Analysis of Coca-Cola Company

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Coca-Cola has a geographical footprint in more than 200 countries across the world. The company has an established presence in relatively matured markets of North America and Europe and is also an established name in emerging economies of Asia, which provide a huge potential market compared to the developed regions. Coca-Cola's presence in several geographical regions will ensure diversification.

Coca-Cola's effective participation in high growth markets has been its driver of growth in recent times. In FY2014, the unit case volumes outside the US accounted for 81% of the company’s worldwide unit case volume. Countries outside the US that had the largest unit case volumes in FY2014 were Mexico, China, Brazil and Japan, which together represented 31% of Coca-Cola’s worldwide unit case volume. During the same period, 74% of the non-US unit case volume was attributable to sparkling beverages and the remaining 26% to still beverages.

III. There are some current strategic issues that Coca-Cola facing.

1. After doing the financial analysis about Coca-Cola, especially the Captial Structure and investment.

1)Investment Recommendations

stock analysis and financial projections appear doom. For example, the company expects a negative growth in sales in the next five years. By 2021, the sales growth rates are expected to be (16.15%). The shrinking of sales level at the company will have a negative impact on the net operating revenues and the net earnings of the company which indicates that the company does not have a solid financial foundation. Other indicators of the adverse financial performance of KO include the projected decline in the cash dividends. In 2016, the cash dividends were recorded to be $5,224.57 million, and it is expected to fall to $3,590.28 million in 2021.

22) The company should reduce the amount of debt used in the financing of the company's investments. It is recommendable that the company should start the repayment of the bonds and refinancing of its loans to ensure that the debt levels are lowered. Unsustainable debt levels would undermine the ability of the company to finance its expansion and normal operations.

The average cost of common equity was less than 10 percent, which is 8.713%. The cost of common equity is close to the weighted average cost of capital (WACC), which is 7.820%. Coca-Cola Company should reduce the amount of debt capital compared to the equity capital. The failure to reduce the debt capital would affect the solvency level of the company in the long term.

Coca-Cola Company has the highest leverage ratio compared to its closest rival in the industry. Coca-Cola Company has higher liabilities that the equity level. It shows that the company does not have the ability to pay for its debts. The management should improve the leverage ratio through raising additional equity to finance the expansion and operations of the company. has negative sales growth levels that do not support the long-term financial performance.

2. Considering the current economic environment, Coca-Cola faced the threats:

1) Regulations that affect sales at certain points of sale

Coca-Cola sells a range of beverage products that contain high amounts of sugars and artificial sweeteners. Nowadays, healthy lifestyle are more and more respected, but such products provided by Coca-Cola are considered to be contributing to the growing prevalence of overweightness and obesity. As knowledge of the impact of obesity, especially in childhood, is becoming more prevalent, consumers, public health officials and government officials are growing more concerned about the nutritional content of foods and drinks consumed by children. In order to protect public health, governments of several countries are taking measures to restrict junk food advertisements, especially those targeting school children. In the recent times, emerging markets which is regarded as important potential market to Coca-Cola have followed suit. While Coca-Cola expects to draw more sales from the emerging economies, such regulations, especially affecting a large and potential consumer segment consisting of school children will impact the company's growth in these regions. In the future, possible new taxes on sugar-sweetened beverages and additional governmental regulations concerning the marketing, labeling, packaging or sale of Coca-Cola's beverages may reduce demand for the company's beverages, which could affect its profitability.

2) Rising labor wages in the US

It is a main issue faced by most of many US company. Labor wages have been rising in the US. In recent times, tight labor markets, increased overtime, government mandated increases in minimum wages and a higher proportion of full-time employees are resulting in an increase in labor costs. With rising labor wages in the US, KO’s profit will be decreasing and lose competitiveness.

However, the KO’s global strategy has evolved over the years. In the future, most of value-added job will be back to US, on the other hand, more labor -intensive jobs will be moved overseas with the global strategy. In addition, more mature automated production lines will reduce labor costs。

Possible solutions to those issues.

1)Maybe for the problems mentioned above, Coca-Cola has opportunities.

This growing market for healthy and nutritious food and beverages is proving to be an opportunity for several food and beverage manufacturers like Coca-Cola that are aligning their strategies in line with the changing consumer preferences. Coca-Cola does not need to give up its own original product, but health space may be the new increasing point of Coca-Cola, since it had huge experience of food and drinks.

Coca-Cola are making their presence felt in the newly-emerging healthy beverages market space. The company offers low- or no-calorie beverage options in every market it operates in. It also provides nutrition information, featuring calories on the front of all of its packages.

Therefore, with a strong focus on providing healthier options to its customers, Coca-Cola can further strengthen and modify its product offerings. This, in turn, helps the company to better respond to the changing preferences of its customer base. As a result, Coca-Cola will be well-positioned to capitalize on the various opportunities created by the global health and nutrition food and beverages market in future.