E12.7. Core Income and Core Profitability for The Coca Cola Company (Easy) A student in your study group prepared the following reformulated income statement for the Coca Cola Company for 2007 (in millions): Sales Cost of sales Gross margin Advertising expenses General and administrative expenses Other operating expenses (net) Operating income from sales (before tax) $28,857 10,406 18,451 2,800 8,145 81 7,425 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 (in millions) were also prepared: Net operating assets Net financial obligations Common shareholders' equity 2007 2006 $26,858 $18.952 5,114 $21,744 2,032 $16,920 You point out that the income statement fails to identify core operating income from sales. Identify core operating income from sales (after tax) and then make the following calcula- tions. Use average balance sheet amounts in denominators where applicable.

a. Core profit margin from sales

b. Core profit margin

c. Care return on set operating assets (RNOA) Real World Connection Exercises E4.5, E46, E4.7, B11.7, E14.9, E15.12, E16.7 and E19.4 deal with Coke, as do Minicases M4. 1, M5.2, and M6.2.