Here is a reformulated income statement for the Coca-Cola Company for 2007 (in millions): Sales .................... $
Question:
Here is a reformulated income statement for the Coca-Cola Company for 2007 (in millions):
Sales .................... $ 28,857
Cost of sales ................ 10,406
Gross margin ............... 18,451
Advertising expenses ............. 2,800
General and administrative expenses ....... 8,145
Other expenses (net) ............... 81
Operating income from sales (before tax) ..... 7,425
Tax ..................... 1,972
Operating income from sales (after tax) ..... 5,453
Equity income from bottling subsidiaries (after tax) . 668
Operating income .............. 6,121
Net financial expense (after tax) .......... 140
Earnings ................. $ 5,981
Summary balance sheets for 2007 and 2006 are as follows (in millions):
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For the following questions, use average balance sheet amounts.
a. Calculate return on net operating assets (RNOA) and net borrowing cost (NBC) for 2007.
b. Calculate financial leverage (FLEY).
c. Show that the financing leverage equation that explains the return on common equity (ROCE) holds for this firm.
d. Calculate the profit margin (PM) and asset turnover (ATO) for 2007 and show that RNOA = PM × ATO.
e. Calculate the gross margin ratio, the operating profit margin ratio from sales, and the operating profit marginratio.
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Average balance sheet amounts are as follows 2007 2006 Average Net operating ...View the full answer
