The Coca-Cola Company Research Paper Example | Topics and Well Written Essays - 1250 words

The Coca-Cola Company - Research Paper Example We will be looking at several types of financial ratios available in assessing the financial position of The Coca-Cola Company: Liquidity Ratios, Asset Management Ratios, Profitability Ratios and Gearing Ratios. The quantitative findings in this segment can be found in the Appendix section of this report. The results show that The Coca-Cola Company has a good Liquidity Ratio. The company’s Current Ratio is 1.12 (0.95 in Q1 2008) and its Quick Ratio is 0.94 (0.80 in Q1 2008). This means that The Coca-Cola Company is still able to generate enough cash to settle its short-term liabilities. There has been a slight improvement in its Liquidity Ratio compared with the previous quarter. As a guide, a current ratio of 2 is ideal. However, in the company’s case, 46% of its Current Assets (42% in Q1 2008) are made up of cash and cash equivalents. At a glance, the company’s assets are being managed efficiently. Its Inventory Turnover is 1.13 (1.07 in Q1 2008), which shows t hat company is trading better. Its inventories declined by 6% in the first quarter of 2009 whereas its sales increased by 3% in the same quarter of 2008. Nevertheless, the company should take note that over increasing its inventories may adversely affect its business performance. This is because costs associated with holding inventories for too long can be very expensive. As such, managing its inventories well is recommended. There is a slight improvement in the Average Collection Days of 39 (43 Days in Q1 2008). Although the company is able to meet its short-term liabilities; it should still make an effort to improve the collection of its debts. The credit term given to its customers is not stated; however, as a guideline, 30 days is recommended. In this case, the company’s customers are enjoying slightly more than the normal credit terms and this should be monitored.