Ratios at Coca Cola Current Ratio Operating Essay

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Ratios at Coca Cola

Current Ratio

Operating Margin

Net Profit margin

Return on Equity

Current Ratio

The current ratio provides a quick yet accurate assessment of a company's ability to meet its short-term obligations and determines the degree of liquidity the company has. This gives a quick snapshot of the basic financial health of the company and its value at a given point in time (that is, not counting the value of operations), with the higher the ratio the healthier/more liquid the company is. Coca-Cola's incredibly high current ratios are an important feature of the company, and once can see that even during the leanest year of the financial collapse, 2008, Coca-Cola remained quite strong in this area. The current ratio was included as a measure because it demonstrates the extreme degree of liquidity the company has long enjoyed, which gives it a great deal of flexibility in the expansion or changing of operations and which continues to make the company very attractive to investors, as well.

Operating Margin

In some ways another measure of the ability to pay certain obligations, the operating margin is a measure of the revenue remaining after variable costs of operation are paid for. Labor, materials (such as sugar, water, and more), and certain parts of the distribution chain are all highly variable, and the complexity of Coca-Cola's overall business structure -- which includes some direct involvement and bottling and wholesaling, some partnerships/subsidiaries in distribution, and other bottling or serving licenses -- all contribute to increased chance for volatility for this measure within the company.

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Company's operating margin is not especially high, either, though at the same time it is certainly not so low that the company need worry. The relative stability of this ratio also demonstrates the power that Coca Cola has on the supply chain, which is another important….....

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