Finance Research Report. Accounting, Finance, SPSS Research Paper

Finance Research Report
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Part 1Rationale for selecting stock
The Coca-Cola Company (KO) owns more than 500 brands of non-alcoholic beverages, mainly soft drinks, but also a wide range of non-carbonated beverages, such as juices, ready juices, ready-to-drink teas and coffees, as well sports and energy drinks. Coca-Cola's operates in the domestic US market and international market, and even with slow growth the company is a stable. The company has a huge network of proprietary operations, independent bottling partners, distributors, wholesalers, and retailers. In 2019, the net operating revenues increased by $ 2,966 million or 9 % to $ 37,266 million compared to $34,300 million in the previous year Coca-Cola, 2019). Coca-Cola also continues to strengthen the core business.
The company has increased its market share in all the markets in which it is present, even as there is increased focus on healthy diets and beverages that affected the demand for carbonated and sugar drinks. The returns on profitability is an appropriate measure for evaluating the attractiveness of a company’s stock and Coca-Cola has a return value that is higher than that of the peer group. The net operating revenues was $ 37, 266 million in 2019 compared to $ 44, 294 million in 2015, but the net income was $ 8, 920 m in 2019 and $ 7, 351 m in 2015 (Coca-Cola, 2019). Even after considering corrections and crises the Coca-Cola stock has a stable dividend as there has been sales revenue and net income growth.
Coca-Cola has a strong brand equity, which gives the company has a competitive edge over the peers in the marketplace. The company produces, sells, and distributes different types of beverages globally and is a market leader in the non alcoholic beverage industry. Coca-Cola’s strong operational capability and distribution has allowed the company to extend its franchise in different markets. Coca-Cola, Diet Coke, Fanta and Sprite are among the most well known nonalcoholic beverage brands and consumers from different market segments continue to choose the Coca-Cola brand Coca-Cola.
Primary reasons for selecting stock and the client’s profile
The investor is middle aged in the early 40s and is employed, has savings and has in the past relied on index investing to generate returns based on the broad market and investing passively. Thus, the investor focuses on the long haul, but wants to choose few stocks with promising returns. The investor profile is classified according to their level of risk aversion and is generally classified as conservative, moderate and aggressive. This particular investor is conservative as there is low risk tolerance and as a long-term investor the investment will increase value and provide income until he can cash out the returns. Despite being a conservative investor he prefers equity assets to fixed income even as the latter have lower returns and are less risky.
The bottling company has increased its market share in all the markets in which it is present and has maintained profitability over decades. The gross margin is good, and the company leader has a competitive advantage in the soft drinks market. Furthermore, Coca-Cola has paid dividends consistently and is ideal for long-term investors and dividend seekers, where in more than five decades Coca-Cola has increased payments to the shareholders. In the past ten years, growth has been slow and even when selling less, the company has increased dividends even if the company reduces dividends, being an investor in Coca-Cola one becomes an owner in a great business.
Five resources
2018 Coca-Cola Annual Report
2019 Coca-Cola Annual Report
Brondoni, S.M., 2020. Shareowners, Stakeholders & the Global Oversize Economy.The Coca-Cola Company Case.Symphonya. Emerging Issues in Management, (1), pp.16-27.
Ciafone, A. (2018). Selling local modernization through the global corporation: Coca-cola bottling in Colombia, 1927-1944 *.Historia y Sociedad, (34), 41-75. .doi 10.15446/hys.n34.65507
Pedersen, L.H., 2018. Sharpening the arithmetic of active management.Financial Analysts Journal, 74(1), pp.21-36.
Thomsett, M.C., 2018. Picking the Right Stock.In Options Installment Strategies (pp. 31-47). Palgrave Macmillan, Cham.
Part 2
Rationale, primary reasons for stock selection, and the client’s profile
Coca-Cola is stable company with more than 500 brands that is a market leader in the non-alcoholic market and has a wide distribution network. The defensive stock is stable and has consistent dividends and stable earnings, which makes it ideal for long-term investment. The company’s geographic reach reduces risks and further expansion will further the company’s earnings. For the long-term investors such as the client investment in Coca-Cola will provide a steady source of income. Determining the intrinsic value of the business and buying at low prices is a common strategy for such investors, but Coca-Cola provides a unique opportunity for long-term returns.
One criterion when making investment decisions is identifying companies that constant profit and the net operating revenues for Coca-Cola increased in the years 2017-2019. Coca-Cola price shares are attractive as the recent fall in price is temporary and linked to the coronavirus. Besides the growth in sales revenue and net income, Coca-Cola has stable dividends that have increased even as the rate of revenue growth has slowed down. Strong companies tend to increase dividends per share over time without resulting to more long-term debt to fund dividend payments (Thomsett, 2018). The non-alcoholic beverage industry is competitive, and Coca-Cola is a recognizable brand.
The client is in the early 40s and is employed and has shown interest in long-term investment with low risk. Additionally, the client seeks an investment opportunity that has steady growth and will provide returns in the long-term including dividends. Such clients tend to stay away from the risky and volatile stocks.The client will want more information the stock performance and beverage patterns as he wants to invest in the long-term where there is increase in the overall growth of the company from beginning to the current stock profile. It is important to highlight the benefits of the investment and how this fits his profile.
Ratio analysis


12 Months Ended

 

 

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

 

Current assets /

20,411

24,930

36,545

1) Current ratio

Current liabilities

26,973

28,782

27,194

 

 

0.76

0.87

1.34

 

 

 

 

 

 

Current assets − Inventories /

17,032

21,859

33,890

2) Quick ratio

Current liabilities

26,973

28,782

27,194

 

 

0.63

0.76

1.25

 

 

 

 

 

3) Earnings per share

Net Income /

 

 

 

(diluted)

Common shares outstanding

 

 

 

 

 

2.07

1.5

0.29

 

 

 

 

 

4) Price earnings ratio

Price per share /

55.27

47.2

45.88

 

Earnings per share

2.07

1.5

0.29

 

PER

26.70

31.47<...