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Coke Inc

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Submitted By Appusa
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Coca-Cola Inc.
Financial Analysis & Valuation

Table of Content

Executive Summary and Financial Inputs 2
5 Force Analysis 3
Strategies to Create and Sustain Competitive Advantage 3
Accounting Analysis 5
Ratio Analysis 5

Executive Summary
In our analysis of Coca-Cola Inc., we estimate an Enterprise Value of $71.3B and an Equity Value of $60.9B, or a value per common share of $25.16. Given the current share price of $44.28, our recommendation for the stock is a “SELL”. Listed below are our key assumptions for the above valuation as well as the conclusions drawn from the analysis of financial statements that led to these assumptions.

Key Estimates and Assumptions: * The estimates for financial inputs for the explicit period 2005 through 2009 are as follows: % | 2005 | 2006 | 2007 | 2008 | 2009 | Sales Growth | 5% | 5% | 5% | 5% | 5% | Cost Of Goods Sold % | 36% | 36% | 36% | 36% | 36% | Selling & Administrative Expenses % | 37% | 37% | 37% | 37% | 37% | NFA/Revenues | 89% | 89% | 89% | 89% | 89% | WCR/Revenues | 0% | 0% | 0% | 0% | 0% |

* Percentages applied for the explicit 5-year period are largely in-line with the performance ratios that Coca-Cola experienced during 2003 and 2004.

* Over-performance Period: This time period represents a scenario where Coca-Cola will continue to enjoy a competitive advantage, resulting in positive NPV investments through the forecasted horizon. * We estimate the above time horizon to last 20 years (2010 to 2029) after which competitive pressures will cause Coca-Cola to earn a return on new investments that is equal to its discount rate (i.e. no positive or negative value will be added to the organization). * During this period, we estimate Coca-Cola will earn an average return on new invested capital (RONIC) equal to 12%.

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