FINANCIAL ANALYSIS ON COCA-COLA

INTRODUCTION

Coca-Cola, a global beverage icon, stands as a paragon of enduring success and market
dominance in the beverage industry. With its rich history dating back to 1886, Coca-Cola has
evolved into a transcendent brand recognized across continents. This financial analysis
endeavors to delve into the intricate financial landscape of Coca-Cola, scrutinizing key
metrics, performance indicators, and strategic decisions that underpin its fiscal prowess. By
examining financial statements, market trends, and competitive positioning, this analysis
aims to provide insights into Coca-Cola's financial health, growth prospects, and potential
avenues for sustained profitability in the dynamic global marketplace.

OBJECTIVE

 Operation Analysis
 Revenue Analysis
 Throughput Accounting
 Pareto Analysis
 ABM Analysis
 IRR (Internal Rate Of Return)
 NPV (Net Present Value)
 Profitability Index
 ARR (Annual Rate Of Return)

SPARKLING SOFT WATER &

JUICE & DAIRY AND

Since, the company is much diversified it is not possible to get data from all subsidiaries of
200+ so I have done the analysis based on the Region contribution with the help of investors
publication of the company

NET OPERATING REVENUE STATEMENT (IN MILLION $)

 Growth: All of Coca-Cola's reportable segments showed positive net operating revenue
growth in 2023 compared to 2022. This includes Europe, Middle East and Africa, Latin
America, North America, and Asia Pacific.
 Top Regions: In 2023, North America was Coca-Cola's highest grossing region at $16,774
Million, followed by Europe, Middle East and Africa at $8,078 Million and Latin America at
$5,830 Million
 Overall: the company Shown a total of 6% Growth Compared to 2022

REVENUE ANALYSIS
Revenue on the Rise

Coca-Cola's income statement indicates growth in net operating revenues. This suggests the
company is successfully selling more products or increasing prices. It could be due to factors
like successful marketing campaigns, new product launches, or rising consumer demand for
their beverages.

Maintaining Profitability Despite Cost Pressures

The data reveals an increase in the cost of goods sold. This could be due to rising costs of
ingredients, packaging, or transportation. However, the increase in gross profit suggests
Coca-Cola is managing these pressures effectively. This might be achieved through
operational efficiencies, cost-saving measures, or a strategic pricing strategy.

Operating Expenses Under Scrutiny

The income statement highlights a rise in both SG&A expenses and other operating charges.
This could indicate increased investments in marketing, advertising, or research and
development. The significant rise in other operating charges warrants further investigation. It
could be due to one-time expenses, restructuring costs, or legal fees.

Overall Financial Health

Despite the cost pressures, Coca-Cola's income statement shows a healthy increase in net
income attributable to shareholders. This suggests the company is efficiently managing its
expenses and potentially benefiting from other income sources like investments.

THROUGHPUT ACCOUNTING

Unlike most companies that prioritize performance metrics like variance analysis, Coca-Cola
might benefit from implementing a throughput accounting system. Throughput accounting
excels at identifying bottlenecks in production and service delivery. This approach, alongside
variance analysis, would provide a more comprehensive picture of potential issues within
Coca-Cola's operations.Imagine applying such an analysis across Coca-Cola's various
departments and subsidiaries. Each might reveal its own unique challenges. However, a
 deeper analysis could potentially uncover a common thread – a recurring issue impacting all
departments.

BOTTLENECKS

 Supply Chain: This is a common bottleneck for many companies, and Coca-Cola is no
exception. Delays at borders due to customs checks or shortages of ingredients can slow
down production [2]. There can also be issues further down the supply chain, such as glass
bottle production limitations [3].
 Manufacturing Capacity: Coca-Cola relies on a network of bottlers around the world. If a
particular bottling plant is running at full capacity, it could create a bottleneck for that region
[4].
 Distribution: Labor shortages or logistical challenges in getting the final product to stores
and consumers could limit throughput.
It's important to consider the current economic climate as well. For instance, during the
COVID-19 pandemic, Coca-Cola CEO James Quincey highlighted border slowdowns as a
key bottleneck due to health screenings and policy changes

SUGGESTED MEASURES

Supply Chain:
 Diversification: Source ingredients and packaging materials from multiple suppliers in
different regions to reduce reliance on any single source and minimize disruptions due to
local shortages or delays.
 Inventory Management: Utilize data analytics to optimize inventory levels and predict
potential shortages, allowing for proactive purchasing and avoiding stockouts.
 Sustainable Packaging: Invest in reusable or refillable packaging solutions to reduce
reliance on single-use materials and the environmental impact of transportation.

Manufacturing Capacity:
 Resource Optimization: Implement lean manufacturing practices to minimize waste and
energy consumption during production. This could involve optimizing bottle design for
weight and material usage, as well as exploring energy-efficient machinery.
 Circular Economy: Embrace closed-loop recycling systems for plastic bottles and glass.
This reduces reliance on virgin materials and creates a more sustainable production cycle.
 Automation & Scalability: Invest in automation technologies to increase production
capacity without a significant increase in labor needs. This allows for scaling production up
or down based on demand.

Distribution:
 Sustainable Logistics: Explore alternative transportation methods with lower environmental
impact, such as electric vehicles or rail transport for long distances. Optimize delivery routes
to reduce fuel consumption.
 Demand Forecasting: Utilize data analytics to predict regional demand fluctuations and
optimize distribution networks to deliver products efficiently while minimizing wasted
transportation.
 Local Partnerships: Partner with local distributors and retailers to reduce reliance on long-
distance transportation and build stronger community relationships.

CONSTRAINS

 Cost: Upfront investment needed for new suppliers, data analytics, packaging, machinery,
electric vehicles, etc.
 Complexity: Managing new suppliers, implementing new systems, training for automation.
 Time: Finding reliable partners, developing new systems, waiting for return on investment.
 Risk: New technologies or partnerships might not work as planned.