Coca Cola Financial Data Analysis

When I look at the current ration of Coca-Cola Company for the three years it is above 1. This means that the firm has a high value of short-term assets to pay its short-term liabilities. A current ratio which is below 1 indicates that the firm is going through financial problems that it cannot meet its financial obligations. The Coca-Cola Company should thus be looking for ways to increase sales and net income to avoid problems in paying debts (Gitman & Zutter, 2015). A company should take caution when its acid test ratio is less than 1. This relatively a high ratio and shows that the company is able to pay a loan or any other liability (Gitman & Zutter, 2015). The ability of a company to pay long-term liabilities is also shown by times interest earned ratio.

As seen in the table, the Coca-Cola Company has a times interest earned ratio of more than 20 in the 3 years. This means that the income of Coca-Cola Company is 20 times greater than the annual interest expense in the year 2010, 28 times in 2011 and 30 times in 2012. In other words, the company can afford to give out extra interest expenses, the business is less risky and the company can pay any of its liabilities (Gitman & Zutter, 2015). However, its ROE reduced in the year 2011 and 2012 it is not safe (Kimmel, Weygandt, & Kieso, 2013). Net income and revenues. A high net income and revenues in a company imply that the company has high profitability (Kimmel, Weygandt, & Kieso, 2013). References Gitman, L. J. Accounting: Tools for Business Decision Making (5th edition).