1.An ‘eye-ball’ assessment of the changes in Coke’s financial statements between 1996 and 2010—e.g., overall growth in assets, revenues, equity, debt, etc. An eyeball assessment of the changes in Coke’s financial statements between 1996 and 2010 show that mainly all accounts are up. The total assets are up from 1996 to 2010 with an increase from $16,161 to $72,921. Also current assets increased 3.6% from 1996 to 2010 with total non-current assets increasing 5%. Revenue nearly doubled from 1996 having only $18,546 to increasing in 2010 to $35,119. The total current liabilities increased over the years from $7,406 to $18,508. The total long term liabilities also show an increase from 1996 having $2,599 to $23,410 in 2010. Also the shareholders equity increased greatly over the years from $6,156 to a total of $31,003 in 2010. 2.Analysis of the Common-size statements—i.e., what changed and why. That is, describe the changes in these statements and analyze the cause of the changes.
Coca-Cola Common-Size Statements of Income and Retained Earnings for December 1996 and 2010
1996%2010
Revenue$18,546 $35,119
Cost and Expenses
Cost of Sales$6,738 36%$12,693 36%
Gross Profit$11,808 64%$22,426 64%
S, G, and A$7,893 43%$13,977 40%
Interest Charges$286 2%$733 2%
Other Income/Expenses (net)($967)-5%$6,527 19%
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Total Cost and Expenses$13,950 75%$20,876 59% Income before Income Taxes$4,596 25%$14,243 41%
Provision of Income Taxes$1,104 6%$2,384 7%
Other Income($50)-0.1%
Net Income$3,492 18.80%$11,809 34%
Dividends (% of NI)($1,247)36%($4,068)34%
Adjustments to Retained Earnings$0 $0
Retained Earnings, Beginning Balance$12,882 $41,537
Retained Earnings, Ending Balance$15,127 $49,278
In analyzing Coca-Cola’s (Coke) financial statements, balance sheet, and statements of income and retained earnings for 1996 and 2010 we can see positive earnings in trends. In 2010 Coke had a net income of 11,809 with revenue of 35,119. common size percentage is found by dividing net income of 11,809 by revenue of 35,119 to equal .336 which equals 33.6% in common size percentage in 2010. In 1996 the common size percent is found the say way by taking the net income of 3,492 by revenue of 18,546 to equal .1882 which equal 18.82%. When comparing the two percentages we see that the net income has increased. When analyzing the change we see that the net income has increased due to the increase in income before taxes from 4,596 in 1996 to 2010 having 14,243 that shows an increase from 25% to 41%. Also we find a decrease in S,G, and A from 43% in 1996 to 40% in 2010. We also see a decrease in total cost and expenses in 1996 of 75% to 2010 having 59%. Finally, we see a dramatic change in other income/expenses (net) from 1996 having a -5% to in 2010 having a positive 19%.
The cause of changes reflect the selling, general and administrative expenses where the direct selling expenses are directly linked to the sale of a specific unit and indirect selling expenses that cannot be directly linked to a specific unit and the general and administrative expenses include other decreases show that there was an decrease in spending in 2010. The changes reflect the increase in other income and expenses dramatically and increase in income before taxes. The ending retained earnings increased significantly that result in having an increase of net income and increase of the beginning balance of retained earnings. Coca-Cola Common Size Balance Sheets for December 1996 and 2010
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1996%2010%
Assets
Current Assets
Cash and Equivalents$1,658 10%$11,511 16%
Receivables$1,641 10%$4,430 6%
Inventory$952 6%$2,650 4%
Other$1,659 10%$478 1%
Total Current Assets$5,910 36%$21,579 30%
Productive Assets
Property, Plant, and Equipment$5,581 $21,706
Accumulated Depreciation($2,031)($6,979)
Net Productive Assets$3,550 22%$14,727 20%
Other Assets$6,701 41%$36,615 50%
Total non-current assets$10,251 $51,342
Total Assets$16,161 $72,921
Liabilities And Shareholders’ Equity
Liabilities
Current Liabilities
Accounts Payable$2,972 18%$2,160 3%
Current Debt Due$3,397 21%$9,376 13%
Other$1,037 6%$6,972 10%
Total Current Liabilities$7,406 46%$18,508 25%
Long-Term Liabilities
LT Debt$1,116 7%$14,041 19%
Other LT Liabilities$1,182 7%$5,108 7%
Deferred Income Taxes$301 2%$4,261 6%
Total LT Liabilities$2,599 16%$23,410 32%
Total Liabilities$10,005 62%$41,918 57%
Shareholders’ Equity
Common Stock$1,916 12%$880 1%
Treasury Stock($10,320)-64%($27,762)-38%
Retained Earnings$15,127 94%$49,278 68%
Equity Adjustments($567)-4%($1,450)-2%
Capital Surplus$10,057 14%
Total Shareholders’ Equity$6,156 38%$31,003 43%
In analyzing Coke’s Common-size statements the assets, liabilities, and shareholders’ equity have changed from 1996 to 2010. The productive assets of property, plant, and equipment changed dramatically in 1996 they were 5,581 to 2010 an increase to 21,706. In total current assets there was a increase in 1996 from 5,910 to in 2010 21,579. Another significant change is in long term debt in 1996 of 1,116 to in 2010 an increase to 14,041. Also an important figure to note is in the retained earning in 1996 they were 94% (15,127) to 2010 68% (49,278).
Lastly, the treasury stock had -4% in 1996 compared to 2010 having -38%. Include: a) mix of assets, b) split between current assets and fixed assets, c) mix of debt, d) split between current liabilities and LT liabilities, capital structure (i.e., debt and equity), e) profitability at all levels a)Mix of assets:
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Total assets increased: 1996=$16,161 to 2010=$72,921
Other assets increase: 1996=$6,701 to 2010=$36,615
Total noncurrent assets increased: 1996=$10,251 to 2010=$51,342 b)Current assets:
Cash and equivalents increase: 1996=$1658 to 2010=$11,511
Coke had more assets in their account in 2010 than they had in 1996 Accounts Receivables increase: 1996=$1,641 to 2010=$4,430
Coke should expect $4,430 paid to them by customers who have purchased goods or services on credit. Inventory increased: 1996=$952 to 2010=$2,650
Coke has raw materials and work in progress and finished good accounting for $2,650 in 2010. Other current assets decreased: 1996=$1,659 to 2010=$478
Coke has items as pre paid expenses
Total current assets decreased: 1996=$5,910 to 2010=$21,579
Fixed assets:
Property, plant, and equipment increase: 1996=$5,581 to 2010=$21,706
Coke invested in assets such as real estates or machinery more in 2010 than in 1996 Accumulated Depreciation increased: 1996=$(2031) to 2010=$(6,979) Because Coke invested in fixed assets the depreciation increased from 1996 to 2010 c)Mix of debts
Total current Liabilities percent decreased: 1996 46% to 2010 25%
Cokes currents liabilities decreased greatly from 1996 to 2010 meaning that their short term debt, account payable, accrued liabilities and other debts decreased. d)Total liabilities percentage deceased: 1996=62% to 2010 57%. Long term liabilities increased: 1996=$1,116 to 2010= $14,041
Coke may have future employee benefits such as pensions and lease payments and require payments in the future. e)Profitability at all levels
Shareholders equity increased: 1996 $6,156 to 2010=$31,003
Coke’s net worth is greater in 2010 than in 1996.
