Stock Analysis on Net

Coca-Cola Co. (NYSE:KO)

Financial Reporting Quality: Aggregate Accruals 

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Coca-Cola Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Operating Assets
Total assets 97,703 92,763 94,354 87,296 86,381
Less: Cash and cash equivalents 9,366 9,519 9,684 6,795 6,480
Less: Short-term investments 2,997 1,043 1,242 1,771 1,467
Less: Marketable securities 1,300 1,069 1,699 2,348 3,228
Operating assets 84,040 81,132 81,729 76,382 75,206
Operating Liabilities
Total liabilities 70,223 66,937 69,494 66,012 65,283
Less: Loans and notes payable 4,557 2,373 3,307 2,183 10,994
Less: Current maturities of long-term debt 1,960 399 1,338 485 4,253
Less: Long-term debt, excluding current maturities 35,547 36,377 38,116 40,125 27,516
Operating liabilities 28,159 27,788 26,733 23,219 22,520
 
Net operating assets1 55,881 53,344 54,996 53,163 52,686
Balance-sheet-based aggregate accruals2 2,537 (1,652) 1,833 477
Financial Ratio
Balance-sheet-based accruals ratio3 4.65% -3.05% 3.39% 0.90%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Mondelēz International Inc. -4.19% 7.90% 0.47% -0.91%
PepsiCo Inc. 3.36% 0.98% 4.76% 15.56%
Balance-Sheet-Based Accruals Ratio, Sector
Food, Beverage & Tobacco 1.51% 1.65% 2.97% 4.95%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples 2.35% 3.17% -0.53% 0.46%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Net operating assets = Operating assets – Operating liabilities
= 84,04028,159 = 55,881

2 2023 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2023 – Net operating assets2022
= 55,88153,344 = 2,537

3 2023 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,537 ÷ [(55,881 + 53,344) ÷ 2] = 4.65%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Coca-Cola Co. deteriorated earnings quality from 2022 to 2023.

Cash-Flow-Statement-Based Accruals Ratio

Coca-Cola Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income attributable to shareowners of The Coca-Cola Company 10,714 9,542 9,771 7,747 8,920
Less: Net cash provided by operating activities 11,599 11,018 12,625 9,844 10,471
Less: Net cash used in investing activities (3,349) (763) (2,765) (1,477) (3,976)
Cash-flow-statement-based aggregate accruals 2,464 (713) (89) (620) 2,425
Financial Ratio
Cash-flow-statement-based accruals ratio1 4.51% -1.32% -0.16% -1.17%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Mondelēz International Inc. -5.47% 8.02% 0.42% -2.05%
PepsiCo Inc. 2.17% 1.04% -1.48% 18.19%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Food, Beverage & Tobacco 0.67% 2.33% -0.43% 4.65%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples 1.90% 1.41% -4.95% -1.05%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,464 ÷ [(55,881 + 53,344) ÷ 2] = 4.51%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Coca-Cola Co. deteriorated earnings quality from 2022 to 2023.