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\fFinancial Position Coke's scal year ends on December 3|. As indicated in Exhibit 1, Coke posted revenues of $35.4 billion in 20\". compared to $4l.8 billion in 2(II6. it IS percent decline. Net income was $L28 billion compared to $6.66 billion in 20l6. an 81 percent decline. Declines in both ofthesc numbers are alarming. Note all the negative numbers in Exhibit I. even though for most companies 20H was a very properous year. Coke's balance sheets are provided in Exhibit 2. Note that Coke purchased $3.? billion of its own stock in 2017. in 20W. Coke paid $5 billion out to shareholders in dividends even though the company's net income was only $1 .28 billion. Thus, hasicaily the company borrowed money to pay dividends: this event resulted in a negative retained earnings for the year 201? and a large drop in re- tained earnings on the 2017 balance sheet. as shown in Exhibit 2. Note in Exhibit 2 that Coke's paid- in-capital increased a whopping 89 percent in 2017 revealing high use of equityr as a source of capital. EXHIBIT 1 Coke's Income Statements (in millions of dollars) Income Statement 12!31!16 12131\"? Percent Change Revenues $41363 $35.4\") { lS.4l% Cost of Goods Sold |6.465 H.256 {y l9.49% Gross Prot 25.398 22, i54 { | 2.77% Operating Expenses 16.172 H.653 { -12.63% EBIT 8.626 7.50] { l3.04% Interest Expense 490 759 f 54.90% EBT 8.136 6,742 '7 l';'. 13% Tax 1.586 5.560 1- 250.57% Non-Recu rring Events (23) 66 in NA Net Income 6,527 L248 {7 -80.83% \f\f