The fundamentals of financial statement analysis as applied to the Coca-Cola Company

88 Pages·2015·4.43 MB·English

by  Gardner

THE BUSINESS The Fundamentals of Financial M Finance and Financial
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EXPERT PRESS Statement Analysis as Applied to the GO Management Collection
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DIGITAL LIBRARIES Coca-Cola Company AN John A. Doukas, Editor
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EBOOKS FOR Carl B. McGowan, Jr. • John C. Gardner GA
BUSINESS STUDENTS • Susan E. Moeller RD
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Curriculum-oriented, born- Recent stock market crises are exacerbated by investors who don’t ER The Fundamentals
understand what has been happening to companies because inves- •
digital books for advanced M
tors lack an understanding of financial ratio analysis. Stock markets
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business students, written are efficient in that they incorporate, and even anticipate, informa- EL
by academic thought tion about companies based on financial accounting data provided by LE of Financial
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leaders who translate real- companies. However, market efficiency results from extensive analy-
world business experience sis performed by financial analysts. Much of this financial analysis is T
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into course readings and based on the analysis of financial information provided by companies E Statement Analysis
and analyzed using financial ratio analysis. F
reference materials for U
This book provides a step-by-step demonstration of how to down- N
students expecting to tackle load data from Internet sources, transfer the data to a spreadsheet, D
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management and leadership and conduct a financial ratio analysis of any company. The book out- M
challenges during their lines the steps needed to perform a financial ratio analysis, the finan- E
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professional careers. cial statements to be retrieved from E DGAR, and the five categories of T
financial ratios used in the financial analysis of the company. The data AL the Coca-Cola
POLICIES BUILT retrieved from the financial statements is copied to a worksheet and S
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BY LIBRARIANS used to compute and graph the financial ratios. The ratios and graphs F
are used to determine the performance drivers of this c ompany. F Company
• Unlimited simultaneous IN
usage Carl B. McGowan, Jr., PhD, CFA is a Faculty Distinguished Professor A
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• Unrestricted downloading and Professor of Finance at Norfolk State University, has a BA in Inter- C
and printing national Relations (Syracuse), an MBA in Finance (Eastern Michigan), IA
and a PhD in Business Administration (Finance) from Michigan State. L
• Perpetual access for a Professor McGowan has published 90 peer reviewed articles and 100 ST
one-time fee proceedings and has presented 175 papers at regional, national, and A
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• No platform or international conferences. E
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maintenance fees
John C. Gardner is the KPMG Professor of Accounting in the Depart- E
• Free MARC records N
ment of Accounting at the University of New Orleans. He earned T
• No license to execute his undergraduate degree from the State University of New York at A
N Carl B. McGowan, Jr.
The Digital Libraries are a Albany, and MBA and PhD degrees from Michigan State University. A
Dr. Gardner has published in leading accounting, finance, and man- L
comprehensive, cost-effective Y
agement science journals and is a consulting economist who testifies S John C. Gardner
way to deliver practical as an expert witness in federal and state courts. Dr. Gardner served IS
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treatments of important four years active and two years reserve duty in the United States S Susan E. Moeller
business issues to every Navy diesel submarine service during the Vietnam War. A
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student and faculty member. Susan E. Moeller is a Professor of Finance at Eastern Michigan Uni- P
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versity. Prior to joining EMU, Dr. Moeller taught at Northeastern IE
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University and the University of Michigan–Flint. Her corporate ex-
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perience was with Ford Motor Company. She has published in the O
Journal of Business Case Studies, Journal of Economic and Financial Educa- T
For further information, a H
tion, Journal of Financial and Strategic Decisions, Journal of Global Busi- E
free trial, or to order, contact:  ness, Journal of International Finance, Management I nternational Review, C
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Journal of Applied Business Research, and AAII Journal.
[email protected] C
Finance and Financial Management A
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www.businessexpertpress.com/librarians Collection C
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John A. Doukas, Editor A
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ISBN: 978-1-63157-095-7 M
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The Fundamentals of
Financial Statement
Analysis as Applied to
the Coca-Cola Company

The Fundamentals of
Financial Statement
Analysis as Applied to
the Coca-Cola Company
Carl B. McGowan, Jr.
John C. Gardner
Susan E. Moeller
The Fundamentals of Financial Statement Analysis as Applied to
the Coca-Cola Company
Copyright © Business Expert Press, LLC, 2015.
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted in any form or by any
means—electronic, mechanical, photocopy, recording, or any other
except for brief quotations, not to exceed 400 words, without the prior
permission of the publisher.
First published in 2015 by
Business Expert Press, LLC
222 East 46th Street, New York, NY 10017
www.businessexpertpress.com
ISBN-13: 978-1-63157-095-7 (paperback)
ISBN-13: 978-1-63157-096-4 (e-book)
Business Expert Press Finance and Financial Management Collection
Collection ISSN: 2331-0049 (print)
Collection ISSN: 2331-0057 (electronic)
Cover and interior design by Exeter Premedia Services Private Ltd.,
Chennai, India
First edition: 2015
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
Abstract
Recent stock market crises are exacerbated by investors not understanding
what has been happening to companies because investors lack an under-
standing of financial ratio analysis. Stock markets are efficient in that they
incorporate, and even anticipate, information about companies based
on financial accounting data provided by companies. However, market
efficiency results from extensive analysis performed by financial analysts.
Much of this financial analysis is based on the analysis of financial infor-
mation provided by companies and analyzed using financial ratio analysis.
The goal of this book is to provide a step-by-step demonstration of
how to download data from Internet sources, transfer the data into a
spreadsheet, and conduct a financial ratio analysis of Coca-Cola. The
book shows the steps needed to perform a financial ratio analysis, the
financial statements to be retrieved from EDGAR, and the five categories
of financial ratios used in the financial analysis of Coca-Cola. The data
retrieved from the financial statements is copied to a worksheet and used
to compute and graph the financial ratios. The ratios and graphs are used
to determine the performance drivers of Coca-Cola.
Keywords
asset management ratios, consolidated balance sheet, consolidated state-
ment of cash flows, consolidated statement of income, EDGAR, financial
analysis, financial leverage ratios, internet data retrieval, liquidity ratios,
market based ratios, profitability ratios, ratio analysis

Contents
Introduction ������������������������������������������������������������������������������������������ix
Chapter 1 Internet Data Collection ..................................................1
Chapter 2 F inancial Ratio Analysis—Calculating and
Graphing Ratios .............................................................39
Chapter 3 The DuPont System of Financial Analysis ......................61
References ���������������������������������������������������������������������������������������������69
Index ���������������������������������������������������������������������������������������������������71

Introduction
Stock market crises can be exacerbated by investors not understanding
what has been happening to companies due to a lack of understanding
of financial statement analysis. Stock markets are efficient in that they
incorporate, and even anticipate, information about companies based
on financial accounting data provided by companies. However, market
efficiency results from extensive analysis performed by financial ana-
lysts. Much of this financial analysis is based on the analysis of financial
information provided by companies and analyzed using financial ratio
analysis. The objective of this book is to demonstrate how to conduct a
financial statement analysis covering the entire process of collecting and
analyzing the data for financial ratio analysis. This book shows how to
collect data, enter data into a spreadsheet, analyze the data, write a paper
about the process, and create and present a PowerPoint presentation. The
Coca-Cola Company is used as the example in this book but the process
can be applied to any company that has financial information available in
the Internet data resources used.
This book provides a step-by-step demonstration of how to down-
load data from EDGAR and other Internet sources, transfer the data to a
spreadsheet, and conduct a financial ratio analysis of Coca-Cola. The pres-
entation shows how to find the ticker symbol for Coca-Cola (KO) and
use the ticker symbol to access Form 10-K data from EDGAR. EDGAR
stands for Electronic Data Gathering, Analysis, and Retrieval System, which
is the database system provided by the Securities and Exchange Commis-
sion (SEC) for the disclosure of financial information required by U.S.
Securities Laws.
The use of the microcomputer and the Internet has increased dra-
matically over the past 30 years. The use of microcomputers for pedagog-
ical purposes has expanded from spreadsheet analysis and transparency
master creation to the use of real-time Internet access that can be used
to find data on the Internet, download the data into spreadsheets, and
analyze the data. Instead of transparency masters, instructors can use