Interpretation And Analysis Of Company Financial Reports

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FINANCIAL STATEMENTS NEEDS TO MAKE DECISION; AN OVERVIEW

The financial statements are prepared to make decisions in the first place. It plays a key role in the creation of administrative decisions. However, the information received from these statement are not the final because no one can take the meaningful decisions on the basis of tese statements alone. (Yohn, 2001). Through the analysis and interpretation of financial statements, thedecisions made by these statements would be very beneficial. Financial analysis needs to determine the financial strength of the balance sheet and P & Loss accounts. there are mainly four types of financial statements available on which basis a financial advsor took some decision in the favor of company. Four types of financial statement are like balance sheet, profit and loss statement account, cash flow statement and the statement of changes in equity. These statements are used for the analysis purpose. There are so many methods to analyze the statements like trend analysis, vertical analysis, horizintal analysis and ratio analysis etc. from all these methods, ratio analysis is a very importantr tool to measure the analysis of all the financial statements. It is the process of creation and interpretation of the various reports that can be analyzed more clearly the financial statements and the decisions taken by such an analysis. (Udell, 2002) financial statement analysis can be determined as the relationship of doctor and patient. Doctor examine the patient and give the report on it and let the know about the diseases. So the same case is with statements analysis, analyst examine the statements and then give the report on it whether the firm is enjoying the good health or not by the help of these statement analysis. The purpose of financial analysis is to identify the information contained in the financial statements in order to judge the profitability and financial position of the company. Analysis of financial statements is an attempt to determine the importance and meaning of the data so that it can predict the financial statements, the ability future salary to pay interest and debt maturity and profitability of sound dividend policy. The financial report is the relationship between accounting numbers expressed mathematically report provides information on the financial situation of concern. These are indicators and indicators of financial health, strength, or a position of

weakness Foundation. One can draw conclusions about the real financial situation of concern with the help of reports. OVERVIEW FOR THE FINANCIAL ANALYSIS The first purpose of statement analysis is to provide the information for the purpose of decision making. 2nd essential step is to point out the the important information and then arrange it. Final step is to analyze the statements and interpret all the calculation and result it. (Douglas. 1999) ESSENTIAL FEATURES OF FINANCIAL ANALYSIS
The main feature of the analysis of financial statements is to provide the

easiest and reliable information to concerned persons.

Information which is provided by the analyst needs to classify for the

concerned persons.
Last but not least feature is to compare the conclusions with another company

or with another time frame. (Udell, 2002) Purpose of Analysis of financial statements
Through this analysis concerned person would be known about the earning

capability of the firm.

Solvency of the firm can be known. Companys sound position can be determined by these analyses Is the fir capable to meet its short and long term debts and obligation, these

analyses provide the information By comparing two firms, it provides the knowledge whether the firm is performing well or not.
Trend analysis by comparing time series analysis. Management efficiency can be determined

Management can get better information through it for taking firms decisions. Steps to make Analysis

There is a procedure which needs to be adopted by the financial analyst to interpret the financial statements.: First of all analyst should know about the reasons for making the analysis.

That analyst must know about the policies of the company and well known about the principles of accounting. After analyzing the reasons, the aim should be specified. What the firm wants to do. The purpose of that firm might be profit making. Then analyst should be well known about the sources of earning.
Before the start of analysis, all the statement should be provided to analyst for

making the analysis. Balance sheet and profit and loss accounts are very essential. (Bushe, 1997)
Make the availability of all the data relevant to financial statements. It needs to

be recognized and rearranged according to availability. Data needs to be minimized till relevant information.
Analysis can be of more than one method. So here the topic would define the

way of ratio analysis. So here the relationship would be established to evaluate the information from these statements.
After choosing the method for analyzing, interpretation needs to be very

simple and in an understandable way. Because this analysis would help in explaining the decision making of the firms.
Findings would be presented in the form of reports to the management.

RATIO ANALYSIS: It is the way for which one can analyze the statements in a very broad way. It facilitates to couching and analyzing the statements by considering the financial statements. It focuses on tangible and measurable facts which are the essentials of any firm. If one considers it that the analysis of financial statement through ratio analysis is just a comparison of two time frames or two companies it is wrong. One understands that this is just the game for the numbers on the balance sheet, income statement and any

other statement, which is wrong. It actually looks for the relationship between values and evaluate the performance of the firm and result in the future outcomes. RATIO: The ratio is the measurement of figures in terms of the other. It shows the relationship between two values which are actually dependent on each other. Calculation of the ratio is termed as the division of one figure with the other one. Two main heads must be divided with each other. The result of these ratios is termed as Times. RATIO ANALYSIS: AN OVERVIEW After analyzing the definition of ratio, ratio analysis is the process of two figures what these terms actually depict. What does it mean of these ratios? It is a method in which bundle of figures can be calculated, evaluating and interpreting. It is used for the quantitative analysis for the statement analysis. It can be used for the both of the trend analysis as well horizontal and vertical analysis. By these ratios, health and sound position of the forms can be calculated. Analysis of anything is actually based on the purposes and objectives of the things to whom analysis is required. Ratio analysis is the way to provide the insight of valuable information to concerned persons or stakeholders. Who are the stakeholders actually? Stakeholders are those who have a stake in any firm or interested parties in the firm's affairs. These parties can be outsiders like creditors and customers while the internal parts can be management and shareholders of the companies etc. Due to the financial statement analysis, stakeholders can view the performance of the company, leverage position of the company and strengths of the companies. By taking an example of leverage ratio, analysts would find that how much company is leveraged. Or if the financial advisor calculates the liquidity ratio, its results would show that how much company is liquid to set off their obligations. One thing which should be kept in mind by the financial advisor that not to be focused only on one ratio. One ratio can give wrong direction. There needs to be some set of ratio analysis of different aspects. INTRODUCTION OF COCA-COLA COMPANY

For the purpose of ratio analysis, Coca-Cola company has been chosen as a case study. Coca-cola company is the worlds largest marketer because it is dealing in the sale and promotion of alcohol free beverages in the world. In the U.K, it is also a very big brand which is distributing the alcohol free beverages to the local market. Cocacola is mainly dealing with five hundred alcohol free beverages, syrups and juices and coffees. It was originally started with the name COKE and origin was United states of America in 1944. Mr Gigga was the person who starts the business with medicines and market dominance with the soft drinks from all over the world in the twentieth century. Coca Cola started its operation in the united states of America and sold its firstly product in the same country in the year of 1886. It is the company which starts from medicines and now established as a multinational company in the world. It was registered in New York stock exchange in the year of 1919 and its sales were 1.6 billion in the twentieth century. There was a person who holds the major position in the different designations like the chairman of the board, CEO and President of the company. His names were Mukhtar Kent. Financial reporting and making the financial statement is the main part of this study. There are so many branches for this multinational brand from which there are some as follows: Europe, north and Latin America, Eurasia and Africa are some examples.

Position in the Industry: The Coca-Cola company is the well renowned multinational and worlds largest company in beverages market. There are more than 3000 beverages license has been issued for this brand all over the world In the 200 counties, there are 55000 brand names available all over the world (Olson, 2005)

 As per above mentioned pie chart, it is clearly describing the major part of the coca-cola which is 44 percent currently in the beverages market. After the coca cola industry, 31 percent share has been occupied by the Pepsi limited company. So that the main competitors of the Coca Cola limited is the Pepsi and Dr. Pepper which is also holding the 31 percent and 15 percent respectively.

Interpretation of financial statement analysis:

Liquidity Ratios:
1. Current Ratio Year 2005
C.Ratio = = C.Assets C.Liab $10908 $11705 0.936 cents C.Ratio = =

Year 2006
C.Assets C.Liab $8442 $8891 0.95 cents

C.Ratio

= = =

Year 2007 2007 C.Assets

C.Liab $12106 $13226 0.916 cents C.Ratio = = =

Year 2008
C.Assets C.Liab $12177 $12987 0.93 cents

2008 2007 2006 2005 0 .9 0 .9 0 5 0 .9 1 0 .9 1 5 0 .9 2 0 .9 2 5 0 .9 3 0 .9 3 5 0 .9 4

Interpretation: Four years analysis is showing that the firm is able to achieve its target by mitigating by the obligations. In the year 2005, the company was able to meet its obligation as compared to current assets. After that company goes for more growth and in year 2007 company was not in a sound position as compared to other years.but

in year 2008, company gain tries to boost up its ability to meet obligations against its assets.

Quick Ratio
Quick ratio = = =

Year 2005
Quick ratio = = =

Year 2006
C.A - Stock C.Liab $8441 - $1641 $8890 0.76

C.A - Stock C.Liab $10908 - $2018 911700 0.79 cents

Year 2007
Quick ratio = = = C.A - Stock C.Liab $12106 2227 $13226 0.75 Quick ratio = = =

Year 2008
C.A - Stock C.Liab $12186 2188 $12989 0.76

2008 2007 2006 2005 0.745 0.75 0.755 0.76 0.765

Interpretation:
This ratio explains that the way to meet obligations through its most liquid assets. Graphical representation shows that except in year 2007, all the year were good for its liquidity terms. The company is enjoying the very good health of the firm. In year 2007, there was a great decline which was suffered by the company, after that the period of booms touch the surface of coca cola one more time.

Debt / Equity Ratio: Year 2005

D/E ratio = = = C.L + L.T.Debts S. equity $14159 $19717 0.718

Year2006
D/E ratio = = = C.L + L.T.Debts S. equity $10205 $16921 0.60

Year 2007
D/E ratio = = = C.L + L.T.Debts S. equity $16501 $21745 0.76 D/E ratio =

Year 2008
= = C.L + L.T.Debts S. equity $15768 $20473 0.77

Debt to Equity Ratio

1 0.8
Ratio

0.6 0.4 0.2 0 2005 2006 2007

Years

2008

Interpretation:
By making the comparative analysis for the four years, it was found that debt to equity ratio is good for all the years. Debt to equity ratio is actually a term as how much debt can be payoffs against shareholders equity. Shareholders are getting the facilities of debts then how much capability to pay off. By taking the view of graphical representation and interpretation, it is continuously rising. In year 2008 it is on its peak as compared to previous years. it results in the financing from the shareholders' equity now. Debt to Total Asset Ratio:

2005
Debt To Total Asset Ratio = = = Total debts Total assets $14158 37917 0.373 Debt To Total Asset Ratio = =

2006
= Total debts Total assets $10204 $29963 0.34

2007
Debt To Total Asset Ratio = = = Total debts Total assets $16502 $43269 0.38 Debt To Total Asset Ratio = =

2008
= Total debts Total assets $15769 $40519 0.389

Debt to Total Asset Ratio

0.5 0.4
Ratio

0.3 0.2 0.1 0 2005 2006 2007

Ye ars

2008

Interpretation: This ratio defines as the companys ability to meet the debts of company through financial assets of the firm. In the year 2005 the ratio was almost 37 percent while in year 2008 it remain alsmots same for of the years.there is a slight upward change in the ratio find, so it needs to be care.

Long Term Debt to Total Capitalization:

2005
Long term debt to total = Capitalization = = Long term debts Total capitalization $2457 $22169 0.11 Long term debt to total = Capitalization = =

2006
Long term debts Total capitalization $1314 $18234 0.07

2007
Long term debt to total = Capitalization = = Long term debts Total capitalization $3277 $25021 0.13 Long term debt to total = Capitalization = =

2008
Long term debts Total capitalization $2781 $23253 0.12

Long Term Debt to Total Capitalization 0.15 0.1

Ratio

0.05 0 2005 2006 2007

Years

2008

Interpretation: It is the relation between the long term debts and the capital structure of the company. In the year 2005, the ratio was satisfactory but in the year 2006 it was in declining phase. After more struggle by the company it was again rising up to 0.12 in the year 2008.

Gross Profit Margin Ratio: 2005

Gross Profit margin ratio CGS = = = Net sales Gross Profit margin ratio CGS = = Net sales $28296 9981 $28296 64.7 %

2006
= Net sales Net sales $24088 8164 $24088 66 %

2007
Gross Profit margin ratio CGS = = = Net sales Gross Profit margin ratio CGS = = Net sales $28857 10406 $28857 63 %

2008
= Net sales Net sales $31944 11374 $31944 64%

Gross Profit Margin Ratio

80 60
Ratio

40 20 0 2005 2006 2007

Years

2008

Interpretation:
If the ratio of the gross profit would be higher then its results for the firm to produce more at lower cost of goods sold. In the comparisons of the financial statements of CocaCola company, the position stagnant but it is high which resuls in favorable condition. Net Profit Margin Ratio: 2005
Net profit margin ratio = = = Net profit after taxes Net sales $5623 $28296 19.87 % Net profit margin ratio = = =

2006
Net profit after taxes Net sales $5080 $24088 21 %

2007
Net profit margin ratio = = = Net profit after taxes Net sales $5981 $28857 20.7% Net profit margin ratio = = =

2008
Net profit after taxes Net sales $5807 $31944 18.1%

2009

=
=

7,605/30990 24.5%

Net Profit Margin Ratio 25 20 Ratios 15 10 5 0 2005 2006 2007 Years 2008

Interpretation: According to the definition, higher the ratio, higher will be the firms ability to pay its taxes. In the first three years, the margin is high but in 2008 the margin falls by 2%. For the company, roughly 0.20 cents out of every sales dollar consists of After Tax Profit.in 2009the company again suddenly high the ratio 6.4% .

Return on Investment: 2005

Return on Investment = = = Net profit after taxes Total assets $5623 $37917 14.8 % Return on Investment = = =

2006
Net profit after taxes Total assets $5080 $29963 17 %

2007
Return on Investment = = = Net profit after taxes Total assets $5981 $43269 14 % Return on Investment = = =

2008
Net profit after taxes Total assets $5807 $40519 14.33 %

2009

= =

7605/48671 15.6% Return on Investment

20 15
Ratio

10 5 0 2005 2006 2007

Years

2008

Interpretation: The ratio should be higher. Here starting from 2005, the ratio is almost 15% and goes up in 2006 and is static in 2008 and 2009 with 14%-15.6%. The fluctuations show that in 2005, the firm is generating 14.8% and in 2009 15.6% of net profit after taxes by using its total assets.

Return on Equity: 2005

Return on equity = Return on equity = = = Net profit after taxes Shareholders equity $5623 Net profit after taxes = $19712 Shareholders equity 29 % $5981 $21744 27 % Return on equity = =

2006
= Net profit after taxes Shareholders equity $5080 $16920 30 %

2007
Return on equity = =

2008
= Net profit after taxes Shareholders equity $5807 $20472 28 %

2009

=
=

7605/25,346
30%

Return on Equity
40 30 Ratio 20 10 0 2005 2006 2007 Years 2008

Interpretation: The ratio should be higher. Here starting from 2005, the ratio is 29% and goes up in 2006 and fluctuates in 2007 and 2008 in 2009 the ratio again high to 30%. The fluctuations show that in 2005, the firm is generating 29% and in 2009 the firm generating 30% of net profit after taxes through Shareholders Equity.

Receivable Activity Ratio: 2005

Receivable activity ratio sales = Receivable activity ratio sales = = = = Annual credit Receivable activity ratio sales = = Receivables $28296 = $2998 Annual credit 10 times Receivables $28857 $8317 8.69 times

2006
= Annual credit Receivables $24088 $2587 9.3 times

2007
Receivable activity ratio sales = =

2008
= Annual credit Receivables $31944 $3090 10 times

2009

=
=

30,990/3,758 8.25 times

Receivable Activity Ratio

12 10 8 6 4 2 0 2005 2006 2007
Years

Ratio

2008

Interpretation: This ratio shows that how effectively the firm is using their assets, the higher the turn over between the sales and cash collection. For Coca-Cola company , the turnover in 2005 is 10 times, 9.3 times in 2006, 8.69 in 2007, 10 times in 2008 and 8.25 in 2009. The ratio should be low and it is low as shown in the graph.

Receivable Turnover in Days: 2005

Receivable turnover in days= Receivables Receivable turnover in days= = Receivables = = = Days in year x Annual credit Days in year sales x 365 x 2998 28296 credit sales Annual 39 365days x 8317 $28857 42 days Receivable turnover in days= Receivables = =

2006
Days in year x Annual credit sales 365 x 2587 24088 39 days

2007
Receivable turnover in days= Receivables = =

2008
Days in year x Annual credit sales 365 x 3090 $31944 37 days

Receivable Turn over in Days

50 40
Ratio

30 20 10 0 2005 2006 2007

Years

2008

Interpretation:
the company's ability to collect receivables and conditions here in 2005. In day 39 and remained the same in 2006, but the collection is growing day by 2007, which shows that the collection of slow compared to previous years. The collection period should be lower, so that timely payments

Inventory Activity Turnover Ratio: 2005

Inventory activity turnover ratio= Cost of good sold Average inventory = ratio= $9981 Cost of good Inventory activity turnover $2016 sold = 5 times inventory Average = $10406 $2220 = 4.7times

2006
Inventory activity turnover ratio= Cost of good sold Average inventory = $8164 $1641 = 5 times

2007

2008
Inventory activity turnover ratio= Cost of good sold Average inventory = $11374 $2187 = 5.2 times

Inventory Activity
6 5 4 3 2 1 0 2005 2006 2007
Years

Ratio

2008

Interpretation:
Generally, a high inventory turnover, the more efficient inventory management company and fresher, more liquidity, inventory. The ratios of the time in 2005-06, 2007, and went to the falls, and in 2008, it eventually falls back to 2009. Ratio is high, so it is advantageous. It shows that effective management of the company.

Inventory Turnover in Days: 2005

Inventory turnover in days Inventory = Inventory turnover in days Inventory = = = = Days in year x Inventory turnover in days Inventory = = CGS 365 x 2016 = Days in year x 9981 73 days CGS 365 x 2220 10406 78 days

2006
= Days in year x CGS 365 x 1641 $8164 75 days

2007
Inventory turnover in days Inventory = =

2008
= Days in year x CGS 365 x 2187 11374 70 days

Inventory Turn Over in Days

100 80
Ratio

60 40 20 0 2005 2006 2007

Years

2008

Interpretation: The figure tells us how many days, on average, before inventory is turned into accounts receivable through sales. So in 2005, the turnover in days is 73. In the next four years the turnover ratio in days differs from each other. Lowest of all is 2008s ratio, which is 70 days.
Total Asset Turnover Ratio: 2005
Total assets turnover = = Total assets turnover = = = = Net sales Total assets $28296 $37917 74 % Net sales Total assets $28857 $43269 66 % Total assets turnover = = =

2006
Net sales Total assets $24088 $29963 80 %

2007
Total assets turnover = = =

2008
Net sales Total assets $31944 $40519 78%

2009

= =

30990/48671 63%

Total Asset Turn Over Ratio 100 80 Ratio 60 40 20 0 2005 2006 2007 Years 2008

Interpretation:
The report should be high. Here one can see that the total Coca-Cola Company's assets ratio of 0.74 in 2005, on the other hand, that means that the company generated revenues of USD assets less investments. Report increases in 2006 and then from 2007. In 2008, the company was able to stabilize and generate a moderate income. However, in 2009, again slowed to 0.63 total return on the report.

Conclusion:
After applying all the formulas we get an idea of the Coca Cola company is a profitable firm. For four years, the trend analysis, we found that the company is profitable returns in the short-term and long-term investments, accounts receivable decreased conversion rate, and they can pay their debts, as well as their resources.

Limitations:

Although financial statement analysis is a very useful tool, it has two limitations: These two limitations involve the comparability of data among financial companies need to look beyond ratios.

Comparison of Financial Data:

Comparative another company can provide valuable clues about the financial health of the organization. Unfortunately, the differences between the accounting methods companies sometimes very difficult to compare the company's financial records. For example, if a company values its inventories LIFO method and another firm by average cost method, then direct comparison of financial data items, such as the value and cost of goods sold two companies can be misleading. Footnotes are sometimes sufficient data are presented to restate financial statements for comparative databases. Otherwise, you must take into consideration the lack of comparability of data analyst before coming to any certain conclusion. However, even with this restriction meant comparisons of key ratios, and other companies with the industry average. Often suggest avenues for further investigation.

The Need to Look Beyond Ratios:

An inexperienced analyst may assume that ratios are sufficient in itself as a basis for judgment about the future: Nothing could be further from the truth. Results based on analysis parameters must be considered tentative. Reports should not be considered as final, but they should be seen as a starting point, as indicators of what to pursue in more depth. They raise a lot of questions, but they rarely answer any question by themselves, Besides correlation, other sources of data to be analyzed, so that a decision on the future of the organization analyst should look, for example, industry trends, technological changes, changes in changing consumer tastes and broader factors and economic changes within the company.

Introduction:

Dec Each task trend analysis of the company. Therefore, we have selected 2005 balance sheet and income statement of the Coca-Cola Company. Four years of data were collected through a secondary source, which gauges, graphical presentations are covered in detail by the comments. At the end of the restrictions that we have an idea of what problems are facing 3744 analysts and what are the things that should be kept in mind 2998

Balance Sheet of Coca-Cola Company:

2016 2148

Assets Current Assets

Dec 08

Dec 07

Dec 06

10907 7907

Cash Net Receivables Inventories

4,701.0 3,090.0 2,187.0

4,093.0 3,317.0 2,220.0

2,440.0

19102
2,587.0 1,641.0

37917

Dec 2005

1226

Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets

2,198.0 12,176.0 8,326.0 20,017.0 40,519.0

2,475.0 12,105.0 8,493.0 22,671.0 43,269.0

1,773.0 8,441.0 6,903.0 14,619.0 29,963.0

Liabilities and Shareholder's Equity Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Noncurrent Liabilities Total Liabilities

Dec 08

Dec 07

Dec 06

1,370.0 6,531.0 5,087.0 12,988.0 2,781.0 4,278.0 20,047.0

1,380.0 6,052.0 5,793.0 13,225.0 3,277.0 5,023.0 21,525.0

929.0 3,268.0 4,693.0 8,890.0 1,314.0 2,839.0 13,043.0

4046 28296 18205 9981 18315

Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (mil.) -20,472.0 20,472.0 2,317.2 -21,744.0 21,744.0 2,317.2 -16,920.0 16,920.0 2,317.2

-19712 19712 2317.2

64.8% 10716 1109 7668 27.2%

Income Statement of Coca-Cola Company:

Revenue Cost of Goods Sold Gross Profit Gross Profit Margin 31,944.0 11,374.0 20,570.0 64.4% 28,857.0 10,406.0 18,451.0 63.9% 24,088.0 8,164.0 15,924.0 66.1%

251 -7296 1674 5622

5622 --

SG&A Expense Depreciation & Amortization Operating Income Operating Margin Non operating Income Non operating Expenses Income Before Taxes Income Taxes Net Income After Taxes

11,774.0 1,228.0 7,877.0 24.7% (902.0) (105.0) 7,439.0 1,632.0 5,807.0

10,945.0 1,163.0 8,329.0 28.9% 841.0 (220.0) 7,873.0 1,892.0 5,981.0

9,431.0 938.0 6,798.0 28.2% 297.0 -6,578.0 1,498.0 5,080.0

Continuing Operations Discontinued Operations Total Operations Total Net Income Net Profit Margin

5,807.0 -5,807.0 5,807.0 18.2%

5,981.0 -5,981.0 5,981.0 20.7%

5,080.0 -5,080.0 5,080.0 21.1%

5622 5622 20%

Diluted EPS from Total Net Income ($) Dividends per Share

2.49 1.52

2.57 1.36

2.16 1.24

2.40 1.37

Internal and External Factors: PEST Analysis for the COCA-COLA PEST analysis shows the internal and external effects on the company. It takes the looks on the company like P for Political, E foe Economical effect, S for Social and T for technological effects which impact on the company's affairs. An Analysis of Coca-Cola

Political Impact:
It includes the effects of the government which includes the sourcing for the funds, performances and targets to achieve. Impact of Politics on CoCa CoLa:

Coca cola deals in the alcohol free beverages which is the category of FDA. For this purpose, the government takes part in the manufacturing of these kind of products by some laws and regulations. There would be some fines in the case of non performance of work. There are some factors which are causing an impact on the company as: Most of the time a change in taxation rates, interest rates and revision of the rules and regulation cause an impact on the firms. Coca cola is an multinational brand. There are so many competitors in the world. So the competitors can sell the alcoholic beverages to the market but due to the restriction on alcoholic beverages for the coca cola, they cannot sell these goods, so it also impacts. Political instability also suffers heavily on the business environment. Instability of civil wars, change in the government on an immediate basis and restriction to send resources from one place to another. Especially in the international market, restrictions on imports and exports suffered heavily. Terrorism is also the reason for the lower level of sales of the company. If there is instability in the country and Government is not able to defend it due to weak defensive powers then it will impact on the coca cola company heavily. For the purpose of developing the countries by penetrating the market is also affected by the government actions.

Economic Impact:
It includes the employment opportunities in the economy, demand and supply conditions, training provision and increment in the regional competitiveness. Analysis for the Coca Cola Inc. Last year the U.S. economy was strong and nearly every part of it was growing and doing well. However, things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth. However, because of aggressive action by the Federal Reserve and Congress it will be short and mild. The economy will return to sustained, positive growth in the first half of 2002. (Ghobadian, 2009) In the Last year, the U.K. economy was strong, and almost every part of the economy was growing and healthy. However, things have changed. Many economists loosely described as two consecutive quarters of decline in the downturn, or -ve growth in GDP. However, due to the aggressive action of the FED and Congress will be back soon. Future Prospects The Federal Reserve is doing everything it can help the economy for the purpose of recovery. They cut interest rates ten times this year: The rate has fallen to a 40-year low rates two percent lower interest eventually caused consumer demand in the economy. Companies to expand and increase the use of debt as a result of low borrowing rates: Coca-Cola can borrow money to invest in other products, as well as interest rates are low. The loan can be used

for research into a new product or technology. As for researching new products that will cost less in the Coca-Cola company to sell its products and people spend more because they get free products from Coca-Cola. Before the attacks of September 11, 2001, the United States, the economy is starting to recover a bit and see only recently that they have reached economic levels. Customers will now resume their normal habits, going to shopping malls, cars, eating out and restaurants. However, many are still cautious in handling their money. They believe that low inflation is still ahead of us, consumers can regain confidence next year. Non-alcoholic beverage industry has big discounts to countries outside the UK and poor standard surveys of the industry, "major soft drink companies, there is economic improvement in many major international markets, such as Japan, Brazil and Germany . "This market will continue to play an important role in the success and sustainable growth for the majority of non-alcoholic beverage industry.

Social Impact:
It covers the life style of the people, carrier shortages and difficulties in the society. (Harris, 2001) Social Analysis of Coca-Cola Many UK citizens needs to engage in a healthy lifestyle which is influenced by the soft drinks industry. Many bottled water and Diet colas are passing instead of beer and other alcoholic beveragestere is no care for the healthy food or water or any bevarages. Economy is not awared for the disadvantages of alcoholic bevarages and they are getting it vigirously. (Scholes, 2000) Consumers aged 38-56 are also increasingly concerned about the level of nutrition. There are some segments for the market which arte distributed. In these segments there are some baby boomers segments which is a very large segment. So people are more concerned about their babes food. People want to live long life but the junk foods are decreasing the life time day by day.due to this factor, aggregate demand for these bevarages also decreasing.

Technological Impact:
Technology is changing more vigorously. So the change in technology includes internet facilities which are changing the trend day by day. First it comes from dial up connections to broadband technology, WiFi technologies and much more. Electronic learning through technology, computers, laptops, and many other technological changes occur everywhere which cause the enhancement of knowledge of the consumer world. Analysis: Technological effects have a main feature of promotions, advertisement and marketing through the different channels has been easy. Media have given the best opportunity to expand it. Television and the internet are the source of the increase in the awareness of the people. By introducing the perishable bottles and caps of the bottles have enhanced the sale of the coca cola industry. Consumers can take it to anywhere and bin it any time at any place. Production of the coca cola company has been increased due to thew technology improvement. Now the coca cola company is expanding their sectors through more precisely focused on technology. (Praetz., 2000) FINDINGS AND CONCLUSION: At the end of the study, it has been found that how much benefit is the financial statement analysis? After performing the ratio analysis some points of consideration have been chosen as follows which would be beneficial for the firms: Findings: 1) Through financial statement analysis, analyst analyzes that the coca cola company should reduce their liabilities by reducing the expenses which are accrued. By this thing company can improve the liquidity position. 2) The company needs to be focused for the inventory as well as selling. It means caring for the inventory management and then make the selling as per

availability of stock. There needs to be some LIFO and FIFO method to calculate the CGS for the goods in stock. 3) If company reduced the operating cost then it would be eligible to make profit margins comparatively better. Earning Per Share: 4) If the earnings per share ratio calculate then it would be easy to find out the profitability of the company. So as per the ratio determined, it shows that company is in a very sound position and they are eligible to pay the dividends to their shareholders.

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Annexure:
Income Statement of Coca-Cola Company:
FISCAL YEAR ENDING
Revenue Cost of Goods Sold Gross Profit Gross Profit Margin SG&A Expense Depreciation & Amortization Operating Income Operating Margin No operating Income No operating Expenses Income Before Taxes Income Taxes Net Income After Taxes Continuing Operations Continuing Operations

Dec 2005
28296.0 9981.0 18315.0 64.8% 10716.0 1109.0

Dec 2006
24,088.0 8,164.0 15,924.0 66.1% 9,431.0 938.0

Dec 2007

Dec 2008

Dec 2009
30,990.0 11,088.0 19,902.0 64% 11,671.0 1,236.0

28,857.0 10,406.0 18,451.0 63.9% 10,945.0 1,163.0

31,944.0 11,374.0 20,570.0 64.4% 11,774.0 1,228.0

7668.0 27.2% 251.0 -7296.0 1674.0 5622.0 5622.0 5622.0

6,798.0 28.2% 297.0 -6,578.0 1,498.0 5,080.0 5,080.0 5,080.0

8,329.0 28.9% 841.0 (220.0) 7,873.0 1,892.0 5,981.0 5,981.0 5,981.0

7,877.0 24.7% (902.0) (105.0) 7,439.0 1,632.0 5,807.0 5,807.0 5,807.0

9,301.0 20.6% 121.75.0 (181.67.0) 8,946.0 2,040.0 7,605.0 7,605.0 7,605.0

Year
Assets C. Assets Cash Debtors Stocks Other C. Assets Total Current Assets Net Fixed Assets Other Non current Assets Total Assets Liabilities and Shareholder's Equity Current Liabilities Accounts Payable Short-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Non current Liabilities Total Liabilities Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity Shares Outstanding (mil.)

2005

2006

2007

2008

2009

3745.01 2998.0 2016.0 2148.0 10907.0 7907.0 19102.0 37917.0

2,440.0 2,587.0 1,641.0 1,773.0 8,441.0 6,903.0 14,619.0 29,963.0

4,093.0 2,587.0 2,220.0 2,475.0 12,105.0 8,493.0 22,671.0 43,269.0

4,701.0 3,317.0 2,187.0 2,198.0 12,176.0 8,326.0 20,017.0 40,519.0

9,151.0 3,758.0 2,354.0 2288.0 17,551.0 9,561.0 2,421.0 $ 48,671.0

1226.0 5283.0 5191.0 11701.0 2457.0 4046.0 18205.0

929.0 3,268.0 4,693.0 8,890.0 1,314.0 2,839.0 13,043.0

1,380.0 6,052.0 5,793.0 13,225.0 3,277.0 5,023.0 21,525.0

1,370.0 6,531.0 5,087.0 12,988.0 2,781.0 4,278.0 20,047.0

13,721.0 6,800.0

13,721.0 5,059.0 4,545.0 23,872.0

-19712.0 19712.0 2317.2

-16,920.0 16,920.0 2,317.2

-21,744.0 21,744.0 2,317.2

-20,472.0 20,472.0 2,317.2

-24,799.0 25,346.0 2,317.2

sBalance sheet