Overview of the Annual Report and Form 10k and the Balance Sheet
I should be able to understand your answer and see what the numerical support is without looking at your tables. For all problem sets, please show tables and calculations with each answer (unsupported answers will be marked wrong), not in separate tables. I should be able to look at your tables or calculations and see what the answer should be without actually reading it. And I should be able to read and understand your interpretation of a table without having to look at it. Clearly show and label any and all calculations. Your output should look professional. 1.
Corporate Message: What does Coca Cola’s 2012 Annual Review tell you about the message the company wants to convey to its readers? Point out examples to support your discussion. 2. Describe the three types of Coca Cola’s bottling relationships. Name the significant companies that are accounted for by the equity method. Does Coca Cola have a controlling interest in these companies? Explain and demonstrate why or why not? What would the company’s balance sheet look like if Coke were to account for its publicly traded equity method investments at fair value rather than using the equity method? .
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Except for Property, plant, and equipment, what was Coca Cola’s largest single asset (not asset category) at 12/31/2012? How does it compare to 2011? Why do you think it increased? What was its relative impact on the change in total assets? Which component of Coca Cola’s balance sheet is the primary factor causing the company’s change in total assets from December 31, 2011 to December 31, 2012? How much did this factor change by relative to (i. e. , as a percentage of) the change in total assets? 4.
Income Tax: Is Coca Cola’s effective (i. e. , average) tax rate more or less than the U. S. federal (“statutory”) rate? What is the primary reason(s) that it was more/less in 2012? 5. Look at Coke’s 10K. For 2012, is the amount of dividends declared equal to the amount of dividends paid? What are these amounts? Where did you find them? Did dividends declared increase, decrease, or remain the same – per share and in total, compared to 2011? 6. Prepare a 2011 and 2012 common size balance sheet for Coke. Comment on differences between the two.
A common size balance sheet is one for which each item in the balance sheet is divided by total assets. Download Pepsi’s 2012 10-K from Pepsico. com 7. Using the information in Pepsi’s 2012 10-K, calculate the company’s a. Total market value for 2012 and 2011. b. Book value to common shareholders for 2012 and 2011 (Hint: Pepsi does not have dividends in arrears on their preferred shares. Use Pepsi’s call price located in the footnotes for the preferred stock claim. Just subtract the total preferred stock call price amount from total stockholders’ equity. c. Market to book value ratios for 2012 and 2011. d. How do the above ratios for Pepsi compare to those of Coca Cola for the same two years? How do you interpret any differences? 8. Make a common size balance sheet for Pepsi for 2012 (round your percentages to 1 decimal place – i. e. , the same as 0. xxx ) Examine the two companies’ common size balance sheets. What do you notice about a. Cash and cash equivalents b. Net receivables c. Current liabilities d. Long term debt What do you think any significant differences between these ratios might mean?
Do you notice any other significant differences between Coke and Pepsi? 9. Working capital: Working capital equals total current assets minus total current liabilities. How much working capital does Pepsi have at 12/31/2012 and 12/31/2011? How much working capital does Coca Cola have at 12/31/2012 and 12/31/2011? Can you directly compare the two companies’ working capital? Why or why not? If not, how could you make them comparable? Are the two companies experiencing similar changes in working capital?