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3 pages/β‰ˆ825 words
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3 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Case Study
Language:
English (U.S.)
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Total cost:
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Topic:

Ratio, Horizontal, and Vertical Analysis of Coca-Cola Company

Case Study Instructions:

Week 2 Assignment - Case Study on Financials
Overview
Financial statements are reports that summarize all the accounting transactions that have taken place during a specific period of time.
Choose a publicly held company and, using the Internet, review its most current annual report. Evaluate the health of the corporation you picked based upon your analysis of its financial statements: balance sheets, income statements, cash flow statements, and statements of shareholders' equity. Then, research a similar sized competitor for comparison.
Instructions
Write a 3–4 page report suggesting ways to improve the company's financial health.
Conduct a vertical, horizontal, and ratio analysis on four financial statements.
Compare the ratio, which includes liquidity, profitability, and solvency, with the industry benchmark and one other comparable competitor.
Synthesize the results of the three financial analysis tests to determine the overall health of the organization.
Present an accurate interpretation of the company's current financial health, including risks. Support your conclusions.
Recommend three ways to improve the company’s financial health, including one example for each that has been used in the industry.
Use three sources to support your writing, including the web address of your chosen company. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the library, or review library guides.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
Develop business recommendations based on the financial health of a company.

Case Study Sample Content Preview:

Financial Analysis: Coca-Cola Company
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Financial Analysis: Coca-Cola Company
Financial analysis is a necessary process that helps the management determine and project the company's financial health. It evaluates finance-related transactions, budgets, and financial instruments such as income statements to identify their suitability and performance. Typically, financial analysis determines whether the company is profitable, liquid, solvent, or stable (Areas, 2018). Besides, it can evaluate business activities and create long-term plans and projects by synthesizing financial data or numbers. Therefore, an accountant must examine all the company's relevant financial statements, including cash flow statements, balance sheets, and income statements. The paper addresses three major analyses, ratio, horizontal and vertical, of Coca-Cola Company.
Ratio Analysis
Table 1: Liquidity Ratios (The Fiscal year 2021)
Ratio

Coca Cola

Pepsi

Quick Ratio

1.26

0.67

Current Ratio

1.13

0.95

Cash Ratio

0.6x

0.2x

(The Coca-Cola Company, n.d.)
Table 2: Profitability Ratios (The Fiscal year 2021)
Ratio

Coca Cola

Pepsi

Operating profit margin

26.67%

14%

Net profit margin

23.31%

14%

Gross profit margin

60.3%

53.35%

ROI

13.35%

21.09%

(Pepsi, n.d.)
Table 3: Solvency Ratios (The Fiscal Year 2021)
Ratio

Coca Cola

Pepsi

Debt to Equity Ratio

0.82

5.0

(The Coca-Cola Company, n.d.)
Comparison: Coca-Cola vs. Pepsi
The data are retrieved from different financial instruments for 2021 on the companies' websites. Coca-Cola is better than Pepsi Company regarding financial stability based on all the ratios. For instance, from the profitability ratios, including operating margin, gross profit margin, and net profit margin, Coca-Cola makes more profits than Pepsi since Pepsi recorded a net profit margin of 14% in 2021, less than Cocacola (Pepsi, n.d.). Coca-Cola is also financially safer than Pepsi due to its liquidity ratio. For instance, Coca-Cola has a quick ratio of more than 1, indicating financial stability. Lastly, Coca-Cola has a lower debt-to-equity ratio than Pepsi, which is preferred, and the value should be as low as possible to ensure financial stability.
Horizontal, Vertical, and Ratio Analysis: Coca-Cola
Horizontal analysis is significant in understanding the financial health of the company. It involves comparing historical financial data for a given period (Welc, 2022). The aim is to identify any unusual numbers that may jeopardize the company's financial state. Coca-Cola is stable due to increased revenues in the past quarter. Besides, its profits have also escalated by 2% between t...
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