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

1. Step 1Calculate 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.

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

3. Step 3Compare your analyses and conclusions with those of other students.

ASSURANCE OF LEARNING EXERCISE 8C Template:

Determine the Cash Value of Coca-Cola Company

Information Needed: (Except for stock price and shares outstanding, all information is found in the Cohesion Case in Chapter 1. Remember that everything is in millions except for EPS.)

Stock price: Look at Exercise 8A

Number of shares outstanding: Look at Exercise 8A

Net Income: Look at Exhibit 1 in Coca-Cola Cohesion Case (Use 12/31/17 data)

Goodwill: Look at Exhibit 2 in Coca-Cola Cohesion Case (Use 12/31/17 data)

Intangibles: Look at Exhibit 2 in Coca-Cola Cohesion Case (Use 12/31/17 data)

Equity: Look at Exhibit 2 in Coca-Cola Cohesion Case (Use 12/31/17 data)

EPS = Net Income / #Shares Outstanding

Total Assets: Look at Exhibit 2 in Coca-Cola Cohesion Case (Use 12/31/17 data)

Coca-Cola Worth Analysis (in millions)
Valuation Method	Formula/Calculation	Valuation
Net Worth	Shareholders Equity Goodwill Intangibles
Net Income	Net Income x 5
Price-Earnings Ratio	(Stock Price/EPS) x NI
Outstanding Shares	# of Shares Outstanding x Stock Price
Four Method Average