Coca-Cola Co.’s 2012
Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report: Income Taxes Payable $471 Short-term Investments and Marketable Securities 8,109 Cash 8,442 Other non-current Liabilities 10,449 Common Stock 1,760 Receivables 4,812 Other Current Assets 2,973 Long-term Investments 10,448 Other Non-current Assets 3,585 Property, Plant and Equipment 23,486 Trademarks 6,527 Other Intangible Assets 20,810 Allowance for Doubtful Accounts 53 Accumulated Depreciation 9,010 Accounts Payable 8,680 Short Term Notes Payable 17,874 Prepaid Expenses 2,781 Other Current Liabilities 796 Long-Term Liabilities 14,736 Paid-in-Capital in Excess of Par Value 11,379 Retained Earnings 55,038 Inventories 3,264 Treasury Stock 35,009 Other information taken from the Annual Report: Sales Revenue for 2012 $48,017 Cost of Goods Sold for 2012 19,053 Net Income for 2012 9,019 Inventory Balance on 12/31/11 3,092 Net Accounts Receivable Balance on 12/31/11 4,920 Total Assets on 12/31/11 79,974 Equity Balance on 12/31/11 31,921 Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work) (Points : 36)
2. The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013: Accounts Payable $38,080 Accounts Receivable 6,768 Cash 7,781 Common Stock 3,952 Cost of Goods Sold 352,488 Income Tax Expense 7,981 Interest Expenses 2,064 Membership Revenues 3,048 Net Sales 466,114 Operating, Selling and Administrative Expenses 88,873 Retained Earnings 72,978 Required: Using the information provided above: 1. Prepare a multiple-step income statement 2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results. (Points : 36)
3. Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below: Cash flow from operating activities In millions In millions For the year ended 2012 For the year ended 2011 Net (loss) earnings $(12,650) $7,074 Depreciation and amortization 5,095 4,984 Impairment of goodwill and purchased intangible assets 18,035 885 Stock-based compensation expense 635 685 Provision for doubtful accounts 142 81 Provision for inventory 277 217 Restructuring charges 2,266 645 Deferred taxes on earnings (711) 166 Excess tax benefit from stock-based competition (12) (163) Other, net 265 (46) Accounts and financing receivables 1,269 (227) Inventory 890 (1,252) Accounts payable (1,414) 275 Taxes on earnings (320) 610 Restructuring (840) (1,002) Other assets and liabilities (2,356) (293) Net cash provided by operating activities 10,571 12,639 Cash flows from investing activities: Investment in property, plant, and equipment (3,706) (4,539) Proceeds from sale of property, plant, and equipment 617 999 Purchases of available-for-sale securities and other investments (972) (96) Maturities and sales of available-for-sale securities and other investment 662 68 Payments in connection with business acquisitions, net of cash acquired (141) (10,480) Proceeds from business divestiture, net 87 89 Net cash used in investing activities (3,453) (13,959) Cash flow from financing activities: (Payments) issuance of commercial paper and notes payable, net (2,775) (1,270) Issuance of debt 5,154 11,942 Payment of debt (4,333) (2,336) Issuance of common stock under employee stock plans 716 896 Repurchase of common stock (1,619) (10,117) Excess tax benefit from stock-based compensation 12 163 Cash dividends paid (1,015) (844) Net cash used in financing activities (3,860) (1,566) Increase (decrease) in cash and cash equivalents 3,258 (2,886) Cash and cash equivalents at beginning of period 8,043 10,929 Cash and cash equivalents at end of period $11,301 $8,043 Required: 1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections. 2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
4. You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”
Assuming the goal is to maximize net income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.
a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.
b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?
(Points : 36)
5. Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.
Johnson & Johnson