Signature Assignment: Coca-Cola Financial Analysis

Coca-Cola Financial Analysis
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Coca-Cola Company is the oldest company in the carbonated drink industry. The company was founded in the year 1919 and headquartered in Georgia Atlanta, Today, it has turned out to be the leading and largest global manufacturer, distributor and marketer of carbonated drink. The company offers more than 450 brands including Fanta, Dasani, Sprite as well as over 30 manufacturing plant and operates in approximately 200 countries across the world. According to the NYSE and S&P 50 index the company features among the best corporation with highly valuable shares and dividends. Coca-Cola. The company has managed to become competitive in such a highly competitive industry with the aid of its vast-assets brands, unravelled logistic operations as well as strong financial strength. The company has been able to maintain an impressive gross profit margins over the last 5 years between a 66% and 63% , which is better than that of its major competitor PepsiCo, which only managed a correspond gross profit margin that stood between 54% and industry standard of 42.8%. In terms of revenue, the company gunners approximately, 74% from foreign sales annually, It terms of capital structure, the Value Line Report reveals that the company has a debt to equity ratio of 15% only, which is within the recommended industry norm. This percentage includes a liability of $9 billion spend in the acquisition of U.S. bottlers holding.However, the beverage industry is under pressure due to the global pressure on the fluctuations of high fuel prices. Another threat is the increasing consumer and regulatory awareness on health and nutrition considerations which have slightly affected the company’s sales. Thus, the reports to seek to investigate Coca-Cola financially situation capital structure as well as its performance in the capital market, particularly examining the issuance of securities, assess the company’s capital budgeting decisions and the application of Capital Asset Pricing Model (CAPM).
Question 1
According to the Coco-Cola 2013 annual report, the company did not issue any convertible bonds and preferred stocks. Also, the Ychart.com reveals the Coca-Cola did not issue any warranty in the fiscal year 2013. However, according to the company websites stock history, Coco-Cola common stock increase from 11,200,000,000 shares in 2012 to 17, 600 000 0000 shares in 2013 (Coca-Cola, 2013). The stock was issued as two-for-one stock split effective July 27, 2013, the common stocks were issued at a value of $25 per share.
Question 2
As a financial manager, deciding on bond prices will largely depend on three distinct aspects, namely, interest rates, inflation and credit ratings. It is important to check the interest’s rate stratus as an increase interest rates leads to a fall in bond prices and a decline in interest rates causes bond prices to fall (Ehrhardt & Brigham, 2016). This because low interest rates makes the bonds appear attractive to their investors whereas a significant rise in interest rates renders the bonds less attractive to investors. Concerning inflation, high inflation rates causes the bond prices to fall...