## Profitability Analysis

Difficulty: Beginner

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).

### Ratios (Summary)

**Coca-Cola Co., profitability ratios**

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

Ratio | Description | The company |
---|---|---|

Gross profit margin |
Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. | Coca-Cola Co.'s gross profit margin improved from 2015 to 2016 and from 2016 to 2017. |

Operating profit margin |
A profitability ratio calculated as operating income divided by revenue. | Coca-Cola Co.'s operating profit margin improved from 2015 to 2016 and from 2016 to 2017. |

Net profit margin |
An indicator of profitability, calculated as net income divided by revenue. | Coca-Cola Co.'s net profit margin deteriorated from 2015 to 2016 and from 2016 to 2017. |

ROE |
A profitability ratio calculated as net income divided by shareholders' equity. | Coca-Cola Co.'s ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |

ROA |
A profitability ratio calculated as net income divided by total assets. | Coca-Cola Co.'s ROA deteriorated from 2015 to 2016 and from 2016 to 2017. |

### Gross Profit Margin

**Coca-Cola Co., gross profit margin calculation**

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

*2017 Calculations*

^{1} Gross profit margin = 100 × Gross profit ÷ Net operating revenues

= 100 × 22,154 ÷ 35,410 = 62.56%

Ratio | Description | The company |
---|---|---|

Gross profit margin |
Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. | Coca-Cola Co.'s gross profit margin improved from 2015 to 2016 and from 2016 to 2017. |

### Operating Profit Margin

**Coca-Cola Co., operating profit margin calculation, comparison to benchmarks**

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

*2017 Calculations*

^{1} Operating profit margin = 100 × Operating income ÷ Net operating revenues

= 100 × 7,501 ÷ 35,410 = 21.18%

Ratio | Description | The company |
---|---|---|

Operating profit margin |
A profitability ratio calculated as operating income divided by revenue. | Coca-Cola Co.'s operating profit margin improved from 2015 to 2016 and from 2016 to 2017. |

### Net Profit Margin

**Coca-Cola Co., net profit margin calculation, comparison to benchmarks**

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

*2017 Calculations*

^{1} Net profit margin = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Net operating revenues

= 100 × 1,248 ÷ 35,410 = 3.52%

Ratio | Description | The company |
---|---|---|

Net profit margin |
An indicator of profitability, calculated as net income divided by revenue. | Coca-Cola Co.'s net profit margin deteriorated from 2015 to 2016 and from 2016 to 2017. |

### Return on Equity (ROE)

**Coca-Cola Co., ROE calculation, comparison to benchmarks**

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

*2017 Calculations*

^{1} ROE = 100 × Net income attributable to shareowners of The Coca-Cola Company ÷ Equity attributable to shareowners of The Coca-Cola Company

= 100 × 1,248 ÷ 17,072 = 7.31%

Ratio | Description | The company |
---|---|---|

ROE |
A profitability ratio calculated as net income divided by shareholders' equity. | Coca-Cola Co.'s ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |

### Return on Assets (ROA)

**Coca-Cola Co., ROA calculation, comparison to benchmarks**

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

*2017 Calculations*

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

= 100 × 1,248 ÷ 87,896 = 1.42%

Ratio | Description | The company |
---|---|---|

ROA |
A profitability ratio calculated as net income divided by total assets. | Coca-Cola Co.'s ROA deteriorated from 2015 to 2016 and from 2016 to 2017. |