133725425 The Coca- Cola Company's SEC 10k
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The Coca-Cola Company’s SEC 10K
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The Coca-Cola Company’s SEC 10K
Question 1
The main companies that Coca-Cola considers significant equity method investments are
CCEP, Monster Beverage Corporation (“Monster”), AC Bebidas, Coca-Cola FEMSA, Coca-Cola
HBC AG (“Coca-Cola Hellenic”), and Coca-Cola Bottlers Japan Holdings Inc. (“CCBJHI”) (The
Coca-Cola Company, 2019). Most of these investments are bottlers who help Coca-Cola
distribute its products. Others are individual firms whose operations generate income for the
company.
Question 2
The main criteria employed by the Coca-Cola company is having a 15-30% ownership in the
equity method investments. The 15-30% ownership ensures that the company has a big influence
on the operations of these investments and some control over their policies (The Coca-Cola
Company, 2019). Therefore, it can achieve its business and financial goals by influencing how
the subsidiaries are run.
Question 3
Coca-Cola describes its application of the equity method by including the company’s
proportionate share of net income (loss) from equity investments into its consolidated net
income. Additionally, the firm reports its share of net income. This leads to an increase in the
carrying value of the equity method investments and the equity income net of consolidated
income.
Question 4
Coca-Cola reported an equity income of $1.008 billion for the year ending on Dec 31,
2018. The recorded equity income was a reduction from the 1.071 reported in 2017 (The Coca-
3
Cola Company, 2019). In this case, the company experiences a $63 million reduction in the
equity income.
Question 5
Equity method investment
Carrying Amounts (millions
$)
Fair Value (millions $)
CCEP
3,551
4,033
Monster Beverage
Corporation
3,573
5,026
Coca-Cola FEMSA
1,714
3,401
Coca-Cola HBC AG
1,260
2,681
Coca-Cola Bottlers
Japan Holdings Inc.
(“CCBJHI”)
1,142
978
The two values are primarily important during valuation. They help one determine an
over or undervaluation. For instance, in a case where there is an excess payment that has been
allocated to an asset, then the amount is assigned to goodwill. The result is an adjustment in the
EMI’s income account, allowing Coca-Cola to easily determine the carrying amount for each
investee.
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Reference
The Coca-Cola Company. (2019). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December
31, 2018. https://investors.coca-colacompany.com/filings-reports/annual-filings-10-
k/content/0000021344-19-000014/a2018123110-k.htm?
TB_iframe=true&height=auto&width=auto&preload=false
Related Questions
a. Based on the information in the picture, calculate, using market values, Globex PLC weighted average cost of capital. Please show workings
b. Criticallly discuss any two assumptions underpinning the post tax version of Modigliani & Miller model of the relationship between WACC and gearing
arrow_forward
Please send complete handwritten solution for Q7
only handwritten solution accepted
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a) Based on the information in the picture, calculate, using market values, Globex Plc's Weighted average cost of capital (show all workings clearly) b) critically discuss any two of the assumptions underpinning the post tax version of the Modigliani & Miller model of the relationship between WACC and gearing
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LL
R
You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same
industry, LotsofDebt, Inc. finances its $36.00 million in assets with $33.00 million in debt and $3.00 million in equity. LotsofEquity, Inc
finances its $36.00 million in assets with $3.00 million in debt and $33..00 million in equity.
Calculate the debt ratio. (Round your answers to 2 decimal places.)
LotsofDebt, Inc.
LotsofEquity. Ino
Calculate the equity multiplier. (Round your answers to 2 declmal places.)
Equity multiplier
LotsofDebt, Inc.
LotsofEquity. Ine.
Calculate the debt-to-equity. (Round your answers to 2 declmal places.)
Debt-to-equity
LotsofDebt. Inc.
LotsofEquity, Inc.
Mc
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klp.4
arrow_forward
The total market value of the firm's equity is determined by
Select one:
O a. the firm's accountants
O b. the firm's management
O c. regulators at the Securities and Exchange Commission
(SEC)
O d. investors in the stock market
O e. investors in the bond market
arrow_forward
EXERCISE 6: SOURCES OF EQUITY FINANCING
Match the following with the following equity investors: shareholders, risk capital
investors, and government institutions.
• Venture capitalist
Common shareholders
Export Development Canada
• Angel investors
• Preferred shareholders
• Business Development Bank of Canada
arrow_forward
Prepare a statement of equity for Darwin Enterprise.
arrow_forward
Question 1: 5 marks
You are an investor in Borrow-Happy Ltd., which has a debt-equity ratio of 3:1.
Though you have had a good experience thus far, you are influenced by an
expert's advice published in media and decide to move your investment to a firm
called Equity-Safe Inc. which is completely equity financed. You will do this
by selling off your shares worth $35,000 and use the sales proceeds to partly
finance your share purchase in the new firm. If you wish to retain the same
earnings that you enjoyed with Borrow-Happy Ltd. how many dollars' worth of
shares you will need to buy in Equity-Safe Inc.? Provide supporting computations
to your response.
Question 2: 5 marks
arrow_forward
equity/debt
an IOU or promise to pay from/a claim to partial ownership in
Clinton and the othwr stockholders/the bondholders
arrow_forward
Sinaloa Appliance, Incorporated, a private firm that manufactures home appliances, has hired you to estimate the company's beta. You
have obtained the following equity betas for publicly traded firms that also manufacture home appliances.
Firm
iRobot
Middleby's
National Presto
Newell Brands
Whirlpool
Beta
1.03
1.98
0.23
1.18
1.88
Asset beta
Debt
$0
789
($ millions)
11,988
4,565
Market Value of
Equity
$ 3,690
7,690
948
27,670
14,890
a. Estimate an asset beta for Sinaloa Appliance.
Note: Round intermediate calculations and final answer to 3 decimal places.
arrow_forward
please give me answer in relatable
arrow_forward
Sinaloa Appliance, Incorporated, a private firm that manufactures home appliances, has hired you to estimate the company's
beta. You have obtained the following equity betas for publicly traded firms that also manufacture home appliances.
Firm
iRobot
Middleby's
National Presto
Newell Brands
Whirlpool
Asset beta
Beta
0.89
1.84
0.09
1.04
1.74
L
Debt
$0
747
0
11,918
4,495
($ millions)
Market Value of
Equity
$ 2,990
7,410
794
a. Estimate an asset beta for Sinaloa Appliance.
Note: Round intermediate calculations and final answer to 3 decimal places.
26,270
13,910
arrow_forward
Question 6
is financing obtained from investment firms that specialize in financing small, high-
growth companies and receive an ownership interest and a voice in management in return
for their money.
Debt financing
Venture capital
Equity financing
Entrepreneurial capital
O Corporate stock financing
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aba
DCACU RAG
2) ECRI Corporation is a holding company with four main subsidiaries. The
percentage of its business coming from cach of the subsidiaries, and their
respective betas, are as follows:
Beta
Subsidiary
Percentage of Business
0.80
0.90
1.60
1.50
45%
30%
Electric utility
Cable company
Real estate
International/special
projects
15%
10%
a. What is the holding company's beta?
percent and the market risk premium
b. Assume that the risk-free rate is
is 3 percent. What is the holding company's required rate of return?
arrow_forward
9
arrow_forward
Which statement(s) below is (are) correct relative to investment companies? (select all that apply)
The shares of an investment company will always trade at their NAV.
O An investment company enables investors to pool their money with other investors to make diversification more affordable and manageable.
O An investment company keeps track of all purchases and sales, of constituent assets, for tax purposes.
The shares of an investment company are always redeemable at the fund company who issued the original shares.
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Hello tutor please provide this question solution general accounting
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