Management Discussion

Respond to two posts made by other students.

1. “What does Coca-Cola’s debt to equity ratio tell you about the company? Minimum of 3-4 sentences”

Coca Cola has a healthy debt to equity ratio of 1.53%. This tells us that Coca Cola is a healthy company not over leveraging themselves financially. Investors will see that this company relies on debt to finance most of its operations and will be likely to invest in Coca Cola.

“What does Coca-Cola’s earnings per share tell you about the company? Minimum of 3-4 sentences”

According to their most recent 10-K filing, Coca-Cola has an EPS of $2.25. This was an increase of $2.26, 26.6%, in the prior year. This is a strong indicator that Coca-Cola has great value and is a more profitable company that can distribute profits back to investors. A well known competitor of Coca-Cola, Pepsi, had an EPS of $5.49, -7.23%, decrease year-over-year. This shows that Coca-Cola to be a better investment than Pepsi.

Based on what can be inferred about the financial health of Coca-Cola, reference your answers to your calculations above, do you think that Coca-Cola would be a good company in which to invest? Minimum of 2-3 sentences

Based on my analysis, Coca-Cola is a strong and financially healthy company. This statement can be backed up by my calculations as shown above which show Coca-Cola has a healthy balance of debt-to-equity which allows them to operate at a stable leverage ratio. Compared to their main competition in the beverage industry, Pepsi, Coca-Cola strongly outperforms their marketspace by a considerable margin. Coca-Cola should gain a lot of investor attention this fiscal year based off of their financial health compared to their industry.

2. What does Coca-Cola’s debt to equity ratio tell you about the company? Minimum of 3-4 sentences

The debt-to-equity ratio shows how a company is leveraged. Coca-Cola has a ratio greater than one, so they prefer to finance growth through debt rather than equity. This reflects a decrease in the debt-to-equity ratio since Coke had both more debt and less equity the previous year.

What does Coca-Cola’s earnings per share tell you about the company? Minimum of 3-4 sentences

Earnings per share is a metric used to determine a corporation’s value. It shows the profitability of the firm. In this case, Coke creates $2.26 in income for every share it has outstanding. In the previous year, Coke had an EPS of $1.80. Therefore, Coca-Cola is increasing its profitability.

Based on what can be inferred about the financial health of Coca-Cola, reference your answers to your calculations above, do you think that Coca-Cola would be a good company in which to invest? Minimum of 2-3 sentences

Overall, Coca-Cola is in good financial health. They may be over-leveraged regarding the debt-equity ratio. However, this should not be a concern, especially since the ratio has improved from the previous year. All profitability metrics have also shown improvement, and they are a long-standing company. Therefore, Coco-Cola would be a good company in which to invest.