Coca-Cola Co. (KO)

Enterprise Value to EBITDA (EV/EBITDA)

Difficulty: Intermediate

Coca-Cola Co., EBITDA calculation

USD $ in millions

12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net income attributable to shareowners of The Coca-Cola Company	1,248	6,527	7,351	7,098	8,584
Add: Net income attributable to noncontrolling interest	35	23	15	26	42
Less: Income from discontinued operations, net of income taxes	101	–	–	–	–
Add: Income tax expense	5,560	1,586	2,239	2,201	2,851
Earnings before tax (EBT)	6,742	8,136	9,605	9,325	11,477
Add: Interest expense	841	733	856	483	463
Earnings before interest and tax (EBIT)	7,583	8,869	10,461	9,808	11,940
Add: Depreciation and amortization	1,260	1,787	1,970	1,976	1,977
Earnings before interest, tax, depreciation and amortization (EBITDA)	8,843	10,656	12,431	11,784	13,917

Item	Description	The company
EBITDA	To calculate EBITDA analysts start with net earnings. To that earnings number, interest, taxes, depreciation, and amortization are added. EBITDA as a pre-interest number is a flow to all providers of capital.	Coca-Cola Co.'s EBITDA declined from 2015 to 2016 and from 2016 to 2017.

Coca-Cola Co., current EV/EBITDA calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)	227,016
Earnings before interest, tax, depreciation and amortization (EBITDA)	8,843
Ratio
EV/EBITDA	25.67
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc.	13.90
EV/EBITDA, Sector
Beverages	18.64
EV/EBITDA, Industry
Consumer Goods	12.06

If company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.

Otherwise, if company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.

Coca-Cola Co., historical EV/EBITDA calculation, comparison to benchmarks

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Selected Financial Data (USD $ in millions)
Enterprise value (EV)¹	216,786	203,047	215,714	203,912	184,810
Earnings before interest, tax, depreciation and amortization (EBITDA)²	8,843	10,656	12,431	11,784	13,917
Ratio
EV/EBITDA³	24.51	19.05	17.35	17.30	13.28
Benchmarks
EV/EBITDA, Competitors
PepsiCo Inc.	13.65	14.13	14.91	13.75	11.15
EV/EBITDA, Sector
Beverages	18.02	16.42	16.22	15.49	12.27
EV/EBITDA, Industry
Consumer Goods	12.30	11.84	12.68	13.08	10.91

2017 Calculations

³ EV/EBITDA = EV ÷ EBITDA
= 216,786 ÷ 8,843 = 24.51

Ratio	Description	The company
EV/EBITDA	EV/EBITDA is a valuation indicator for the overall company rather than common stock.	Coca-Cola Co.'s EV/EBITDA ratio increased from 2015 to 2016 and from 2016 to 2017.