Discussion Forum Week 9

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Trine University *

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FINANCIAL

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Finance

Date

Nov 24, 2024

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docx

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Uploaded by MasterScience9621

Step 1: Calculate the Net Worth of Coca-Cola Company To determine the net worth of Coca-Cola Company, we start by looking at its balance sheet for the fiscal year. The balance sheet shows the company's assets, liabilities, and shareholders' equity. The shareholders' equity is the difference between the company's assets and liabilities and represents the net worth of the company (Rajagukguk & Siagian, 2021). In millions of USD: Total Assets = $80,697 Total Liabilities = $46,857 Shareholders' Equity = $33,840 Net Worth = Total Assets - Total Liabilities = $80,697 - $46,857 = $33,840 million Step 2: Calculate the Net Income of Coca-Cola Company To determine the net income of Coca-Cola Company, we need to look at the company's income statement for the fiscal year. The income statement shows the company's revenues, expenses, and net income. In millions of USD: Total Revenue = $37,266 Total Expenses = $35,410 Net Income = $1,856 million Step 3: Determine the Cash Value of Coca-Cola Company using 3 different methods a. Net Worth Method The Net Worth Method calculates the cash value of a company as the net worth per share multiplied by the number of outstanding shares (Bustani et al., 2021).

Net Worth per Share = Net Worth / Outstanding Shares = $33,840 million / 4,299 million outstanding shares = $7.87 per share Cash Value = Net Worth per Share * Outstanding Shares = $7.87 * 4,299 million = $33,841.13 million b. Net Income Method The Net Income Method calculates the cash value of a company by multiplying its net income by a price- earnings ratio (P/E ratio). Price-Earnings Ratio = Stock Price / Earnings per Share Earnings per Share = Net Income / Outstanding Shares = $1,856 million / 4,299 million = $0.43 per share P/E Ratio = Stock Price / Earnings per Share = $45.28 / $0.43 = 105.12 Cash Value = Net Income * P/E Ratio = $1,856 million * 105.12 = $194,911.2 million

c. Outstanding Shares Method The Outstanding Shares Method calculates the cash value of a company as the outstanding shares multiplied by the current stock price. Cash Value = Outstanding Shares * Stock Price = 4,299 million * $45.28 = $194,901.72 million Coca-Cola Cash Value Determination After submitting the assignment and working with my peers, we came to an agreement that the cash value of Coca-Cola Company for the fiscal year is $33,841.13 million using the Net Worth Method, $194,911.2 million using the Net Income Method, and $194,901.72 million using the Outstanding Shares Method. We determined that the cash value using the Net Worth Method is lower compared to the other two methods because it only takes into account the company's net worth and not its earning potential. The Net Income Method and Outstanding Shares Method take into account the company's earnings and stock price, which can greatly impact the cash value. Furthermore, we also noticed that the cash value using the Net Income Method is slightly higher than the Outstanding Shares Method. This could be because the P/E ratio used in the Net Income Method is calculated based on the current stock price, whereas the Outstanding Shares Method uses the current stock price directly. Overall, we can conclude that the cash value of Coca-Cola Company is around $194 billion, which is a considerable amount and reflects the company's strong financial performance. However, it is important to note that the cash value can fluctuate depending on various factors such as the company's financial health, market conditions, and potential growth opportunities. Thus, it is crucial to regularly reassess and monitor the company's cash value to make informed investment decisions. References Bustani, B., Kurniaty, K., & Widyanti, R. (2021). The Effect of Earning Per Share, Price to Book Value, Dividend Payout Ratio, and Net Profit Margin on the Stock Price in Indonesia Stock Exchange. Jurnal Maksipreneur: Manajemen, Koperasi, dan Entrepreneurship , 11 (1), 1-18.

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Rajagukguk, J., & Siagian, H. (2021). The effect of liquidity and total asset turnover on profitability: Research study n pharmaceutical companies in indonesia stock exchange. Ekonomis: Journal of Economics and Business , 5 (2), 444-448.