The Case

ChatGPT and Financial Statement Analysis

Part I

How much do you know about ChatGPT?

ChatGPT is an artificial intelligence $($AI$)$ tool that uses natural language processing techniques to

respond to user$-$generated prompts. The $"$GPT$"$ initials stand for generative pretrained

transformer. That is$,$ you ask ChatGPT a question or provide a prompt, it replies using natural

language. People have talked about and used ChatGPT for their work.

Signup for free ChatGPT.

Please note that OpenAI $($the company that designed ChatGPT$)$ collects a lot of data from

ChatGPT users.

o The privacy policy states that this data can be shared with third$-$party vendors, law

enforcement, affiliates, and other users.

o While you can request to have your ChatGPT account deleted, the prompts that you

input into ChatGPT cannot be deleted. If you were to ask ChatGPT about sensitive or

controversial topics, this data cannot be removed.

Please read over the privacy policy and choose to opt out and let your professor know if you do

not feel comfortable having your data collected and shared as outlined in the policy.

Please remember to individually complete the Starting Survey before you start working on Part

II$.$

Part II

Financial Statement Analysis

Background

The Company, a global leader in the beverage industry, emphasizes a people$-$centered

approach to its operations, innovation, and growth strategies. The Company operates on a

global scale, selling beverage products in more than $200$ countries and territories. The

company's history dates back to $1886$ in the United States. It owns or licenses a wide variety of

beverage brands across several categories, including its flagship Trademark Loong, sparkling

flavors, water, plant$-$based beverages, and emerging beverages.

The company makes its branded beverage products available worldwide through a

network of independent bottling partners, distributors, wholesalers, and retailers, in addition to

its own bottling and distribution operations. Beverages bearing Loong $\text{'}$s trademarks account for

$2\mathrm{.}2$ billion of the estimated $64$ billion servings of all beverages consumed globally every day.

Loong$$s success is attributed to its ability to offer a wide variety of beverage options that meet

consumer desires, needs, and lifestyles, coupled with effective execution by its employees.

The Company operates in two main lines of business: concentrate operations and

finished product operations. Concentrate Operations involves selling beverage concentrates

and syrups to authorized bottling operations $($bottlers$).$ The bottlers combine these with water

and sweeteners to produce finished beverages, which are then packaged and sold. Finished

Product Operations involves selling finished beverages directly to retailers or through

distributors and wholesalers. These operations typically yield higher revenues, but lower gross

profit margins compared to concentrate operations. Finished product operations are primarily

conducted through the company's consolidated bottling and distribution operations, included

in the Bottling Investments operating segment, as well as through non$-$bottling finished product

operations in certain markets. Additionally, the Company manufactures fountain syrups in the

United States for sale to fountain retailers or authorized wholesalers, contributing to the

company's North America operating segment.

There are several key areas of concern and risk that the company faces, alongside the

broader commercial beverage industry. First, the company has taken steps to offer a wider

range of beverage options with reduced, low, or no calories, provide transparent nutritional

information, offer products in various sizes to support portion control, and market their

products responsibly, particularly avoiding targeting children under $13.$

Changing demographics, lifestyles, and an increase in consumer information have led to

consumers demanding more personalized beverage choices, with a focus on sustainability and

transparency. The Company is committed to evolving its product portfolio to meet these needs,

expanding into profitable categories, and focusing on innovative and sustainable packaging and

ingredient education.

The Company recognizes the need to adapt by enhancing its marketing and innovation

efforts in the digital space, increasing investments in e$-$commerce, and offering products in

sizes suitable for online sales to maintain brand relevance and loyalty. The company has

established rigorous safety and quality standards and engages in continuous innovation to meet

consumer needs and preferences.

Scenario:

You are part of a team of financial analysts at a leading investment firm. Your team has been

tasked with evaluating the Company's financial health and performance over the past three

years $(2021,2022,$ and $2023)$ to determine the company's investment potential. The firm is

particularly interested in understanding how the Company has navigated the challenges and

risks identified, including changes in consumer