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Coca-Cola Enterprises Financial Ratio Analysis




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Financial Ratio Analysis

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Coca-Cola Enterprises Financial Ratio Analysis
Coca-Cola Enterprises is the largest beverage company in the world and it was the
number 1 brand in accordance to a fortune survey, which was carried out in 2009. Coca-Cola
Enterprises has operated a franchised distribution system since 1889 and its headquarters are
located in Atlanta, Georgia. Coca-Cola Enterprises has various local operations in above 200
countries worldwide and it has over 160,000 employees around the world (The Wall Street
Journal, 2014). Financial analysis is mainly an assessment of an organization’s future,
present, and past financial conditions, which is usually done in order to certify the
organization’s financial strengths as well as weaknesses. This is done using primary tools,
which include financial statements and a comparison of various financial ratios to all
organizations, sector, and past industry. Among the financial ratios used in financial analysis,
include liquidity ratios, which assess the ability of an organization to meet its current
obligations. On the other hand, leverage ratios are used in assessing an organization’s ability
to meet its long-term debt obligations (Gibson, 2012). This study will conduct a financial
analysis for Coca-Cola Enterprises.
From the various financial statements of Coca-Cola Enterprises, it is evident that the
sales/revenue ration for the company was $46.77 billion in 2011, $48.07billion in 2012, and
$46.7 billion in 2013, which is an indication that Coca-Cola Enterprises sales/revenues ratio
was increasing as compared to industry benchmark, which was expected to decrease. The
major reason for this decrease projection was the world’s economic environment, which was
hostile since consumers did not have enough money due to the effects of recent global crisis.
On the other hand, the earnings/share ratio was 1.92 in 2011, 2.01 in 2012, and 2.08 in 2013,
which also shows that Coca-Cola Enterprises share value was escalating and investors had a
lot of trust in the company (The Wall Street Journal, 2014).

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Additionally, the profit margin percentage of the company decreased in 2013 to a low
of 18.32% as compared to 18.78% in 2012, which was a favorable year for the company
since its profit margin percentage, was 18.42% in 2011. The return on equity as well as the
return on assets percentages took decreased in the three years of this study. The return on
equity percentage for 2011 was at 26.85%, 27.19% in 2012, and 25.67% in 2013 whereas the
return on assets percentages was 9.53% in 2013, 10.47% in 2012, and 10.72% in 2011
(Barchart, 2014).
However, the price/sales ratio, price/earnings ratio, price/book/ratio, and the
debt/equity ratio increased during the three-year period that was undertaken by this study.
The price/sales ratio was 3.78 in 2013, 3.30 in 2012, and 3.05 in 2011, the price/book ratio
was 5.12 in 2013, 4.77 in 2012, and 4.45 in 2011 and the price/earnings ratio was 18.63 in
2013, 17.55 in 2012, and 16.27 in 2011. The debt/equity ratio was 0.57 in 2013, 044 in 2012,
and 0.43 in 2011. The above-mentioned four ratios that increased show that Coca-Cola
Enterprises performance was remarkable as compared to the industry benchmark which
reduced significantly (Barchart, 2014).
In conclusion, it is evident from the above financial analysis summary that Coca-Cola
Enterprises was able to perform exemplary despite the economic environment being hostile
due to the adverse effects of the global financial crisis which greatly affected many
consumers since they only had little money to cater for their needs. In addition, Coca-Cola
was able to surpass the industry benchmark through its impressive performance and its
competitors were not able to perform well as compared to the company.

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