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http://nacsonline.com/NACS/NEWS/daily/pages/ND1119097.aspx
http://www.marketwatch.com/story/the-coca-cola-company-and-coca-cola-
enterprises-strategically-advance-and-strengthen-their-partnership-2010-02-
25?reflink=MW_news_stmp
Part C: Income Statement
The Coca-Cola Company has a multi-step Income Statement because it
includes the Gross Profit amount that is stated after net revenues and Cost
of Goods Sold.
Income Statement data as follows:
Fiscal Year 2007 2008 Difference
(amounts stated in
millions of dollars)
The data shows overall growth with one large exception, the net income decreased in 2008.
After more analysis, I noticed the net equity on the income statement for 2007 was a gain of
$668 million. In 2008, due to the recession, they reported a loss of $874 million.
Part C: Balance Sheet
Fiscal Years Total Total
(amounts in
millions of dollars)
Stockhold + Liabilities = Total Assets
(current liabilities
ers’ Equity +other liabilities)
In both 2007 and 2008, net income has been greater than the cash flows provided for
operating activities.
In 2007, The coca-cola company invested a substantial portion of their cash flows (almost
6 billion dollars!) towards acquiring other bottling companies such as Glaceau. In 2008,
displaying a clear retraction in investing activities, The company shifted their focus of
investment toward Plant, Property, and Equipment increasing from $1,648 in 2007 to
$1,968 in 2008.
The Coca-Cola Company uses Long-Term Loans to lower their costs of overall capital,
which allows for a larger return on Stockholder Equity. The changing interest rates can
have an adverse effect on their strategy. Their long-term debt was rated A+ by Standard
and Poor’s, showing that they are in a good financing position in 2008.
Cash flow has increased in both 2007 with an increase of $1,653 million and in 2008 an
increase of $608 million.
Part D: Accounting Policies
Revenue Recognition: Coca-Cola recognizes revenue when the title of the company’s
products are transferred to Partners, resellers, retailers, and other customers.
Customer incentives are deducted from revenue.
Cash and Equivalents: Marketable Securities that are highly liquid and reach maturity
in less than 3 months from purchase are considered equivalent to cash.
Plant, Property, and Equipment: All Plant, Property, and Equipment are stated at cost.
The Depreciation is recorded using the straight-line method. The company generally
follows such guidelines: Buildings and improvements 40 years or less, Machinery and
Equipment 15 years or less, Containers 10 years or less.
Inventories: The inventories consist of mostly raw materials, packaging and finished
goods.
Cost Calculations: Cost is calculated on the average cost method and the First in First
out Method (FIFO), Inventories are valued at lower of cost or market.
Part D: Accounting Policies Page 2
Topics in Notes to Financial Statements: