Portfolio Management

According to the March 19, 2012 issue of Fortune Magazine, The Coca-Cola Company is the fourth most highly admired company in the world (Fortune Online, 2012). While this is a huge accolade, it does not dictate whether an investor should purchase the company’s equity or debt. Many other factors must go into this kind of decision. What are the strengths of the company that will translate into return on equity or ability to service debt? What challenges might the company face that could significantly hamper its growth or impede its cash flow? Would investing in competitors produce better results? After a thorough analysis of the Coca-Cola Company’s strengths, weaknesses, opportunities, threats, and its financial performance and prospects for future prosperity, it is evident that a portfolio manager would be wise in investing in both the company’s equity and debt in the medium to long term.

With a history that dates back to the late 1800’s, Coca-Cola has positioned itself as not only one of the most recognizable and admirable brands in the world, but also as one of the best long term investments a portfolio manager can make. The company formally began operations in 1886 when Dr. John Styth Pemberton created an elixir for headaches (Coca-Cola Co., 2011), the basic formula which would eventually evolve to the Coca-Cola beverage that over 200 countries throughout the world know today (The Coca-Cola Company, 2011). In 1893, two years after druggist Asa G. Candler purchased the company, Coca-Cola paid its first dividend. It has paid a dividend on its common stock every year since (Coca-Cola Co., 2011). When a portfolio manager is choosing his or her investment options, the strength and continuity of a stock’s dividend speaks volumes to the strength and stability of the investment option. Coca-Cola’s strength and stability is without question.

Over the next 115 years, the company grew to be one of the largest in the world with revenues of $46.5 billion in...