Company coca cola
Understanding the Annual Report and 10K (Note: Show your computations. If a ratio does not apply to your company, please state this in the report and provide a reason why).
1. How does current year’s sales revenues and net income (i.e., earnings) compare with that in previous years? Compute the annual growth rate for the last five years for both sales revenue and net income. This may require you to examine financial highlights of the company in the annual report of research financial information from prior years. [For example, if revenues in Year 1 and 2 are 100 and 125 respectively, the growth rate from Year 1 to Year 2 is 25%]. What earnings trend do you observe and what factors may be causing this trend?
2. Calculate the gross margin percentage (Gross Profit divided by Net Sales) for each period presented in the income statement. What trend in gross margin do you observe and what factors may be causing this trend over the past three years?
3. Where are the resources of your company employed? Figure this out by calculating a percentage of the total assets for each asset displayed in the balance sheet. The total should equal 100%. What are the three largest assets as a percentage of the total? How are these assets used to produce revenues?
4. What method(s) of depreciation does your company use? Does the company use the same method of depreciation for all types of long-lived assets? Where did you find this information?
5. What method(s) does your company use to value its inventory? Compute the inventory turnover ratio for the last two years. This may require you to look up the financial statements for the most recent three years in order to compute average inventory. Comment on the trend observed.
6. Examine the financial structure of the company. Do this by calculating the amount of total liabilities
and stockholders’ equity as a percentage of total assets. The total should equal 100%. Which is the
primary source of funding for assets and what conclusions can you draw from this?
7. Identify the major components of stockholders’ equity by examining the Statement of Stockholders
Equity. What types of accounts and transaction resulted in major changes (both increases and
decreases) in the Stockholder Equity accounts during the most recent year?
8. The 10K provides some important information to interested parties, including the stockholder, which
is not found in the Annual Report. Briefly explain the nature of the some of this additional
information contained in this SEC filing. Include at least two items of interest.
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