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Coca-Cola Co. (KO) | Analysis of Equity Method Investment

Selected Financial Data

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Coca-Cola Co.'s selected financial data

USD $ in millions

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
Equity income (loss), net
Equity method investments
   
ROA (equity method investments only)1 % % % % %

Source: Based on data from Coca-Cola Co. Annual Reports

2010 Calculations

1 ROA (equity method investments only) = 100 × Equity income (loss), net ÷ Equity method investments
= 100 × ÷ = %

Item Description The company
Equity income (loss), net This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment. Coca-Cola Co.'s equity income (loss), net increased from 2008 to 2009 and from 2009 to 2010.
Equity method investments This item represents the carrying amount on the entity's balance sheet of its investment in common stock of an equity method investee. This is not an indicator of the fair value of the investment, rather it is the initial cost adjusted for the entity's share of earnings and losses of the investee, adjusted for any distributions (dividends) and other than temporary impairment losses recognized. Coca-Cola Co.'s equity method investments increased from 2008 to 2009 and from 2009 to 2010.
ROA (equity method investments only) A profitability ratio calculated as equity income (loss), net divided by equity method investments. Coca-Cola Co.'s ROA of equity method investments improved from 2008 to 2009 and from 2009 to 2010.

Summarized Financial Information

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Summarized financial information for Coca-Cola Co.'s affiliates, subsidiaries, associates, and joint ventures

USD $ in millions

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
Shareowners' equity
Noncontrolling interest
Total equity (deficit)
Total liabilities and equity
Net operating revenues
Cost of goods sold
Gross profit
Operating income
Consolidated net income (loss)
Less: Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to common shareowners

Source: Based on data from Coca-Cola Co. Annual Reports

Item Description The company
Shareowners' equity This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets, liabilities, and results of operations of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may include total equity or capital (as applicable). Shareowners' equity of Coca-Cola Co.'s affiliates, subsidiaries, associates, and joint ventures increased from 2008 to 2009 and from 2009 to 2010.
Net income (loss) attributable to common shareowners This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may, at a minimum, include net income or loss. Net income (loss) attributable to common shareowners of Coca-Cola Co.'s affiliates, subsidiaries, associates, and joint ventures increased from 2008 to 2009 and from 2009 to 2010.

Adjustments to Financial Data: Proportionate Consolidation

Recognition of Coca-Cola Co.'s proportionate share of affiliates, subsidiaries, associates, and joint ventures assets and liabilities instead of net equity.

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Coca-Cola Co., adjustments to financial data

USD $ in millions

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
Weighted average percentage interest in affiliates % % % % %
  Adjustment to Current Assets
Current assets (as reported)
Add: Current assets of affiliates (adjustment)
Current assets (adjusted)
  Adjustment to Total Assets
Total assets (as reported)
Less: Equity method investments (adjustment)
Add: Total assets of affiliates (adjustment)
Total assets (adjusted)
  Adjustment to Current Liabilities
Current liabilities (as reported)
Add: Current liabilities of affiliates (adjustment)
Current liabilities (adjusted)
  Adjustment to Total Liabilities
Total liabilities (as reported)
Add: Total liabilities of affiliates (adjustment)
Total liabilities (adjusted)
  Adjustment to Equity Attributable To Noncontrolling Interests
Equity attributable to noncontrolling interests (as reported)
Add: Noncontrolling interest of affiliates (adjustment)
Equity attributable to noncontrolling interests (adjusted)
  Adjustment to Net Operating Revenues
Net operating revenues (as reported)
Add: Net operating revenues of affiliates (adjustment)
Net operating revenues (adjusted)

Adjusted Ratios: Proportionate Consolidation (Summary)

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Coca-Cola Co., adjusted ratios

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  Current Ratio
Reported current ratio
Adjusted current ratio
  Net Profit Margin
Reported net profit margin % % % % %
Adjusted net profit margin % % % % %
  Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
  Financial Leverage
Reported financial leverage
Adjusted financial leverage
  Return on Assets (ROA)
Reported ROA % % % % %
Adjusted ROA % % % % %
Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Coca-Cola Co.'s adjusted current ratio improved from 2008 to 2009 but then slightly deteriorated from 2009 to 2010.
Adjusted net profit margin An indicator of profitability, calculated as net income divided by adjusted revenue. Coca-Cola Co.'s adjusted net profit margin improved from 2008 to 2009 and from 2009 to 2010.
Adjusted total asset turnover An activity ratio calculated as adjusted total revenue divided by adjusted total assets. Coca-Cola Co.'s adjusted total asset turnover deteriorated from 2008 to 2009 and from 2009 to 2010.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Coca-Cola Co.'s adjusted financial leverage declined from 2008 to 2009 but then increased from 2009 to 2010 not reaching 2008 level.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Coca-Cola Co.'s adjusted ROA improved from 2008 to 2009 and from 2009 to 2010.

Adjusted Current Ratio

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Current assets (USD $ in millions)
Current liabilities (USD $ in millions)
   
Current ratio1
  Adjusted: from Equity Method to Proportionate Consolidation
Adjusted current assets (USD $ in millions)
Adjusted current liabilities (USD $ in millions)
   
Adjusted current ratio2

2010 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= ÷ =

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Coca-Cola Co.'s adjusted current ratio improved from 2008 to 2009 but then slightly deteriorated from 2009 to 2010.

Adjusted Net Profit Margin

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net income attributable to shareholders of The Coca-Cola Company (USD $ in millions)
Net operating revenues (USD $ in millions)
   
Net profit margin1 % % % % %
  Adjusted: from Equity Method to Proportionate Consolidation
Net income attributable to shareholders of The Coca-Cola Company (USD $ in millions)
Adjusted net operating revenues (USD $ in millions)
   
Adjusted net profit margin2 % % % % %

2010 Calculations

1 Net profit margin = 100 × Net income attributable to shareholders of The Coca-Cola Company ÷ Net operating revenues
= 100 × ÷ = %

2 Adjusted net profit margin = 100 × Net income attributable to shareholders of The Coca-Cola Company ÷ Adjusted net operating revenues
= 100 × ÷ = %

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as net income divided by adjusted revenue. Coca-Cola Co.'s adjusted net profit margin improved from 2008 to 2009 and from 2009 to 2010.

Adjusted Total Asset Turnover

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net operating revenues (USD $ in millions)
Total assets (USD $ in millions)
   
Total asset turnover1
  Adjusted: from Equity Method to Proportionate Consolidation
Adjusted net operating revenues (USD $ in millions)
Adjusted total assets (USD $ in millions)
   
Adjusted total asset turnover2

2010 Calculations

1 Total asset turnover = Net operating revenues ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Adjusted net operating revenues ÷ Adjusted total assets
= ÷ =

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as adjusted total revenue divided by adjusted total assets. Coca-Cola Co.'s adjusted total asset turnover deteriorated from 2008 to 2009 and from 2009 to 2010.

Adjusted Financial Leverage

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Total assets (USD $ in millions)
Equity attributable to shareholders of The Coca-Cola Company (USD $ in millions)
   
Financial leverage1
  Adjusted: from Equity Method to Proportionate Consolidation
Adjusted total assets (USD $ in millions)
Equity attributable to shareholders of The Coca-Cola Company (USD $ in millions)
   
Adjusted financial leverage2

2010 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to shareholders of The Coca-Cola Company
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Equity attributable to shareholders of The Coca-Cola Company
= ÷ =

Ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Coca-Cola Co.'s adjusted financial leverage declined from 2008 to 2009 but then increased from 2009 to 2010 not reaching 2008 level.

Adjusted Return On Assets (ROA)

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    Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006
  As Reported
Net income attributable to shareholders of The Coca-Cola Company (USD $ in millions)
Total assets (USD $ in millions)
   
ROA1 % % % % %
  Adjusted: from Equity Method to Proportionate Consolidation
Net income attributable to shareholders of The Coca-Cola Company (USD $ in millions)
Adjusted total assets (USD $ in millions)
   
Adjusted ROA2 % % % % %

1 ROA = 100 × Net income attributable to shareholders of The Coca-Cola Company ÷ Total assets
= 100 × ÷ = %

2 Adjusted ROA = 100 × Net income attributable to shareholders of The Coca-Cola Company ÷ Adjusted total assets
= 100 × ÷ = %

Ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Coca-Cola Co.'s adjusted ROA improved from 2008 to 2009 and from 2009 to 2010.

February 8, 2012

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