Financial and Management Accounting Assignment Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Coca Cola Beverages Company is one of the largest companies in the world in the industry of beverages. It is the biggest and the leading marketer of the soft drinks and producer of soft drinks in the world after PepsiCo (Interbrand, 2010). The largest consumption rate of the soft drinks is of the soft drinks of Coca Cola which are consumed at about 600 million times per day and there has been consistent increase in this rate.

The company has achieved many milestones in its history and the company does not looks back on its past glories instead the company has always focused on the future and accepted all the challenges (Hays, 2004). The management of the company has always focused on increasing the market share of the company by entering into new markets. Also, if we talk about the world’s largest and the biggest distributor of syrup then again the name of Coca Cola Beverages Company is on the top.

Over the period of past 5 years, the stock price of the company had reached to a high level of $ 63.81 and a low price of $ 39.10. The company had stayed in the same ranged over the past 5 years which shows that sales revenues of the company have been consistent. Over the years, the company had also been enjoying a high price earnings ratio which shows that the confidence regarding the future prospects of the company was optimistic and they made significant investments in the company. Furthermore, the net income of the company has just slightly increased from 2013 to 2014 due to high costs of aluminum and sugar and the weakening of the US economy was has now much improved.

Performance

The recent performance of the company had been declining slightly. It was recently reported by the Wall Street Journal that most of the consumers had now started to become more health conscious and were moving away from GMOs, Junk Food and Soda. As a result of this, the sales of Coca Cola had started to decline in terms of the sales growth rate which is further creating financial difficulties for the company.

In response to that, the management of the company had taken actions to reduce their annual budget by around $3 billion by cutting around 2000 jobs (Isdell, 2011). Furthermore, the executives of the company are not able to travel in limousines and they have to cut their most expensive parties also. One of the recent reports had identified that 10% of the total corporate staff at Coca Cola Beverages Company is facing the risk of losing their jobs at the global regional offices and Atlanta headquarters.

The relevancy of Coke has been reducing over the years and the trend have been changing and new trends have been emerging where the consumers are giving more importance to healthfulness and since the health problems associated with artificial drinks have increased the customers of the company are moving away from all such artificial drinks and even also the low calorie diet drinks. In 2013, the management of the company had said in an advert that the company has a problem with the sugar which was leading towards the problem of obesity (Louis, 2010). Therefore, as a result of these challenges, the performance of the company has been deteriorating slightly. However, many campaigns and food programs have been initiated by the management of the company to counter all such problems and maintain the leading brand image of the company around the world.Financial and Management Accounting Assignment case Solution

Ratio Analysis

The ratios have been calculated for the company for the past three years. The direct competitor of Coca Cola Beverages Company is Pepsi. Therefore, Pepsi has been chosen as the benchmark company and the ratios of both the companies have been analyzed as follows in order to identify the performance of Coca Cola Beverages Company in comparison to its benchmark company. A range of ratios have been calculated for the company regarding the profitability, liquidity, efficiency and leverage position of Coca Cola Beverages Company. These are evaluated and analyzed below:

Profitability ratios

A number of profitability ratios for the company have been evaluated which include the return on capital employed, return on equity, net profit margin, gross profit margin and operating profit margin ratios. First of all, if we look at the return on capital employed ratio for Coca Cola Beverages Company for the past three years, then it could be seen that this ratio had declined by 1% from 2013 to 2014 which might be due to the decline in the sales of the company, whereas on the other hand the return on capital employed for Pepsi Company has been increasing significantly over the three year period. This shows that the management of Coca Cola Beverages Company has not been able to earn a good return on the invested capital of the company. This might be due to the recent negative publicity regarding the products of the company and the sugar problem..................

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