Write a Business Profits; Managerial Report.

Running head: FINANCIAL STATEMENT ANALYSIS 1

Financial Statement Analysis

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FINANCIAL STATEMENT ANALYSIS 2

1.0 Introduction

The purpose of this report is to analyze the financial performance of Coca-Cola Company

for a period of five years (2014-2018) and make recommendations to the company’s

shareholders. The report will analyze the company’s balance sheet, income statement, and

cash flow statement. The report will use ratios to compare the company’s financial

performance with that of the industry average.

2.0 Analysis

2.1 Balance Sheet

The balance sheet is a statement of the company’s financial position at a particular date.

It lists the company’s assets, liabilities, and equity. The company’s assets are its

resources, which may be used to pay its liabilities. The company’s equity is the residual

interest in the assets of the company after deducting its liabilities (Garrison, Noreen, &

Brewer, 2016).

2.1.1 Assets

The company’s assets increased from $88,290 million in 2014 to $104,806 million in

2018. The increase in assets was mainly due to an increase in the company’s cash and

equivalents, which increased from $8,830 million in 2014 to $18,267 million in 2018. The

increase in cash was due to an increase in the company’s operating cash flow. The

company’s other assets, such as investments and property, plant, and equipment, also

increased during the period.

2.1.2 Liabilities

The company’s liabilities increased from $48,427 million in 2014 to $56,377 million in

2018. The increase in liabilities was mainly due to an increase in the company’s long-term

debt, which increased from $23,089 million in 2014 to $33,476 million in 2018. The

increase in long-term debt was due to the company’s aggressive expansion strategy, which

involved acquiring other companies and investing in new production facilities. The

increase in long-term debt was also due to the company’s share repurchase program.

2.1.3 Equity

FINANCIAL STATEMENT ANALYSIS 3

The company’s equity increased from $39,863 million in 2014 to $48,429 million in

2018. The increase in equity was due to an increase in the company’s retained earnings,

which increased from $26,201 million in 2014 to $35,953 million in 2018. The increase in

retained earnings was due to the company’s profitability.

2.2 Income Statement

The income statement is a statement of the company’s financial performance over a

period of time. It shows the company’s revenue, expenses, and net income.

2.2.1 Revenue

The company’s revenue increased from $46,849 million in 2014 to $48,016 million in

2018. The increase in revenue was due to an increase in the company’s sales. The

company’s sales increased from $44,294 million in 2014 to $45,973 million in 2018. The

increase in sales was due to an increase in the company’s volume of sales. The company’s

volume of sales increased from 9,010 million in 2014 to 9,460 million in 2018. The

increase in sales was also due to an increase in the company’s prices. The company’s

prices increased from $4.92 in 2014 to $4.87 in 2018.

2.2.2 Expenses

The company’s expenses increased from $37,694 million in 2014 to $39,370 million in

2018. The increase in expenses was due to an increase in the company’s cost of goods

sold, which increased from $32,478 million in 2014 to $34,176 million in 2018. The

increase in cost of goods sold was due to an increase in the company’s volume of sales.

The company’s volume of sales increased from 9,010 million in 2014 to 9,460 million in

2018. The company’s other expenses, such as selling, general, and administrative

expenses, also increased during the period.

FINANCIAL STATEMENT ANALYSIS 4

2.