Financial Analysis of Coca-Cola - Capstone Project Example

Coca-Cola, the largest manufacturer, and distributor of non-alcoholic beverages concentrate, and syrups have had its humble start in 1886 with an initial investment of US $ 70. This one-man business enterprise has risen to a vast empire with its capital base of US $ 50 billion. Truly a rag to riches story, Coca Cola has made itself a household name in more than 200 countries with a total of 400 variety products and is now the ring leader in the soft drink scenario. The singularity of Coca Cola in the soft drink market is apparent through its enviable consuming rate of more than one billion drinks per day.

It is wrong to assume that this soft drink company has had its journey equally on a soft path; its triumphant journey through various ups and downs in its history can be looked upon as a substantial material for a case study in business strategy. The fast pace in economic and regulatory changes coupled with the globalization of business activities has increased the complexity and importance of financial management. Financial management, as an integral part of overall management, is interrelated with economics, accounting, marketing, production, and quantitative methods.

Basic knowledge of macro and microeconomics is necessary to understand and formulate an institutional framework aimed at increased profit-making. The scope and function of financial management are categorized into two broader types namely, Traditional Approach and Modern Approach.  The modern approach is an analytical way of viewing the financial problems of a firm and it is broken down into three major components of i) investment decisions ii) financing decisions, and iii) dividend policy decisions.

The financial analysis of Coca Cola Company, having multinational operations, calls for critical analysis of its financial status in order to have wealth maximizing action consistent with the preservation of the wealth of stakeholders. Financial statement analysis is a meaningful study of the financial statement, the balance sheet, and the profit and loss account, relating to a specific period of a business, to ascertain the prevailing state of affairs and reasons thereof (Metcalf and Titard.1976, 157).