Coca Cola Strategy

16- VALUE OF THE FIRM

Financial and Value Review

1) Size of firm

Net worth of $16.92billion

2) Financial condition with a weighted current ratio of 0.94 Coke falls below the required 2, therefore they fail this test.

3) Earnings stability there has been positive net income for the past ten years and they 8pass this test.

4) Earnings growth

Earnings are greater than five years ago. Pass. Overall we would not suggest Coke being placed in the defensive investor’s portfolio at this time.

Opinion: Seeing that currently Coke is trading at a much higher price than our internal valuation we would be sceptical to purchase this security at this time. However, Coke is an excellent firm with great management, products, dividend history, and earnings. This stock we would place on our review list and periodically watch the share price to see if it dips and falls more in line with what we would be comfortable paying.

Summary in points:

Strengths:

• Leading brand value and a strong brand portfolio

• Coca-Cola, Diet Coke, Sprite and Fanta

• Large investments in brand promotions

• sells its products in more than 200 countries

• Company also owns bottled water production and still beverage facilities as well as a facility that manufactures juice concentrates.

• These three segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments

• Return on total assets increases over the period consistently 2005, 06, 07 15.47%, 16.55%, and 16.95% respectively.

Weaknesses:

• Negative publicity in India

• Inventory turnover decreased by 13.29%

• Return on equity decreased by 40.50%

• Sluggish performance in North America Coca-Cola’s performance in North America was far from robust

• Collection form debtors decreased by 15.68%

Internal Factor Evaluation Matrix (IFE) of Coca Cola Co

KEY INTERNAL FACTORS Weight Rating Total Score

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