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Working Capital And Financial Environment Essay

1143 words - 5 pages

The Coca-Cola Company is a well-known company that used the taste of an excellent soda to start a worldwide phenomenon. Over the years and the start of the 20th century, Coca-Cola Company has expanded their products and services to reach millions of people throughout the world. As a result, Coca-Cola Company has established the name as a billion dollar company.The Coca-Cola Company overlooked by a financial team to produce excellent profit figures. Some factors that compile the figures, combined by sales, inventories, debt owed, accounts receivable and investments. In business, the bottom line is how much money the company has at the end. One way to factor the result of the company's is subtract current liabilities from current assets. The difference between current assets and current liabilities is known as net working capital, but financial managers often refer to the difference simply (but imprecisely) as working capital (Brealey, Marcus & Myers, 2003).The total current assets accumulated from inventories, prepaid expenses, cash, marketable securities and trade account receivables to total $10,250 billion (Coca-Cola Company, 2006). The total current liabilities from accounts payable, loans and notes payable, current maturities of long-term debt and accrued income total $9,836 billion (Coca-Cola Company, 2006). . According to Brealey, Marcus & Myers (2003), usually current assets exceed current liabilities that is, firms have positive net working capital.The Coca-Cola Company at the end of 2005 has a working capital of $414 million (Coca-Cola Company, 2006). When dealing with millions of dollars in a billion dollar company, it is vital to have an internal financial group monitoring all transactions of the money.With out intermediaries Coca Cola would not be able to succeed in the Global Business Market, which makes 70% of the profits for the Business. This large percentage of income has resulted form Coca Cola's use of sales and assets across international borders and resulting form flow of capital, goods, services and labor.Coca Cola does not outsource their distribution even though Coca Cola is a very large company. The company has chosen to deal directly with the retail and foodservice industry. Coca Cola has bottling and distribution centers located in over 100 countries and therefore are not severely impacted by changes with intermediaries. (American.edu)Where Coca Cola may get hit in the pocket, is with regulatory bodies increasing tariffs, trafficking laws, and changes in currency value. Coca Cola has reported that there is little if any impact on the company currently or in the near future. Only a negative one percent impact due to currency was released, which Coca Cola seems to be very proud about. (2006)"The American Institute of Certified Public Accountants (AICPA) has defined internal control as the policies and procedures established to provide reasonable assurance that specific entity objectives will be achieved."...

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