SHOW ALL STEPS AND WORK PLEASE Analyzing Financial Risk. Present below are summa

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SHOW ALL STEPS AND WORK PLEASE

Analyzing Financial Risk. Present below are summary financial data from the THE COCA-COLA COMPANY 2015 annual report. Using the ratio definitions from Exhibit 4.6, calculate the following liquidity and solvency rations: cash and marketable securities to tatal assets, quick ratio, current ratio, long-term debt to total assets, long-term debt to shareholder's' equity, and the interest coverage ratio. Evaluate the comapny's liquidity and solvency.

E4.18 Aalyzing Financial Risk. Presented below are summary financial data from the The Coca-Cola Company 2015 annual report. Using the ratio definitions from Exhibit 4.6, calculate the following liquidity and solvency ratios: cash and marketable securities to total assets, quick ratio, current ratio, long-term debt to total assets, long- term debt to shareholders' equity, and the interest coverage ratio. Evaluate the company's liquidity and solvency. TA 1 (amounts in millions) 2015 2014 Balance sheet 4,269 $18,010 3,665 Cash and cash equivalents Accounts receivable (net). Total assets $15,631 . . 4,466 32,986 92,023 3,941 . 32,374 3,552 Current liabilities.... 26,930 2,677 19,063 4030,561 Income statement Interest expense Net income before taxes . $ 856 9,605 $ 483 9,325 .. . . .

Explanation / Answer

[15631+4269]/

19900/90093

.22

[18010+3665]/92023

21675/92023

.24

[15631+4269+3941]/26930

.89

[18010+3665+4466]/32374

.81

33395/26930

1.24

32986/32374

1.02

28407/90093

.32

19063/92023

.21

28407/25764

1.10

19063/30561

.62

[9605+856]/856

12.22

[9325+483/483

20.31

b)The company liquidity ratio has increased from 2014 which means company has more liquid asset .s.However cash and marketable securities tot total asset has decreased which means company cash balance and readily convertible securities is decreased.

solvency ratio -company long term debt ration to total asset and equity has increased which means share of long term debt increases during the year .so the risk of company increases as payment for interest liability increases.(not performing well)

Formula 2015 2014 cash and marketable securities to total assets cash and marketable securities/Total asset

[15631+4269]/

19900/90093

.22

[18010+3665]/92023

21675/92023

.24

Quick ratio [cash+marketable securities+accounts receivable]/current liabilities

[15631+4269+3941]/26930

.89

[18010+3665+4466]/32374

.81

Current ratio current ratio /current liability

33395/26930

1.24

32986/32374

1.02

long-term debt to total assets long term debt /Total asset

28407/90093

.32

19063/92023

.21

long-term debt to shareholder's' equity long term debt /equity

28407/25764

1.10

19063/30561

.62

interest coverage ratio Income before interest and tax/interest

[9605+856]/856

12.22

[9325+483/483

20.31

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