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Financial Analysis - Chapter 9 - Annisa Nabila Kanti - 155020307121021

Coca-Cola's estimated income statement and ratios for Year 3 show net sales increasing 1.02% to $20.297 billion and net income of $3.802 billion. The gross profit margin is estimated to remain around 70% while selling, general and administrative expenses are projected to be 39.28% of net sales. The estimated cash flow statement for Year 3 shows $4.636 billion from operations but -$1.200 billion for capital expenditures and -$4.783 billion for dividends, resulting in a projected cash shortage of $1.347 billion. Based on the initial projection, Coca-Cola will require approximately $1.5 billion in external financing to maintain a cash balance of around $

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436 views3 pages

Financial Analysis - Chapter 9 - Annisa Nabila Kanti - 155020307121021

Coca-Cola's estimated income statement and ratios for Year 3 show net sales increasing 1.02% to $20.297 billion and net income of $3.802 billion. The gross profit margin is estimated to remain around 70% while selling, general and administrative expenses are projected to be 39.28% of net sales. The estimated cash flow statement for Year 3 shows $4.636 billion from operations but -$1.200 billion for capital expenditures and -$4.783 billion for dividends, resulting in a projected cash shortage of $1.347 billion. Based on the initial projection, Coca-Cola will require approximately $1.5 billion in external financing to maintain a cash balance of around $

Uploaded by

Annisa Nabila Kanti
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© © All Rights Reserved
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Problem 9.

A.
Coca-Cola
INCOME STATEMENT Year 3 Estimation Year 2 Year 1
Net sales 20,297 20,092 19,889
Cost of goods sales 6,106 6,044 6,204
Gross profit 14,191 14,048 13,685
Selling general & administrative expense 7,972 7,893 9,221
Depreciation & amortization expense 863 803 773
Interest expense -66 -308 292
Income tbefore tax 5,422 5,660 3,399
Income tax expense 1,620 2,692 1,222
Net income 3,802 3,969 2,177
Outstanding shares 3,491 3,491 3,481

RATIOS
Sales growth 1.02% 1.02%
Gross profit margin 69.92% 69.92%
Selling general & administrative expense 39.28% 39.28%
Depreciation (depn exp/pr yr PPE gross) 12.14% 12.14%
INT (int/pr yr LTD) -5.45% -5.45%
Tax (Inc Tax/Pre-tax inc) 29.88% 29.88%

B.
Based on our initial projection of Coca-Cola's balance sheet,it appears that the company will require approximately $1.5billion
Statement of Cash Flows Year 3 Estimation
Net income 3,802
Depreciation 863
Accounts receiveable -19
Inventories -11
Accounts payable 38
Income taxes -36
Net cash flow from operation 4,636

CAPEX -1,200
Net cash flow from investing activities -1,200

Long term debt 0


Additional paid in capital 0
Dividens -4,783
Net cash flow from financing activities -4,783

Net change incash -1,347


Beginning cash 1,934
Ending cash 587

uire approximately $1.5billion of external financing in Year 3. This amount will yield a cash balance of approximately $2 billion, consistent w
ximately $2 billion, consistent with prior years.

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