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Analysis of Operating Leases

Difficulty: Advanced

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee statement of financial position, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments

Coca-Cola Co., future operating lease payments

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Total undiscounted future operating lease payments1 (USD $ in millions)
Discount rate2 % % % % %
Total present value of future operating lease payments (USD $ in millions)

1 Source: Coca-Cola Co. Annual Reports

2 Weighted-average interest rate for Coca-Cola Co.'s debt

Year Future operating lease payments (as reported)1 Year Future operating lease payments (estimated) Present value at %
2018 2018
2019 2019
2020 2020
2021 2021
2022 2022
2023 and thereafter 2023
2024
2025
Total:

1 Source: Coca-Cola Co. Annual Reports

Year Future operating lease payments (as reported)1 Year Future operating lease payments (estimated) Present value at %
2017 2017
2018 2018
2019 2019
2020 2020
2021 2021
2022 and thereafter 2022
2023
2024
2025
Total:

1 Source: Coca-Cola Co. Annual Reports

Year Future operating lease payments (as reported)1 Year Future operating lease payments (estimated) Present value at %
2016 2016
2017 2017
2018 2018
2019 2019
2020 2020
2021 and thereafter 2021
2022
2023
2024
Total:

1 Source: Coca-Cola Co. Annual Reports

Year Future operating lease payments (as reported)1 Year Future operating lease payments (estimated) Present value at %
2015 2015
2016 2016
2017 2017
2018 2018
2019 2019
2020 and thereafter 2020
2021
2022
2023
Total:

1 Source: Coca-Cola Co. Annual Reports

Year Future operating lease payments (as reported)1 Year Future operating lease payments (estimated) Present value at %
2014 2014
2015 2015
2016 2016
2017 2017
2018 2018
2019 and thereafter 2019
2020
2021
2022
Total:

1 Source: Coca-Cola Co. Annual Reports

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Analyst Adjustments for Operating Leases

Coca-Cola Co., adjustments to financial data

USD $ in millions

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Adjustment to Total Assets
Total assets (as reported)
Add: Operating leased assets1
Total assets (adjusted)
Adjustment to Total Debt
Total debt (as reported)
Add: Operating lease obligations2
Total debt (adjusted)

1, 2 Equal to total present value of future operating lease payments. See Details »

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Adjusted Ratios for Operating Leases (Summary)

Coca-Cola Co., adjusted ratios

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Total Asset Turnover1
Reported total asset turnover
Adjusted total asset turnover
Debt to Equity2
Reported debt to equity
Adjusted debt to equity
Return on Assets3 (ROA)
Reported ROA % % % % %
Adjusted ROA % % % % %
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 deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. Coca-Cola Co.'s adjusted debt-to-equity deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Coca-Cola Co.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Total Asset Turnover

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net operating revenues (USD $ in millions)
Total assets (USD $ in millions)
Total asset turnover1
Adjusted for Operating Leases
Net operating revenues (USD $ in millions)
Adjusted total assets (USD $ in millions)
Adjusted total asset turnover2

2017 Calculations

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

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

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 deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Debt to Equity

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Total debt (USD $ in millions)
Equity attributable to shareowners of The Coca-Cola Company (USD $ in millions)
Debt to equity1
Adjusted for Operating Leases
Adjusted total debt (USD $ in millions)
Equity attributable to shareowners of The Coca-Cola Company (USD $ in millions)
Adjusted debt to equity2

2017 Calculations

1 Debt to equity = Total debt ÷ Equity attributable to shareowners of The Coca-Cola Company
= ÷ =

2 Adjusted debt to equity = Adjusted total debt ÷ Equity attributable to shareowners of The Coca-Cola Company
= ÷ =

Ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders' equity. Coca-Cola Co.'s adjusted debt-to-equity deteriorated from 2015 to 2016 and from 2016 to 2017.

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Adjusted Return on Assets (ROA)

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income attributable to shareowners of The Coca-Cola Company (USD $ in millions)
Total assets (USD $ in millions)
ROA1 % % % % %
Adjusted for Operating Leases
Net income attributable to shareowners of The Coca-Cola Company (USD $ in millions)
Adjusted total assets (USD $ in millions)
Adjusted ROA2 % % % % %

2017 Calculations

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

2 Adjusted ROA = 100 × Net income attributable to shareowners 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 deteriorated from 2015 to 2016 and from 2016 to 2017.

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