Question

EXHIBIT 14-26 Summary of Analytical Measures Ratios or Other Measurements Method of Computation Significance Measures of short-term liquidi Current ratio ab Current Liabilities Quick ratio A measure of short-term debt Current Liabilities A measure of short-term debt tes the cash generated by operations Indicates ability to cover currently maturing Indicates how quickly receivables are collected Indicates in d ons Average Inventory to sell the a 365 Days Days to Sell I Free cash flow Net Cash from Debt ratic ion A1

Answer 1

To describe the above question I choose the Coca-Cola Company. And the annual financial report of the company of period 2017, 2016 and 2015.

(A)About the business:-

The Coca-Cola Company is the world's largest beverage company. It own or license and market more than 500 nonalcoholic beverage brands, which are group into the following category clusters: sparkling soft drinks; water, enhanced water and sports drinks; juice, dairy and plant-based beverages; tea and coffee; and energy drinks. We own and market four of the world's top five nonalcoholic sparkling soft drink brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries.

It was incorporated in September 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia corporation with the same name that had been organized in 1892.

(B)Financial Ratios

Measurements of Short-Term Liquidity:-

Current Ratio:-Current Asset/Current Liabilities

$9N3tliNYwvcAAAAASUVORK5CYII=$

Coca-Cola Co.’s current ratio improved from 2015 to 2016 and from 2016 to 2017. Which is a good sign for the company. Relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time as and when they become due. An increase in the current ratio represents improvement in the liquidity position of the firm.

Quick Ratio:-Quick Asset/Current Liabilities

Coca-Cola Co.’s quick ratio improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level. A high quick ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low quick ratio represents that the firm's liquidity position is not good.

Working Capital:-Current Asset-Current Liabilities

                                                                                     Dec 31,2017   Dec 31,2016

$R8iUbpEfnUJ9gAAAABJRU5ErkJggg==$

The company has better working capital amount in 2017 compare to 2016. Working capital is the amount of funds necessary to cover the cost of operating the enterprise.

Measurements of Profitability:-

Gross Profit Rate:-Gross Profit/Net Sales(Net Operating Revenues)

Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Coca-Cola Co.’s gross profit margin improved from 2015 to 2016 and from 2016 to 2017. As higher the gross profit ratio betters the performance of the company.

Net Income as a percentage of net sales:-Net Income/Net Sales

$+bBAgH30uBQAAAABJRU5ErkJggg==$

An indicator of profitability, calculated as net income divided by revenue. Coca-Cola Co.’s net profit margin deteriorated from 2015 to 2016 and from 2016 to 2017. The decreasing ratio shows that firm have low capacity to face adverse economic condition such as price competitions, low demand etc.

Return on Equity(ROE):-Net Income/Average Total Equity

A profitability ratio calculated as net income divided by shareholders’ equity. Coca-Cola Co.’s ROE deteriorated from 2015 to 2016 and from 2016 to 2017. As the ratio is deteriorating year by year it is not good for the equity shareholders of the company. The company can lose faith from the equity shareholders. It can affect the share price of the company.

(C)Use of Internet for Financial Informations

Internet is the third most used source preceded by print media and financial advisors . It is widely used by investors and creditors to access financial information, particularly when making investment decisions. Internet can be used to access financial information and conduct personal research in order to aid the decision-making process. Types of decisions that can be made with the use of the Internet include purchasing decisions, organizing activities, creating itineraries, and numerous other decisions that are made easier by accessing quick and reliable information on the Internet.