Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Coca-Cola Co. (NYSE:KO)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure

Coca-Cola Co., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Trademarks 9,266  6,682  6,729  6,097  5,989 
Bottlers’ franchise rights 109  51  138  3,676  6,000 
Goodwill 16,764  10,263  9,401  10,629  11,289 
Other 110  106  106  128  164 
Indefinite-lived intangible assets 26,249  17,102  16,374  20,530  23,442 
Customer relationships 344  185  205  392  493 
Bottlers’ franchise rights 341  30  213  487  604 
Trademarks 177  186  182  228  211 
Other 55  88  94  179  97 
Definite-lived intangible assets, gross carrying amount 917  489  694  1,286  1,405 
Accumulated amortization (400) (321) (432) (688) (715)
Definite-lived intangible assets, net 517  168  262  598  690 
Intangible assets 26,766  17,270  16,636  21,128  24,132 

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Coca-Cola Co.’s goodwill increased from 2017 to 2018 and from 2018 to 2019.
Intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Coca-Cola Co.’s intangible assets increased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Goodwill

Coca-Cola Co., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 86,381  83,216  87,896  87,270  90,093 
Less: Goodwill 16,764  10,263  9,401  10,629  11,289 
Total assets (adjusted) 69,617  72,953  78,495  76,641  78,804 
Adjustment to Equity Attributable To Shareowners Of The Coca-Cola Company
Equity attributable to shareowners of The Coca-Cola Company (as reported) 18,981  16,981  17,072  23,062  25,554 
Less: Goodwill 16,764  10,263  9,401  10,629  11,289 
Equity attributable to shareowners of The Coca-Cola Company (adjusted) 2,217  6,718  7,671  12,433  14,265 
Adjustment to Net Income Attributable To Shareowners Of The Coca-Cola Company
Net income attributable to shareowners of The Coca-Cola Company (as reported) 8,920  6,434  1,248  6,527  7,351 
Add: Goodwill impairment —  —  390  10 
Net income attributable to shareowners of The Coca-Cola Company (adjusted) 8,920  6,434  1,638  6,537  7,355 

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).


Coca-Cola Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Coca-Cola Co., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net Profit Margin
Reported net profit margin 23.94% 20.20% 3.52% 15.59% 16.60%
Adjusted net profit margin 23.94% 20.20% 4.63% 15.62% 16.60%
Total Asset Turnover
Reported total asset turnover 0.43 0.38 0.40 0.48 0.49
Adjusted total asset turnover 0.54 0.44 0.45 0.55 0.56
Financial Leverage
Reported financial leverage 4.55 4.90 5.15 3.78 3.53
Adjusted financial leverage 31.40 10.86 10.23 6.16 5.52
Return on Equity (ROE)
Reported ROE 46.99% 37.89% 7.31% 28.30% 28.77%
Adjusted ROE 402.35% 95.77% 21.35% 52.58% 51.56%
Return on Assets (ROA)
Reported ROA 10.33% 7.73% 1.42% 7.48% 8.16%
Adjusted ROA 12.81% 8.82% 2.09% 8.53% 9.33%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Coca-Cola Co.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Coca-Cola Co.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted 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 ratio increased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Coca-Cola Co.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Coca-Cola Co.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Coca-Cola Co., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,248  6,527  7,351 
Net operating revenues 37,266  31,856  35,410  41,863  44,294 
Profitability Ratio
Net profit margin1 23.94% 20.20% 3.52% 15.59% 16.60%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,638  6,537  7,355 
Net operating revenues 37,266  31,856  35,410  41,863  44,294 
Profitability Ratio
Adjusted net profit margin2 23.94% 20.20% 4.63% 15.62% 16.60%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Net profit margin = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Net operating revenues
= 100 × 8,920 ÷ 37,266 = 23.94%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to shareowners of The Coca-Cola Company ÷ Net operating revenues
= 100 × 8,920 ÷ 37,266 = 23.94%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Coca-Cola Co.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net operating revenues 37,266  31,856  35,410  41,863  44,294 
Total assets 86,381  83,216  87,896  87,270  90,093 
Activity Ratio
Total asset turnover1 0.43 0.38 0.40 0.48 0.49
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net operating revenues 37,266  31,856  35,410  41,863  44,294 
Adjusted total assets 69,617  72,953  78,495  76,641  78,804 
Activity Ratio
Adjusted total asset turnover2 0.54 0.44 0.45 0.55 0.56

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Total asset turnover = Net operating revenues ÷ Total assets
= 37,266 ÷ 86,381 = 0.43

2 Adjusted total asset turnover = Net operating revenues ÷ Adjusted total assets
= 37,266 ÷ 69,617 = 0.54

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Coca-Cola Co.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 86,381  83,216  87,896  87,270  90,093 
Equity attributable to shareowners of The Coca-Cola Company 18,981  16,981  17,072  23,062  25,554 
Solvency Ratio
Financial leverage1 4.55 4.90 5.15 3.78 3.53
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 69,617  72,953  78,495  76,641  78,804 
Adjusted equity attributable to shareowners of The Coca-Cola Company 2,217  6,718  7,671  12,433  14,265 
Solvency Ratio
Adjusted financial leverage2 31.40 10.86 10.23 6.16 5.52

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Financial leverage = Total assets ÷ Equity attributable to shareowners of The Coca-Cola Company
= 86,381 ÷ 18,981 = 4.55

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to shareowners of The Coca-Cola Company
= 69,617 ÷ 2,217 = 31.40

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted 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 ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,248  6,527  7,351 
Equity attributable to shareowners of The Coca-Cola Company 18,981  16,981  17,072  23,062  25,554 
Profitability Ratio
ROE1 46.99% 37.89% 7.31% 28.30% 28.77%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,638  6,537  7,355 
Adjusted equity attributable to shareowners of The Coca-Cola Company 2,217  6,718  7,671  12,433  14,265 
Profitability Ratio
Adjusted ROE2 402.35% 95.77% 21.35% 52.58% 51.56%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

2019 Calculations

1 ROE = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Equity attributable to shareowners of The Coca-Cola Company
= 100 × 8,920 ÷ 18,981 = 46.99%

2 Adjusted ROE = 100 × Adjusted net income attributable to shareowners of The Coca-Cola Company ÷ Adjusted equity attributable to shareowners of The Coca-Cola Company
= 100 × 8,920 ÷ 2,217 = 402.35%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Coca-Cola Co.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,248  6,527  7,351 
Total assets 86,381  83,216  87,896  87,270  90,093 
Profitability Ratio
ROA1 10.33% 7.73% 1.42% 7.48% 8.16%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net income attributable to shareowners of The Coca-Cola Company 8,920  6,434  1,638  6,537  7,355 
Adjusted total assets 69,617  72,953  78,495  76,641  78,804 
Profitability Ratio
Adjusted ROA2 12.81% 8.82% 2.09% 8.53% 9.33%

Based on: 10-K (filing date: 2020-02-24), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-25).

2019 Calculations

1 ROA = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Total assets
= 100 × 8,920 ÷ 86,381 = 10.33%

2 Adjusted ROA = 100 × Adjusted net income attributable to shareowners of The Coca-Cola Company ÷ Adjusted total assets
= 100 × 8,920 ÷ 69,617 = 12.81%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Coca-Cola Co.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.