Analysis Of Coca-Cola

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ITEM 1A. GLOBAL CURRENT EVENT

It is no secret that the demand for carbonated soft drinks is declining, and rather rapidly. Several states including California and Illinois in the United States are already proposing taxes on unhealthy beverages that could potentially double the price of case of soda. The United States is not the only country taking an initiative on the soft drink epidemic. Mexico has also implemented a tax of one peso per liter of soda. To put things in perspective, this tax is about 7.6 cents. The United States is surprisingly not the only market Coca-Cola makes substantial profit off of. Believe it or not, Brazil has the third largest carbonated soft drink market in the world. With the strong soft drink resistance in one
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My strong recommendation would be that it would be a very sound investment if one were to invest in The Coca-Cola company. Please reference in Item 1A Figure A for the following analysis. I believe that my decision weighed heavily on the comparison of Coca-Cola’s financial ratios to that of their competitors. The first ratio I analyzed was the debt to equity ratio. I believe this ratio is important in making a decision for many reasons. When a company like Coca-Cola has a high debt to equity ratio, this is not always a bad thing. In fact, because Coca-Cola is in a capital intensive industry, they have the opportunity to increase their total earnings by outside financing like so. Another key ratio is return on sales. Coca-Cola’s return on sales percentage is higher than its two major competitors, telling us that there is more profit being generated per dollar of sales than any other company. A current ratio is a very important because it determines the company’s health. Coca-Cola has $1.13 in assets for every $1 in liabilities. Companies in the soft drink industry tend to run on debt. Although Coca-Cola is not running its company off of debt, the current ratio is considerably low. Referring back to the debt to equity ratio, many companies have the opportunity to increase their total earnings by running their company this way. These ratios are strong indicators as to why Coca-Cola is successful. Another key reason why Coca-Cola is worth investing in is because it is considered a low risk. Although the higher the risk the higher return, a person will benefit from owning Coca-Cola 's low risk stock. With a dividend reinvestment plan, you can continuously invest the quarterly dividends received to build a larger amount of money invested. It does add up over the

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