Free Financial Research Report Research Paper Sample
Coca-Cola is a worldwide company that is known for its priorities to reach their products to the customers. This company is working hard all the time to improve their products by either, taste, size, design and convenience. The target market of coca cola is satisfied with goals and objectives of the company. This is because; the company takes into consideration a wide variety of cultural consumers across the word. This company engages in product diversification throughout the world. Recently, their adverts are mostly directed to the young, reason being they know that their product will give the youth’s power and energy. The company will continue to grow with many customers who do enjoy coke as a drink will be eager to try a can of diet coke due to brand awareness.
2.1 Growth strategies
The company has long-term strategies for growth. The growth will be achieved by investing in the emerging market that are related to the company’s projections for this market. It is estimated that by 2020, there will be more than 1 billion people joining the middle class. Therefore, the per capita income for the individuals will increase by approximately 30%. In the next three years coming, the company plans to invest $2 billion for finishing three new plants (Liu, 2012). Coca-Cola Company knows that for it to attain the intended strategy there must be consumer access and alignment as the key to their growth kin the emerging markets.
2.2 Vision, Mission, and Culture
The company’s culture, mission, values, and vision, shapes its objectives into measurable expressions of what the organization intends to achieve in the near future. This includes the hierarchy or top management, a mixture of hard and soft goals.
2.3 Core and Activities
The core activities of Coca-Cola Company make it unique from other companies. The company depends a lot on the suppliers the customers and the bottling company at large. As the suppliers give them the materials, Coca-Cola Company plays an important role in making quality products. For instance, the company has a unique bottle design that is recognized by everyone in the world. Due to this, the company secures a lot of customers in the world hence making huge profits per annum.
2.4 Value Proposition
This company is recognized over the world for providing for their customers. Coca-Cola Company offers products that meet the customer needs. It has more than 400 brands and wants to engage with consumers to try something new and refreshing. Therefore a few of the products that the Company offers are: energy drinks like sodas, water, juice, coffee and tea (Liu, 2012). The reason as to why Coca-Cola Company products are preferred is; they focus on the customer’s lifestyle in satisfaction terms. Also, the branding, pricing, affordability and packaging is more appealing to the customers across the world. These products make it unique in that they are the most consumed products in the world. Therefore, Coca-Cola Company is one of the best companies to invest in especially in the US and in the world at large.
Profile of the investor
This determines the period the investor will like to invest in a certain company. There are three types of durations. Short term ranges from 1 to 3 years; Medium term ranges from 4 to 9 years and long term that is over ten years.
The client wants to invest in the Company in over ten years (Portokalis, 2012). This is a long term investment. This is when the value of the investment grows because the client is interested in capital growth and not for income. This investment strategy is suitable for the client to invest in Coca-Cola Company because the company has got long-term goals that will be implemented in the future.
Since the client want to grow its lump sum and do not need income in the short term, it is suitable to invest in Coca-Cola Company because the company is a long term organization that promises a bright future in terms of growth. The client wants to reinvest the original lump sum and grow his lump sum as much as possible as time goes by.
This means how quick one can convert his investment into cash before the end of the investment period.
The investor is interested in a low-liquidity. This is because he does not need cash as quick as possible after investing it (Portokalis, 2012). This is defined by the fact that he is interested in the long term investment. Therefore, this is suitable for him to invest in Coca-Cola Company.
3.5 The area of focus
The profile of an investor is shaped by the area he/she chooses to invest. For example in shares, stocks and bonds, technology, commodity, or real estate, small-cap or large-cap companies.
The client is interested to invest in share that makes it appropriate for him to invest in Coca-Cola Company.
3.6 Investment strategy
There are different types of strategies that are used by the investors when investing. They include: ethical investing, growth investing, index investing, value investing and quality investing. The client will use the growth investing strategy since he focuses on capital appreciation. The client should invest in Coca-Cola Company because the company exhibits signs of above average growth.
Coca-Cola Company’s Financial Data in the past three years.
4.1 Comprehensive income statement.
Statement of financial position.
Liabilities & Shareholders' Equity
Current ratio = current assets/ current liabilities.
= 30.33/ 18.51 = 1.64
31.3/ 24.28 = 1.29
32.99/27.82 = 1.19
In both years, the company has a current ratio that is more than one showing that it is doing well since the current assets exceed the current liabilities (Reilly, 2011).
Acidic test ratio = current assets-stock/ current liabilities.
30.33-3.26/18.51 = 1.46
31.3-3.2/24.28 = 1.16
32.29-0/27.82 = 1.19
The company can meet its current obligations by use of liquid assets. This is because it has a standard value that is more than 1.
Cash ratio = cash and cash equivalents/ current liabilities.
16.55/ 18.51= 0.89
20.27/ 24.28 = 0.83
21.68/ 27.82 = 0.78
The cash ratio of the company in the three years is below 1 meaning that it will not be able to all current liabilities using its immediate short term (Reilly, 2011).
Total asset turnover = sales/ total assets.
45.9/ 72.92 = 0.63
46.7/ 79.9 = 0.59
46/ 86.17 = 0.53
Return on Investment = net profit after tax/ total sales.
9.02/72.92 =0. 12
The year 2013
8.58/ 79.9 =0.11
The year 2014
7.1/ 86.17 = 0.082
5.0 Risks in Coca-Cola Company from investor’s point of view
The company has been using borrowed money to purchase shares at prices that are becoming unfavorable (De Jong, 2012). This led to overvaluing of the company, and yet the earnings have not been growing. The truth of the matter is that earnings of the company have declined. This reduction suggests that the company is benefiting from international economic expansion.
There has been a shift in the consumption of soft drinks due to health reasons. Many of the consumers have shifted to drinks like tea, coffee, and water. The company is faced with the risk of balancing predicament for manufacturers over the beverage industry.
5.1 Strategies used to minimize the perception of risks
5.1.1 Product diversity.
The company has diversified its products in that it is not only producing soft drinks, but also other drinks like water, coffee and tea (De Jong, 2012). This helps the company to secure those customers that may not want to consume the soft drinks products like sodas.
5.1.2 Investment in equity.
The company uses, in large scale, the equity methods to account for the investments in equity securities investment provides the company with the ability to exercise important influence over operating and policies of the investee.
Dividend stocks crush their non-paying counterparts over the long term. Well-constructed dividend portfolio creates wealth as it allows you to sleep comfortably. Therefore, in order to create a well dividend portfolio, an investor must carefully analyze the financials and the earning capacity of a specific company in which to invest. The mechanisms to be used include the financial ratios in which an investor should cross check the earnings per share and the overall profitability of the company.
Afuah, A. (2013). The Theoretical Rationale for a Framework for Appraising the Profitability Potential of a Business Model Innovation. Ross School of Business Paper, (1205).
De Jong, F., & Driessen, J. (2012). Liquidity risk premia in corporate bond markets. The Quarterly Journal of Finance, 2(02).
Liu, C., & Yermack, D. (2012). Where are the shareholders’ mansions? CEOs’ home purchases, stock sales, and subsequent company performance. InCorporate Governance (pp. 3-28). Springer Berlin Heidelberg.
Portokalis, G. (2012). Know Your Client! Investor Profile and Tailor-Made Asset Allocation Recommendations. CFA Digest, 42(3), 170-171. doi:10.2469/dig.v42.n3.2
Reilly, F., & Brown, K. (2011). Investment analysis and portfolio management. Cengage Learning.
Waikar, R. D., Kalagnanam, S. S., & Findlay, I. (2014). Financial Proxies for Social Return on Investment Analyses in Saskatchewan: A Research Report.
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