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Strengths and weaknesses of financial ratio analysis
Background of coca cola company
Background of coca cola company
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Industry General Description The Coca-Cola Company - American multinational corporation operates in a nonalcoholic segment of Beverage Industry. The history of the industry goes back to the 17th century, when the first marketed soft drink came to the Western Market. The Beverage Industry product portfolio consists of soft drinks, carbonated beverages, and alcoholic beverages. Kinds of drinks in a non-alcoholic segment varies a lot and includes such beverages as tea, coffee, juices, carbonated drinks, water. The Beverage Industry is a highly competitive one and tends to be dominated by a few major actors. The two biggest worldwide known and most influential companies are Coca-Cola and Pepsi. The limited growth opportunities make this competition very intense, requiring companies to follow the trends and be always aware of the competitors' progress. However, the demand for the products depends a lot on the economic conditions within the society. Those few big players enjoy the benefits of the strong loyal customer base during the growth and stability stage in the economy, whereas in times of economic difficulties customers turn to cheaper substitutes. Thus, although the key feature of the industry is that it is very difficult for a new unknown company to enter the market and compete with well-known long-established businesses, the companies should pay significant attention to the new entrants, especially in times of economic instability. Consumer tastes are also seasonal, meaning that the demand for the carbonated beverages is higher during the hot months of the year. Shifting consumer preferences bring the concern of operating uncertainty, which greatly affects pricing strategies. The large companies pay reliable dividends... ... middle of paper ... ...The chart below shows a direct comparison between the p Works Cited Coca-Cola Needs Less Fizz in Its Products to Get More in Its Stock, Yahoo Finance, 2014. Web. Industry Analysis: Beverage, Value Line, 2012. Web. Coca Cola Enterprises Hits 52-Week High, Yahoo Finance, 2014. Web http://biz.yahoo.com/e/140220/dps10-k.html http://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=DPS&itx http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Analysis/Income-Taxes#EITR http://www.stock-analysis-on.net/NYSE/Company/Coca-Cola-Co/Analysis/Income-Taxes#EITR http://financials.morningstar.com/income-statement/is.html?t=PEP®ion=usa&culture=en-US http://www.reuters.com/finance/stocks/companyProfile?symbol=KO.N http://www.pitt.edu/~cls181/engineeringcompanies.html http://bizfinance.about.com/od/yourfinancialposition/ss/financial-ratio-analysis-tutorial-101_7.htm
Monster Beverage Corp. shows that they understand their customers’ needs. They are a successful business with higher growing revenue every year. Their revenues did decrease during the economy’s recent recession (2008...
The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten brands sold. Colas are the dominant flavor in the U.S carbonated soft drink industry; however, popularity for flavored soft drinks has grown in recent years. The changing demographics of the U.S population have been an important factor in the growing popularity of these flavored soft drinks. The possible impact of this factor will be addressed later in the case.
aspects: Carbonated soft drinks industry's structure, evaluation of driving change factors in this industry and finally analysis of key strategic factors it is faced with.
(iv) Substitute Offerings: High but actively reshaped to Low – However, Soft drink vendors reshape this force by improving availability and convenience of acquiring their products through vending machines, fountain sales and convenience channels. In recent years, soft drink vendors have diversified into new products that threaten to take share away from traditional sugar sodas, (diet soda, fruit juices, bottled water).
This is all thanks to the company's ability to stay competitive in the world marketing competitive environment. "The competitive environment, also known as the market structure, is the dynamic system in which your business competes. The state of the system as a whole limits the flexibility of your business."-Stan Mack(CHRON) The ability to stay flexible in todays market has enabled company to create revenue through adapting to changing views of the consumers. Although the first thought when hearing the Coca Cola name is still soda, the trend of non-carbonated and sugary drinks is the most revenue producing products of the company today. Don't get it wrong, the company still has 4 name brand sodas that bring in over $1 billion apiece in revenue annually, but the most substantial revenue is the companies investment in non-carbonated and sugar-based drinks. Products such as Smart Water, Vitamin Water, and Fairlife Superkids(milk) are among the nearly 400 products produced by the company that are not soda-related.(Fortune) So even with soda sales at the 30-year low, The Coca Cola Company continues to adapt to the ever-changing competitive market environment and sustain its household name and
Analysis of the Coca-Cola Company The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Company markets many of the world's top soft drink brands, including Coca-Cola, Diet Coke, Sprite and Fanta. Through the world's largest and most pervasive distribution system, consumers in nearly 200 countries enjoy the Company's products at a rate of more than one billion serving a day.
Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year. Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share.
In 1886 Coca-Cola was first formulated and in 1893 Pepsi-Cola was invented. It was during the time of the Great Depression when the competition between these two products truly began. Pepsi cut the price of its 12-oz bottle to 5 cents – which is what Coke was charging for their 6.5-oz bottle. During this time Pepsi competed directly with Coke and marketed to consumers that they were “twice as much for a nickel, too.” The most intense competition between the two CSD companies occurred during the years of 1975 - 1990s where Coke and Pepsi fought over the $66 billion industry. As CSD consumption rose steadily year after year, both Coke and Pepsi were achieving average annual revenue growth of 10%. The production and distribution of CSDs involved concentrate producers, bottlers, retail channels, and suppliers; concentrate producers and bottlers being the most prominent of these four participants. A concentrate producer’s most significant costs were for advertising, promotion, market research, and bottler support. The bottling process was capital-intensive and involved high-speed production lines that were interchangeable only for products of similar type and size.
The beverage industry is highly competitive and presents many alternative products to satisfy a need from within. The principal areas of competition are in pricing, packaging, product innovation, the development of new products and flavours as well as promotional and marketing strategies. Companies can be grouped into two categories: global operations such as PepsiCo, Coca-Cola Company, Monster Beverage Corp. and Red Bull and regional operations such as Ro...
While there are only few new markets to expand into, the market for soft drinks is globally well exploited. There are few factors that suggest trivial forecast for growth. However, demand continues to grow. Before the end of the current decade, the soft drinks market is expected to surpass the alcoholic beverages market, which constantly has shown lower growth than the beverage industry market in general. While product innovation has stimulated some growth within the industry during the 1990s by introducing new plastic bottles, innovation is slowing within the soft drinks industry recently.
However, Coca-Cola is primary recognized globally and has always exceed according to a 2014 Nasdaq article, “Coke holds 42% of carbonated drinks while Pepsi Co. holds 30 (2014).”
Experimentation with the new market for carbonated beverages on the decline coke has done experiments in new flavors and healthier alternatives to try to stay competitive. As well as investing in “Keurig Green Mountain is a K-Cup maker but has a new Keurig Cold that can deliver Coca-Cola through the new system.” (Cooper, 2014)
The purpose of this report is to compare financial reports from the two largest soft drink manufacturers in the world. The Pepsi Co. and Coca Cola have been the industry's leaders in their market since the early 1900's. I will use relevant figures to determine profitability, and break down key ratios in profitability, liquidity, and solvency. By breaking down financial statements, and converting them to percentages and ratios, comparisons can be made between competitors regardless of size.
Coca-Cola is a company with sustainable competitive advantage. The company is innovative and has an extensive business model with boasts of a sustainable distribution network. The company was incorporated in the late 1800s to commence the production of a sweet fizzy beverage that has become the world's most known brand. Presently, the company is still on an upward trajectory as it remains one of the world's most sought-after stocks. The company's competitive advantage has shown resilience and sustainability over the years.
The Coca-Cola company was founded in 1886 by John Pemberton, a Civil War veteran and Atlanta pharmacist. He was inspired by his curiosity as he stirred up a fragrant, caramel-colored liquid that he brought down to a place called Jacobs’ Pharmacy. There he added carbonated water and let several customers sample the new concoction. Jacobs’ Pharmacy put it on sale for five cents a glass and named it Coca-Cola. This “inspired curiosity” has now grown to be the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. In 1906 Coca-Cola opened bottling plants in Canada, Cuba, and Panama. Today they produce nearly 400 brands in over 200 countries. More than 70% of their income comes from outside the U.S. (1). This paper will focus on an analysis of operations of the statement of cash flow reports and a vertical and horizontal analysis of the consolidated balance sheets. Also an analysis of the global financial condition of the Coca-Cola Company and the value of goodwill and other intangible assets will be discussed.