Accounting, Ratio, and Credit Analysis of Coca-Cola

Coca-Cola Financial Analysis
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Executive Summary
Coca-Cola prepares financial statements in accordance with Generally Accepted Accounting Principles (GAAPs), which results in three financial statements: cash flow statement, income statement, and statement of financial position. Companies must make assumptions and estimates for revenues, expenses, assets, and liabilities, as well as disclose contingent liabilities and assets in the financial statements with accompanying notes, according to GAAPS. Coca-Cola uses accounting flexibility by recognizing marketing expenses after they have occurred rather than when they are incurred. Furthermore, the company consolidated reports that included entities in which it did not own a controlling interest.
Given that the auditors and the company agree on the valuation of trademark and goodwill impairment, Coca-accounting Cola's policies and estimates have been realistic. To achieve an optimal mix of long-term and short-term debt, the company structures primarily long-term debt by extinguishing certain tranches after the issuance of long-term notes. There are no red flags in the income statements or balance sheet because the amounts, earnings, and expenses vary within reasonable ranges from year to year. In the past three years, the company has not received a qualified opinion from its auditors, Ernst & Young, indicating that there are no material misstatements in their financial reports.
There is no evidence that long-term obligation costs are consistently underestimated or overestimated. Coca-Cola also calculates the cost of goods sold by factoring in the actual cost of shipping and handling.
There is, however, no acceptance of the International Financial Reporting Standards (IFRS). Coca-Cola may have difficulty meeting reporting requirements in countries that have adopted the Framework. Through the financial statement notes, the company has been able to make complete disclosures.
When comparing Coca-overall Cola's profitability to that of the industry, it becomes clear that the company is highly profitable by significant margins. The pre-tax profit margin of Coca-Cola increased from 29.52 percent in 2020 to 32.14 percent in 2021. When compared to the industry average of 6.68 percent, Coca-pre-tax Cola's profit margin is impressive. Coca-strong Cola's performance cements its position as a beverage industry leader, and the company must maintain its positive image in order to increase sales.
Coca-debt-to-equity Cola's ratio has steadily increased over the last three years, from 2.25, 2.217, and 3.1 in 2019, 2020, and 2021, respectively. Coca-performance Cola's falls short of the 0.78 industry average. If debt is not managed properly, the company will go bankrupt. Coca-flaw Cola's is that it has amassed so much debt in comparison to its competitors. While the industry average long-term debt-to-equity ratio was below 145 percent, Coca-long-term Cola's debt-to-equity ratio was above 165 percent.
Coca-asset Cola's turnover ratio has remained consistent at 0.4, indicating that for every dollar invested in assets, the company generated $0.4 in sales. Coca-results Cola's are slightly lower than the market average. As a resul...