears obsessed with order as well as chaos. Satan creates order out of chaos by creating a structured parliament, this desire for order also adds to the ambiguity of Satan as a character, this is done by Milton so that Satan becomes a piece of chaos in the sense that he is used by Milton to enlighten the reader to their own lives. The literary critic Stanley Fish has formulated a theory on ‘Paradise Lost’ called ‘The Fish Trap’. ‘The Fish Tr ap’ states that Milton initially makes Satan appear ‘good’ which is where the common critic phrase ‘Satan has all the best lines’ comes from, and also why Shelley believed that Satan was the hero of the story. Milton then shows ‘the infected readers’ that Satan is actually evil and a deceiver through Sin and Death’s initial description of him which includes phrases such as ‘Thou art traitor’ and ‘fugitive’. The technique of this instilling chaos into the mind of the reader is to show that they have fallen from the moral heights of Adam and Eve. Despite my agreement with the theory, Fish seems too obsessed with Milton’s Christianity, when in fact he was quite an unorthodox religious believer which devalues the theory slightly. The archaic language which is often Latinate is also meant to stress how the readers, who find the language hard, have fallen from Eden this is where the title comes from, soc iety has lost ‘Paradise’. Critic Christopher Ricks concurs, stating ‘(the words) take us back to a time when there were no infected words because there were no infected actions’. Milton has used the chaos of Satan’s character to protect the reader from the chaos of losing paradise and falling from God, in this sense the statement is true when analysing ‘Paradise Lost’ because humans have moved away from the structure of God and into the chaos of hell. Milton’s final exploration into whether chaos is appealing is somewhat difficult; chaos is literally personified in ‘Paradise Lost’ and ‘reigns’ just like God as well as Satan. With this neutral character Milton is showing that chaos is simply a device used by individuals and that it is mainly a tool for Satan to entice humans into hell with him. The entire poem, therefore, is testament to how appealing chaos can be to humans, if it was not there would be no need for Milton to write ‘Paradise Lost’ in order to save humanity. In A Clockwork Orange, Alex, the protagonist, finds chaos much too appealing and will forever remain a slightly violent individual, but after the section in jail with behavioural treatment Burgess has shown the reader that chaos due to an expression of free will is far superior to a structured life without choice. Bobby Newman believes that Burgess has not successfully achieved sound meaning within his novel, stating that ‘Burgess’s understanding of the philosophical and political ramifications of behaviourism is lacking.’ This critique is weak because Newman has lost sight of Burgess’s aims of displaying that chaos and structure are at odds and no matter what, it is human nature to have an innate desire for chaos. Whether behavior therapy is good or not is beside the point Burgess is making. Compared to Burgess’ ultimate meaning, Milton’s is much more convoluted. I believe Milton’s work does show that chaos is more appealing than struc ture, but this is only due to Satan’s grasp on chaos. Chaos becomes a test in ‘Paradise Lost’ which must be overcome to reach Eden and beyond; the society in which Milton wrote ‘Paradise Lost’ must also overcome chaos and pass through his ‘realm’ in order to reach God.