Business Finance
ACCT301 Iowa State Coca Cola Accounts Receivables and Inventory Report

ACCT301

Iowa State University

Question Description

Can you help me understand this Accounting question?

Project Two Business Report Accounts Receivables and Inventory

Two Pages: Single spaced, One inch margins, APA. Please reference attachments (project 1, SEC 10-K and Project two Guid)

Accounts Receivables and Inventory

Your SEC 10-K company should have accounts receivable and inventory. For answers to the questions below, read the Notes to the Financial Statements presented immediately after the financial statements. This is usually part of section 8 of the SEC 10-K. Section 7 is Management and Analysis (M&A). Section 15 is often referenced as financial exhibits.

I.Write down the Accounts Receivables values over the last two years. How have the values changed? Do you believe this change is significant? Why or why not? Are you surprised at these results? Who owes money to your Sec 10K Company? What information did you find about Accounts Receivables in the Notes to the Financial Statements section? Do not merely cut and paste from the SEC 10 K report. Summarize the information using your own words as much as possible. 20 points

II.Write down the Inventory values over the last two years. How have the values changed? Do you believe this change is significant? Why or why not? Are you surprised at these results? Is this information available to you? What information did you find about Inventory in the Notes to the Financial Statements section? How is it described? Do the notes tell you what Inventory method is being used such as FIFO, LIFO, etc. Do not merely cut and paste from the SEC 10 K report. Summarize the information you find in the Notes section using your own words as much as possible.

20 points.

III.Using the resources of our course materials compute the following for two years and comment briefly interpreting the results:

(a)Accounts Receivable Turnover

The formula: Net Credit Sales/Average Accounts Receivable.

If Net Credit Sales information is not available, use Sales for purposes of this assignment.

Formula for computing Average Accounts Receivables: Beginning AR + Ending AR/2

Year 1 Ratio:

Year 2 Ratio:

Comments:

10 points

(b)Day’s sales in Accounts Receivable (AR)

The formula: Average AR/Average Daily Sales

Average Daily Sales = Sales/ 365

Comment briefly interpreting your results.

10 points

( c ) Inventory Turnover

Formula: Cost of Goods Sold/Average Inventory

Formula for computing Average Inventory: Beginning Inventory + Ending Inventory/2

Comment briefly interpreting your results.

Year 1 Ratio:

Year 2 Ratio:

Comments:

10 points

(d) Day’s sales in Inventory for two years.

Formula:

Average Inventory/Average Daily Cost of Goods Sold

Average Daily Cost of Goods Sold = Cost of Goods Sold / 365

Year 1 Ratio:

Year 2 Ratio:

Comments:

Comment briefly interpreting your results. In order to calculate two years of ratios, you will need to review there years of financial statement information. Supporting computations for reach ratio must be shown clearly.

10 points

IV.Property, Plant & Equipment

Write down the Property, Plant & Equipment values over the last two years. Show te breakdown of the numbers in this category. How have

the values changed? Do you believe this change is significant? Why or why not? Are

you surprised at these results? What information did you find about this category in

the Notes to the Financial Statements section? What information was provided about

the depreciation method(s) being used. Do not merely cut and paste from the

SEC 10 K report. Summarize the information using your own words as much as possible.

20 points

Your submission must cross reference the question numbers and the sub parts such as III a, III b etc. Failure to follow these instructions will result in loss of points.

Good Luck! Analyzing the SEC Annual Report is an important skill!


you have to use the link aboves SEC 10K from 2018

https://www.coca-colacompany.com/content/dam/journ...


This builds off of my project two which is attached


Unformatted Attachment Preview

Carmen SEC Report: The Coca-Cola Company Fiscal Year Ended December 31, 2018 Benny Algarin Professor Trang Phan ACCT 301 7982 Carmen The Coca-Cola Company I. Company Background The Coca-Cola Company began in the great city of Atlanta, Georgia in 1886 by the pharmacist, Dr. John S. Pemberton. The original intent was to create a unique soft drink that could be distributed via soda fountains. Having a pharmacological background enabled him to mix the syrup with carbonated water until an acceptable formula was created. Dr. Pemberton is also credited with the original script branding which is still used today. Coca-Cola often referred to as “Coke”, went from a daily sales average of nine servings to now well over 1.9 billion globally (Coca-Cola History, n.d.). Coca-Cola is arguably one of the most recognized brands in the world. In fact, it is routinely listed on Interbrand’s “Best Global Brands” list, coming in at number 5 for the year 2019 (Best Global Brands 2019 Rankings, 2019). This recognition is the byproduct of an enterprise that can boast as “the world’s largest nonalcoholic beverage company”. With a catalog that produces over more than 500 separate beverages spanning from carbonated soft drinks, water, sports drinks, juice, teas, coffees, dairy to energy drinks. This includes housing four of the world’s top nonalcoholic soft drinks: Coca-Cola, Diet Coke, Fanta and Sprite. Coming from humble beginnings in 1886, to being sold in more than 200 countries and territories around the world (Coca-Cola Annual Form 10-K, 2019). Globally, there are over 900 bottling and manufacturing facilities tied to the Coca-Cola brand (The Coca-Cola System, 2019). This includes the manufacturing of fountain machine syrups, which are also distributed globally from these locations. These partners also work closely with stores, restaurants, vendors, theme parks, theaters and countless other associates to ensure the product reaches consumers throughout the world. This system allows Coca-Cola to control both the production and distribution of its products throughout the world, a pretty impressive feat. II. Sales and Profitability a) When looking at total sales for 2018, Coca-Cola reported selling unit case volume of 29.6 billion. This is an increase in comparison to the 29.2 billion and 29.3 Billion reported in the years 2017 and 2016 (Coca-Cola Annual Form 10-K, 2019). This increase can be directly associated with a strategic push to expand the company’s presence in new and emerging markets. This also includes introducing products that fill consumer specific needs, like products that utilize organic ingredients or reduced calories (Sanchez, 2019). b) An impressive feat the Coca-Cola company can claim a reduction in the cost of goods sold from the year 2017 to 2018. In fact, the company reported an 11.2% reduction in the cost of goods sold over the last year, going from 13.25 billion to 11.77 billion (Coca-Cola Annual Form 10-K, 2019). This is directly linked to a slight increase in sales, reducing bottling operations and pushing smaller sized products that are cheaper to produce (Reuters, 2016). By taking more control of the actual distribution costs, Coca-Cola was able to dramatically reduce its cost of goods sold over the last three years. This coupled with the use of foreign currency hedges helped to reduce the impact normally associated with exchange rates (Coca-Cola Annual Form 10-K, 2019). c) Another area of great pride is Coca-Cola’s increase in net income witnessed from 2017 to 2018. According to their 10-K report, the company pulled in $6.4 billion in consolidated Carmen net income. This is quite the increase from the $1.2 billion reported in the year 2017 (Coca-Cola Annual Form 10-K, 2019). This upturn has been directly tied to Coca-Cola’s approach to its consumer’s needs. The company has focused on its production of lowcalorie beverages, such as Coke-Zero and increased its manufacturing of smaller sized products. Both of these filled the ever-changing needs of a more health-conscious market (Scribner, 2019). d) Sales and accounts receivable are interrelated through a ratio. This can be calculated by dividing the accounts receivable by the actual sales during a specific timeline. Accounts receivable are the sales that have occurred on credit, meaning no money was received yet. Sales refer to both the credit and cash sales a company has collected. This ratio can help illustrate how much of a business's sales were actualized and is important in highlighting any liquidity problems. Of the 31.85 billion in reported sales in 2018, 23.23 billion was recorded as accounts receivable or on credit (Coca-Cola Annual Form 10-K, 2019). III. Risk Factors Associated with Coca-Cola Manufacturing a product that must be physically consumed by customers creates several risk factors in itself. For instance, the Coca-Cola company must be prepared for any health-related concerns with their problem, such as obesity and the financial ramifications this can have on them. There are also risks associated with the key ingredients needed for production, such as sugars and sugar-like sweeteners. Taxes on the ingredients, the total cost of correct labeling and distribution of products provide plenty of risks (Coca-Cola Annual Form 10-K, 2019). Coca-Cola is not alone in its production of non-alcoholic beverages. Increased competition also presents plenty of risk to the company. The brand faces contest in all of their product lines to include low-calorie soft drinks, syrup production, juices, enhanced waters, coffees, teas, and energy drinks. The competition is also present in many of the same countries as Coca-Cola, creating an even bigger risk of losing marketing ground globally (Coca-Cola Annual Form 10-K, 2019). There are also plenty of risk factors associated with conducting business in multiple countries. For instance, the ever-changing currency rate presents plenty of financial fluctuation and risk (Coca-Cola Annual Form 10-K, 2019). Additionally, operating in foreign countries opens a company up to litigation from governing agencies. Coca-Cola must remain abreast of any policy/regulation changes within 200 plus counties of operation (Martin Zwilling, 2016). IV. Discussion on Income Statement An income statement is a required measure routinely included in a financial report (SEC 10K) and it specifics a company’s revenues and expenditures from functional and non-functional activities during a certain period of time (Walther, 2012). This document can help provide insight into a company’s profitability which is essential to accounting. When comparing 2018 ($31.85B) and 2017 ($35.41B) net revenues, Coca-Cola reported a 10% decline associated with the companies push to re-franchise bottling services and currency headwinds. This decline was expected and is in line with the company’s strategic plan to improve its margin. Coca-Cola countered this revenue decrease by lowering the cost of goods sold between 2017 and 2018. Dropping from 13.25B in 2017 to 11.77B in 2018, Coca-Cola has worked tirelessly to reduce Carmen their operating expenses. Net income is defined as the total earnings of a company after expenses have been accounted for ( Hermanson, Edwards, & Maher, 1993). Net income is also a line item in which Coca-Cola has reported an increase in the last year. Growing from $6.7B to $8.3B during the span of 12 months. This can be closely tied to their continued growth in low-calorie products. V. Discussion on Disclosure Requirements Financial disclosure in business can be a delicate balance. In one regard, a company must disclose all accounting principles to operate within good business practice compliance. However, they must weigh that against the threat of weakening their company’s competitive advantage over an industry. The disclosure also provides a company with control of the message associated with the data. For instance, Coca-Cola’s SEC 10-K showed a decrease in total revenue, however, the company was able to explain the circumstances associated with the decline. They were also able to clearly outline a plan for going forward and how this data validated their strategy. Revealing such numbers could subject the company to criticism, especially if a competitor is reporting growth. However, controlling the narrative can circumvent certain fallout. Carmen References: Hermanson, R., Edwards, J. D., & Maher, M. (1993). Accounting Principles: A Business Perspective. Best Global Brands 2019 Rankings. (2019). Retrieved from Interbrand: https://www.interbrand.com/best-brands/best-global-brands/2019/ranking/ Coca-Cola Annual Form 10-K. (2019). Retrieved from https://www.cocacolacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2019/annualshareholders-meeting/2018-Annual-Report-on-Form-10-K.pdf Coca-Cola History. (n.d.). Retrieved from https://www.worldofcoca-cola.com/about-us/cocacola-history/ Martin Zwilling. (2016, April 7). 6 Key Risk Factors When Scaling A Business To Global. Retrieved from https://www.forbes.com/sites/martinzwilling/2016/04/07/6-key-riskfactors-when-scaling-a-business-to-global/#3cdd10ef2a89 Reuters. (2016, February 9). Cost-Cutting is Helping Coke Make More Money. Retrieved from https://fortune.com/2016/02/09/coca-cola-cost-cutting/ Sanchez, L. (2019, April 15). How Coca-Cola Is Thriving Despite Declining Soda Consumption. Retrieved from https://www.fool.com/investing/2019/02/12/how-coca-cola-is-thrivingdespite-declining-soda-c.aspx Scribner, H. (2019, October 18). Coca-Cola is doing really well. Coke Zero is the reason why. Retrieved from https://www.deseret.com/2019/10/18/20920909/coca-cola-coke-zerominute-maid-simply The Coca-Cola System. (2019). Retrieved from https://www.coca-colacompany.com/ourcompany/the-coca-cola-system Walther, L. (2012). Principles of accounting: Chapter 16. ...
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Final Answer

Here is the solution. You can go through it and get back to me if you need more edits to be done. I have slightly exceeded 2 pages, but will be waiting to hear from you if its okay...The analysis was a bit broad. In case of anything else, get back to me.

1

Business Report Accounts Receivables and Inventory
I.

Accounts Receivable (figures reported in millions)

In the year 2018 and 2017, accounts receivables equal $3,396 and $3,667 respectively. Therefore,
accounts receivables decreased by $271. This represents a 7% decrease in the accounts receivable.
This change is not significant since Coca-Cola is a big company with huge amounts of trade
accounts receivable. Notably, a decrease in accounts receivables may imply that the company has
improved in collecting cash on their accounts receivable. On the notes to the financial statement,
there is no information as to who owes Coca Cola money but it is mentioned that significant of
this amount of accounts receivable is from the sales of Coca Cola products in international markets.
It is also men...

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Rice University

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