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The ratio of debt is always on a higher side as compared to equity. In the year 2012, the equity
is almost half of the debt. In the year 2013, the equity has increased by .03% and the debt has
decreased by .03%. In the subsequent years i.e. 2014 & 2015 the debt has decreased, and the
equity has increased subsequently. In the year 2016 again, the equity and debt has increased
and decreased by .03% respectively. 2016 is the year in which the company has raised equal
amount in terms of percentage both from the equity and the debt. In the previous year the
company has raised more capital from debt and less from equity.
LEVERAGES
The above calculations reveal a financial leverage of 1.09 which means that its incomes will
be relatively stable and will not fluctuate much. The operational leverage of 0.21 reveals that
the firm can cover its fixed costs quite well.
WACC 5.55%
The above calculations show that the cost of capital for Coca-Cola stand at 5.55% which
means that for every $1 raised by Coca-Cola from investors, it will have to pay-back $0.05 in
return to its investors.
DIVIDENDS
Looking at the above calculated data, we can observe that Net Income/ Share is decreasing
every year. And this is impacting the DPS. DPS has only increased in 2015 by 68.11% otherwise
it has only kept decreasing. Company is paying a significant amount of its Net Income as its
Pay-out Ratio is above average and in some cases significantly higher (in 2016).
2017 2016
COGS per day = COGS/365 47.41 45.11
The operating cycle of 176 days shows that it takes 176 days for the firm to convert its cash
into products and realize the money again by selling the product to the customer.
Here, DIO (Days Inventory Outstanding) represents the number of days taken to turn
inventory into sales. DSO (Days Sales Outstanding) represents the number of days it takes to
collect cash from sales. DPO (Days Payable Outstanding) represents the number of days it
takes the firm to pay its suppliers for the inventory.
The Current Ratio represents a firm’s ability to meet its short-term as well as long-term
liabilities while Quick Ratio value represents a firm’s ability to meet its short-term liabilities.
Here, Coca-Cola’s Current ratio of 1.33 shows a healthy state of the firm and its capability to
meet its liabilities but the Quick ratio is on the lower side at 0.66 which means that the firm’s
liquidable sources are not enough to meet the short-term liabilities.