Understanding Working Capital and Long Term Debt A recent Consolidated Balance Sheet for the Coca Cola Company and Subsidiaries is presented on the following page.
Required
A. Is Coca Cola a larger or smaller company in 2001 than in 2000? Explain.
B. What is the total amount of long term debt? Explain why Coca Cola classifies longterm debt into two categories.
C. What is working capital?
D. How much working capital does Coca Cola report in 2001 and 2000? What conclusions can you make as a result of your calculations? (Note: This problem takes an interesting twist. Think about the implication of your calculations.)
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Consolidated Balance Sheets |
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31 Dec |
2001 |
2000 |
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ASSETS |
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CURRENT |
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Cash and cash equivalents |
$1,866 |
$1,819 |
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Marketable securities |
68 |
73 |
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1,934 |
1,892 |
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Trade accounts receivable, less allowances of |
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$59 in 2001 and $62 in 2000 |
1,882 |
1,757 |
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Inventories |
1,055 |
1,066 |
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Prepaid expenses and other assets |
2,300 |
1,905 |
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TOTAL CURRENT ASSETS |
7,171 |
6,620 |
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INVESTMENTS AND OTHER ASSETS |
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Investments |
5,422 |
5,765 |
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Other assets |
2,792 |
2,364 |
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8,214 |
8,129 |
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PROPERTY, PLANT AND EQUIPMENT |
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Land |
217 |
225 |
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Buildings and improvements |
1,812 |
1,642 |
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Machinery and equipment |
4,881 |
4,547 |
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Containers |
195 |
200 |
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7,105 |
6,614 |
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Less allowances for depreciation |
2,652 |
2,446 |
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4,453 |
4,168 |
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TRADEMARKS AND OTHER INTANGIBLE ASSETS |
2,579 |
1,917 |
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$22,417 |
$20,834 |
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31 Dec |
2001 |
2000 |
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LIABILITIES AND SHARE OWNERS” EQUITY |
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CURRENT |
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Accounts payable and accrued expenses |
$3,679 |
$3,905 |
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Loans and notes payable |
3,743 |
4,795 |
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Current maturities of long term debt |
156 |
21 |
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Accrued income taxes |
851 |
600 |
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TOTAL CURRENT LIABILITIES |
8,429 |
9,321 |
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LONG TERM DEBT |
1,219 |
835 |
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OTHER LIABILITIES |
961 |
1,004 |
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DEFERRED INCOME TAXES |
442 |
358 |
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SHARE OWNERS” EQUITY |
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Common stock, $.25 par value; Authorized: 5,600,000,000 shares; Issued: 3,491,465,016 shares in 2001; 3,481,882,834 shares in 2000 |
873 |
870 |
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Capital surplus |
3,520 |
3,196 |
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Reinvested earnings |
23,443 |
21,265 |
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Accumulated other comprehensive income and unearned compensation on restricted stock |
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2,788 |
2,722 |
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25,048 |
22,609 |
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Less treasury stock, at cost (1,005,237,693 shares in 2001; 997,121,427 shares in 2000) |
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13,682 |
13,293 |
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11,366 |
9,316 |
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$22,417 |
$20,834 |
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