Questions to be answered:

Management Discussion & Analysis section and Miscellaneous

1.
Read the Management Discussion and Analysis and theChairmans letter
to shareholders. Describe the major productsand services of the company.
The Coca-Cola Company is the leading owner and marketer of
nonalcoholicbeverage brands. Coca-Cola either owns or licenses 500 of the world
snonalcoholic beverage brands. Coca-Cola is recognized as the worlds
mostvaluable brand. There are approximately 54 billion beverages of all
kindsserved worldwide, of the 54 billion Coca-Cola accounts for approximately
1.6billion of those beverages. Coca-Cola sells syrups, concentrates, and sodas
tobottling companies and retailers.
2.
Describe some of the specific details of the companysfinancial
and operational performance. Based on what youread in the Management
Discussion & Analysis sections, doyou get a positive or negative impression
about the company?Describe why.
Coca-Cola follows the accounting principles that are generally accepted in
theUnited States (GAAP). When making decisions, the company executivesalways
consider the impact on stakeholders of the company and are carefulto behave
ethically and follow the policies of Coca-Cola. The company onlyrecords revenue
when collectability is assured and delivery of all
productshas occurred. The company attempts to be very realistic when recordingin
formation that is not set in stone. Also, Coca-Cola takes potential marketrisks into
account on their financial statements in order to more accuratelydisplay the state of
their company.We have a very positive impression of this company. It seems to us
that it isvery profitable, very dominant, and holds a very large amount of
marketpower. What makes Coca-Cola
very unique is their brand name which isnearly impossible for other companies to e
ven attempt to compete with.During the year of 2009, Coca-Cola introduced
Minute Maid Pulpy Super Milkyin China, launched a beverage named Frestea
Green to target active andhealthy individuals in Indonesia, introduced Burn Energy
Shots in Europe andsponsored several international events. Also, Coca-Cola
became the firstcompany in the beverage industry to commit to disclosing all of th
eirbeverage energy information (calories, kilocalories, etc) on all of theirpackaging
.It is evident that Coca-Cola is very focused on the needs of their consumersand is
constantly working on developing products that would benefit theircustomers.
Coca-Cola adapts its products to the location to which it intendsto market them.
For example, in Japan there is a big national interest inrecycling, therefore CocaCola took this into consideration and created a

bottle that is very light and able to be compacted so that it takes up

verylittle space when recycled. It is this care for its customers and ethicalfinancial
behavior that ensures Coca-Colas yearly success and profitability. Inthe future,
Coca-Cola will always be one of the most dominant companies inAmerica as well
as in other countries, regardless of the state of the economy.
3.
Who is the companys independent auditor and what type of audit opinion
was rendered? What does this opinion mean?Who is responsible for the
companys financial statements?
Earnest & Young is the independent auditor for Coca-Cola Company. Theirauditor
stated that in their opinion Coca-Cola presented all their data fairlyand awarded
Coca-Cola a status of unqualified. This means that, to the
bestof their knowledge, Coca-Colas information is accurate. Since Earnest & You
ng gave Coca-Cola an unqualified status, both Coca-Cola and Earnest & Young are
now responsible for the companys financial statements.
4.
What has the companys stock been selling at over the pastthree years? You
can use quarterly or yearly information.What are your observations about the
trend in stock price?What might be the cause(s) for this trend?
Over the past three fiscal years for Coca-Cola, 2007-2009, the companysstock has
reached a high of $63.81 and a low of $39.10.The fact that thecompany has stayed
in the same approximate $20 range means that thecompanys sales have stayed
somewhat consistent. In the current year of 2010, the companys stock has reached
a high of $64.69 and a low of $49.47.In 2009, it reached a low of $39.10 and a
high of $59.11. In 2008, it reacheda low of $41.50 and a high of $63.77. In 2007, it
reached a low of $45.89 anda high of $63.81. The drop of stock prices was due to a
dispute with thecompany Costco who, in November 2009, stopped purchasing
Coca-Cola andDiet Coke products.
5.
What has the Price Earnings ratio (P/E) been for the past 3years? What does
the P/E ratio tell you about this company?How does this compare to the
industry and nearestcompetitor?
Price Earnings Ratio = Current Stock Price per Share / Earnings per
ShareStock Price 12/31/07$16012/31/08 $12112/31/09 $158Earnings per Share
2007$2.592008$2.512009$2.95
Coca-Cola Price Earnings Ratio each year 2007$160 / 2.59 =$61.782008$121 / 2
.51 =$48.212009$158 / 2.95 =$52.56In 2007, the Coca-Cola Company had an
immensely high Price Earnings Ratioof $61.78, meaning that investors were
optimistic about the future prospectsof the company. However, in 2008, the Price
Earnings Ratio fell heavily
downto $48.21, meaning that investors were beginning to question the futureprosp
ects of the company. Once 2009 came around, the ratio rose to $53.56,showing that
the company is beginning to bounce back and is showing moreof a promising

future. Over the years, the Coca-Cola Company has steadilygrown in stock price.
Over the past few years, even when they were havingdifficulties in 2008, they
showed that they were still able to surpass theircompetition more and more each
year.
Income Statement and Profitability
6.
Calculate and interpret a horizontal analysis on Sales and NetIncome for the
years presented in your annual report.
Horizontal Analysis on Sales
Net Operating Revenues (In Millions)20092008
$30,990$31,944Dollar Change in Account
Balance:Current Year Balance Prior Year Balance => $30,990 - $31,944 =$(1,00
4)Percentage Change in Account
Balance:Dollar Change Prior Year Balance => $(1,004) $31,944 = 3.1%Horiz
ontal Analysis on Net Income
Consolidated Net Income (In Millions)20092008
$6,906 $5,807Dollar Change in Account
Balance:Current Year Balance Prior Year Balance => $6,906 - $5,807 =$1,099Pe
rcentage Change in Account
Balance:Dollar Change Prior Year Balance => $1,099 $5,807 =18.9%As you
can see from this analysis, there was an approximately 1 million dollarincrease in
the Net Income of this company. This is an 18.9% change fromthe year before and
is a promising sign for the company. Net Revenues,
however, decreased by approximately 3% since 2008. Although, Coca-Cola
isearning less money per year according to the analysis on Sales, they wereable to
reduce their expenses for the year (including cost of goods sold) andgreatly impact
their net income for 2009 in order to increase their earnings.

Debt to Total Assets Ratio

: Coca-Colas debt to total assets ratio for 2009and 2008 was 0.49 this ratio is
relatively low, indicating that they do not havea very risky capital structure,
especially when comparing these numbers totheir leading competitor, Pepsis ratio
was 0.66 in 2008 and 0.58 in 2009. They are close, but Pepsi seems to have a
riskier capital structure than Coca-Cola.
Debt to Total Equity Ratio
: In 2009 Coca-Cola had a debt to total equityratio of 0.96, which is a slight
decrease from their 2008 ratio of 0.98. Pepsi onthe other hand had a ratio of 1.37 in
2009 and 1.97 in 2008. Coca-Cola isdoing better, because they rely less on
liabilities than they do on equity. Thistells us that there is less risk in investing

in Coca-Cola. Both ratios aredecreasing annually, however Coca-Cola is still the

able to pay off its long-term debts better than Pepsi.
Times Interest Earned
: In 2009 Coca-Cola had a ratio of 24.98 which is alarge increase from 2008 when
their ratio was 18.81. This means that theyhave a comfortable coverage of interest,
and that the coverage has increasedfrom the previous year. Pepsi however is has
a declining coverage of interest.In 2008 Pepsi had a ratio of 21.6 but it declined in
2009 to 20.6.Based on the tree ratios Coca-Colas capital structure is trending to
less debt,which is decreasing the risks of insolvency. Currently CocaCola is notinsolvent, and can still handle their debts. Coca-Cola is doing better
handlingtheir long-term debts than Pepsi. Pepsis capital structure is heading
moretowards debt which could be risky, but at the moment it appears both
Pepsiand Coca-Cola can sufficiently pay off their debts.
26
Relevant Documents:
Balance Sheet
THE COCA-COLA COMPANY AND SUBSIDIARIESCONSOLIDATED
BALANCE SHEETS
December 31,
2009
2008(In millions except par value)
ASSETS
CURRENT ASSETS Cash and cash equivalentsShort-term investments
$ 7,0212,130
$ 4,701 TOTAL CASH, CASH EQUIVALENTS AND SHORTTERM INVESTMENTS
9,151
4,701Marketable securities Trade accounts receivable, less allowances of $55 and
$51,respectively Inventories Prepaid expenses and other assets
62 3,7582,3542,226
2783,0902,1871,920 TOTAL CURRENT ASSETS
17,551
12,176EQUITY METHOD INVESTMENTS
OTHER INVESTMENTS, PRINCIPALLY BOTTLINGCOMPANIES OTHER
ASSETS PROPERTY, PLANT AND EQUIPMENT net TRADEMARKSWITH
INDEFINITE LIVES GOODWILL OTHER INTANGIBLE ASSETS
6,2175381,9769,5616,1834,2242,421
5,316463 1,7338,3266,0594,0292,417
27

TOTAL ASSETS

$ 48,671
$ 40,519
LIABILITIES AND EQUITY
CURRENT LIABILITIES Accounts payable and accruedexpenses Loans and
notes payable Current maturities of long-term debt Accruedincome taxes
$ 6,6576,749 51264
$ 6,2056,066 465252 TOTAL CURRENT LIABILITIES
13,721
12,988LONG-TERM DEBT OTHER LIABILITIES DEFERRED INCOME
TAXES THE COCA-COLACOMPANY SHAREOWNERS EQUITY
Common stock, $0.25 par value; Authorized 5,600 shares; Issued 3,520 and
3,519 shares, respectively Capital surplusReinvested earnings Accumulated other
comprehensive income (loss) Treasury stock,at cost 1,217 and 1,207 shares,
respectively
5,0592,9651,5808808,53741,537(757)(25,398)
2,7813,011 877880 7,96638,513(2,674)(24,213)EQUITY ATTRIBUTABLE TO
SHAREOWNERS OF THE COCA-COLA COMPANY
EQUITYATTRIBUTABLE TO NONCONTROLLING INTERESTS
24,799547
20,472390 TOTAL EQUITY
25,346
20,862 TOTAL LIABILITIES AND EQUITY
$ 48,671
$ 40,519
Income Statement
THE COCA-COLA COMPANY AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF INCOME
Year Ended December 31,
2009
2008 2007(In millions except per share data)
NET OPERATING REVENUES
Costof goods sold
$ 30,99011,088
$ 31,94411,374$ 28,85710,406
GROSS PROFIT
Selling, general and administrative expensesOther operating charges
19,90211,358313
20,57011,774 35018,45110,945 254
OPERATING INCOME
Interest income Interest expense Equityincome (loss) net Other income (loss)
net
8,231249 355781 40
8,446 333438 (874)397,252 236456 668219
INCOME BEFORE INCOME TAXES
Income taxes

8,9462,040
7,5061,6327,9191,892
CONSOLIDATED NET INCOME
Less: Net income attributable tononcontrolling interests
6,906 82
5,874 67 6,027 46
NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THECOCACOLA COMPANY $ 6,824
$ 5,807 $ 5,981
BASIC NET INCOME PER SHARE
1
$ 2.95
$ 2.51 $ 2.59
DILUTED NET INCOME PER SHARE
1
$ 2.93
$ 2.49 $ 2.57
AVERAGE SHARES OUTSTANDING
Effect of dilutive securities
2,314 15
2,315 21 2,313 18
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 2,329
2,336 2,331