Exercise 8C: Determine the Cash Value of Coca-Cola

Purpose

It is simply good business to continually know the cash value (corporate valuation) of your company. This exercise gives you practice in determining the total worth of a company using several methods. To perform this analysis, use Coca-Colas financial statements as given in the Cohesion Case.

Instructions

Step 1 Calculate the financial worth of Coca-Cola based on four approaches: (1) the net worth method, (2) the net income method, (3) the price-earnings ratio method, and (4) the outstanding shares method.

Step 2 Get an average of the four methods. In a dollar amount, how much is Coca-Cola worth?

\begin{tabular}{|lrrrc|} \hline \hline Income Statement & 12/31/16 & 12/31/17 & & Percent Change \\ \hline Revenues & $41,863 & $35,410 & & 15.41% \\ Cost of Goods Sold & 16,465 & 13,256 & & 19.49% \\ Gross Profit & 25,398 & 22,154 & & 12.77% \\ Operating Expenses & 16,772 & 14,653 & & 12.63% \\ EBIT & 8,626 & 7,501 & & 13.04% \\ Interest Expense & 490 & 759 & & 54.90% \\ EBT & 8,136 & 6,742 & & 17.13% \\ Tax & 1,586 & 5,560 & & 250.57% \\ Non-Recurring Events & (23) & 66 & & SA \\ Net Income & 6,527 & 1,248 & & 80.88% \\ \hline \end{tabular} \begin{tabular}{|lrrrc|} \hline \hline Income Statement & 12/31/16 & 12/31/17 & & Percent Change \\ \hline Revenues & $41,863 & $35,410 & & 15.41% \\ Cost of Goods Sold & 16,465 & 13,256 & & 19.49% \\ Gross Profit & 25,398 & 22,154 & & 12.77% \\ Operating Expenses & 16,772 & 14,653 & & 12.63% \\ EBIT & 8,626 & 7,501 & & 13.04% \\ Interest Expense & 490 & 759 & & 54.90% \\ EBT & 8,136 & 6,742 & & 17.13% \\ Tax & 1,586 & 5,560 & & 250.57% \\ Non-Recurring Events & (23) & 66 & & SA \\ Net Income & 6,527 & 1,248 & & 80.88% \\ \hline \end{tabular}