Disclosure Analysis Paper - Essay Example

According to Hilton (1994), finished products with The Coca Cola trade mark are presently selling in over 200 countries worldwide. The success of The Coca-Cola is its ability to reach the customers and providing them with unrivalled variety of products that satisfies their needs, desires and lifestyle choices. The Coca-Cola Company is a publicly traded and listed in the New York Stock Exchange (NYSE). Such company’s success is communicated to shareholders and other interested parties through the financial statements.

Nevertheless, the financial statements provide summarized information and further detailed information in terms of notes. Notes to the financial statements are very essential for clear understanding of the financial reports. This paper seeks to analyze disclosures contained within the notes to the financial statements with respect to cash and cash equivalents, receivables and inventories. It goes further to provide a list identifying the components of cash and cash equivalents. Cash and cash equivalents Cash Any information necessary for full understanding of the financial statements should be included as notes while at the same time avoiding information that is not needed to expound on financial statement.

The Coca-Cola Company cash and cash equivalents comprise of both cash and short-term investments. . credit risk by applying minimum credit standards and diversifies counterparties through application of procedures provided for monitoring credit risk concentrations. Cash equivalents The company considers short-term investments as cash equivalents due to their easy convertibility into cash. This category comprises other investments and time deposits with maturities of more than three months, but not more than one year.

The investments grouped under this category comprises of securities that are easily convertible into cash. In this vein, the company can easily convert them into cash at any given time it is faced with cash flow challenges. Receivables Account receivables are referred to as dues from customers. According to Hopwood, (1974), these are amounts, which have not been received from customers by the close of an accounting period. There are different methods through which receivables are recorded in the books of accounts, and such information is provided as part of the notes to the financial statements.

In this regard, the notes provide that The Coca-Cola Company receivables are recorded at net realizable value. The notes further indicate that the value provided has an allowance for bad debts. Therefore, it records any foreseeable loss on trade account receivable by charging it to provision for doubtful debts. Moreover, the notes indicate that allowance for doubtful debts is computed based on historical values of the write-offs, an amount of unpaid accounts after considering the contractual terms and the ensuing relationship with the customers and bottling partners.

However, the notes conclude by mentioning that the exposure posed by concentration of credit risk is adequately controlled due to diversity of geographical areas covered by the company’s