Financial Statement Analysis of Coca Cola

Financial Statement Analysis of Coca Cola

Introduction

Financial analysis is key aspect of analyzing the position of any company in market. It is significant as well as crucial aspect that asks for proper analysis. This paper focuses on financial statement analysis of Coca Cola Inc., where, it has indicated some of the main aspects of company's financials including tangible assets amount and depreciation method; intangible assets, its amount, and depreciation and impairment method, capital lease, bonds payables and notes payables, liabilities, interests, and others. Hence, this paper is important as it provides the analysis of Coca Cola on several important aspects covers in financial statement analysis.

Discussion

Property, Plant, and Equipment

Amount of these tangible assets on balance sheet of Coca Cola for the years 2011 and 2010 is $2,230 and $2,220, respectively. Where, the amount of depreciation and amortization in cash flow statement is $321 and $264 for the year 2011 and 2010 respectively. The amount of these tangible assets is given as net amount, where it is reported at cost. Main assets replacements, additional, and enhancements are included, however repairs and maintenance that don't enlarge the functional life of equipment or adding any new function are excluded as expensed when incur. The depreciation is accounted through the STL method over the respected anticipated functional life of coca cola assets. The drink utensils and apparatus are depreciated through STL method over anticipated functional life of every cluster of asset. However, under this method coca cola does not recognize losses and gains on the clearance of separate groups of assets when it arises in the usual route of operations. The company capitalizes the cost of refurbish their drink assets and attached costs are depreciated over the anticipated phase of time, unless the next equipment retires or next schedule refurbished. Where, the leasehold enhancement is amortized through STL method over the lesser of the residual lease phase or the anticipated functional life of the enhancement.

Intangible Assets and Goodwill

The Coca Cola Company has intangible assets in form of franchise license intangible assets, which amounts $3771 and $3828 in years 2011 and 2010, respectively. These intangible assets of the company are their franchise license agreements that consist of the requirement of routine processes and express them the rights to allocate and trade items of the licensor with in particular areas. The goodwill accounts for $124 and $131 for the year 2011 and 2010, respectively. There is no amortization expense indicated in coca cola financial statement for their intangible assets because they do not amortize their franchise license intangible assets and goodwill. In its place they analysis these intangibles for impairment yearly, or more recurrently if the specifics or situations represent they can be impaired. This analysis incorporates comparison of the anticipated fair value of the intangibles for a coverage group to its carrying quantity in order to identify if a write-down to fair value is needed. Intangible assets do not have any physical form like tangible assets (McDonough, 2010), as ...