Coca-Cola Beverages Florida, LLC is a popular soft drink manufacturer and distributor all over the world. As the largest distributor of the famous Coca-Cola drink, among others, the company receives an annual revenue of approximately 1 billion dollars. From the company’s income statement during the year 2018, the consolidated net income reflects a loss from the previous years. The gross profit recorded for the year 2018 is approximately 4 billion dollars before taxes, while the net income is approximately 700 million dollars after taxes. The income statement reveals that the company incurred losses in the respective year, which implies an underperformance. Some of the attributable factors for the loss recorded include massive operational costs which minimize business efficiency and therefore not attractive to potential investors (Coca-Cola, 2018).
The cash flow statement analysis reveals the company's net cash flows generated from operations which are approximately 1.5 million dollars. The total cash flow used in financing the company's activities is approximately about 700 million. Some of these activities include repayment of loans dividends paid and interests paid. The cash flow statement reveals a huge potential for the company to be profitable in future, making it's stock attractive to potential investors. From the income statement, potential investors may gauge the revenue growth of the company, gross profit, net profit margin and net income growth to assess the value of the stock and its potential (Coca-Cola, 2018). From the cash flow statements, potential investors may assess the company’s operations, financing and investing activities to decide whether to purchase the company’s stock.
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Investors assess financial statements like the income statement and cash flow statement, among other factors to make a stock purchase decision. In the current case, the Coca-Cola stock at the time (2018) seemed attractive considering the company's portfolio and previous trends. An investor may also analyze financial reports by the company to thoroughly assess potential elements that would affect the stock, including risk factors and legal proceeding that may be present. Investors must be thorough in the analysis, which aids in the decision-making process of the stock purchase.
References
Coca-Cola. (2018). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Retrieved from https://www.coca-colacompany.com/content/dam/journey/us/en/policies/pdf/shareowner-services/2018-annual-report-on-form-10-K.pdf
