Sample Financial Statements - Coca Cola - Online Tutor, Practice Problems & Exam Prep

The financial statements of Coca Cola illustrate key accounting concepts. The income statement summarizes revenues and expenses over a period, leading to net income. The statement of stockholders' equity tracks changes in equity accounts, culminating in an ending balance. The balance sheet provides a snapshot of assets, liabilities, and equity at a specific date, adhering to the accounting equation: $A_L^E=L_E^Q$. Lastly, the cash flow statement details cash movements across operating, investing, and financing activities, showing how cash changes over time.

Income Statement - Coca Cola

Alright, so now I want to show you some sample Financial Statements, so you can see what they actually look like in the real world. I've chosen Coca Cola as the company to show you financial statements for. Now, Coca Cola is a gigantic company with very complicated financial statements, but I picked this because although it's complicated, you can see that our fundamental equation and all these things that we've talked about so far are still apparent in their financial statements.

Alright, let's check it out. So let's start here with the income statement, okay? I pulled this from the government website where companies have to submit their financial statements to the government, okay? So this is notice an income statement and notice that it says 12 months ended, right? It's for a period of time just like we discussed, the income statement is going to show us the revenues and expenses of a company over a period of time. Okay? And notice there's a lot going on here, but I just want to show you on a high level what's going on.

We start with our revenues up here. This is the revenues of the company. And then as we go down, we're subtracting out all the expenses. Maybe here and there, there's going to be other sources of revenue that we get, maybe from interest, maybe we have loans out that we have to other companies or something like that, we might be getting little sources of revenue but our main revenue probably from Coca Cola of selling bottles of Coca Cola, that revenue, that's that top line, net operating revenues and then they start to subtract things from it, cost of goods sold, they make a gross profit where they show along the way they show some summations right. So there they here where they're showing gross profit, well that's just the subtraction of this number minus that number gets us there and we keep going down. We're taking out more and more expenses as we go down. So we start taking out all these expenses and notice here there there is another interest income right there so there's a little bit more money that comes in. But overall, we start with our revenues, take out our expenses, and where does it lead us? Net income, right? Revenues minus expenses gets us to our net income and then they show a little bit of extra stuff, earnings per share, some calculations that we'll go through later in the course, but they're also important information to show to the users there.

Alright, so that's our income statement. Notice, theirs was pretty complicated, there's a lot going on there, but it really just boils down to the revenues minus expenses gets us to our net income. Alright? So let's pause here and let's continue on to the next financial statement.

Statement of Stockholder's Equity - Coca Cola

Alright. So, here we have a statement of stockholders' equity. Notice they call it shareowners' equity. They can call it whatever they want; they could just call it the statement of equity. Whatever. Here, they're calling it the statement of shareowners' equity. And Coca Cola, when I picked up this financial statement, it was long, man. There was a lot going on here and luckily for you, you're not going to have to go through any of that detail in this class. Our discussion of equity is going to be very high level, and we don't go into all sorts of detail, but what you'll notice is that the things that we've talked about still hold, alright? So it's going to show a period of time here again. We're going to go through a period of time. In this case, we're starting from December 2013 and it shows what happens year over year. Okay. It's going to show that increases to stockholders' equity and then Other Activities, right? It shows increases and decreases to stockholders' equity, and it keeps going; it's going to keep adding and subtracting. What happened throughout the year in all the different accounts. Notice, here's the common stock account, capital surplus, which is like the additional paid in capital, reinvested earnings, that's what they're calling their retained earnings, they've got other things here, notice treasury stock we talked about, don't worry about all the other ones they're not so important, but notice these are the accounts we've talked about, and they're showing us what's increased in that account, what's decreased in that account, and what's affecting it, right? That's good information that's being shown to the stockholders and as we go, we're increasing, we're decreasing, we're showing all the activity, I even had to truncate it because it was so long. I just cut part of it out because I was like, we're not getting anything out of it. And what do we do? We end up with a balance at the end of the year. Okay. So GAP, notice this one started at the beginning of 2013 here, right? They were showing all the way to 2013 and they got all the way to 2016. So GAP actually requires quite a bit of past information when we talk about stockholders' equity, right? So that's basically what's going on here. We start with some balance, we show the changes in the account, and we get to the ending balance. Alright, let's go ahead and move on to the next financial statement.

Balance Sheet - Coca Cola

Alright. So here we have Coca Cola's balance sheet and notice that they show us 2 years here, but notice that they give us a date, right? A snapshot. This is at a point in time. They're saying, as of this day, as of December 31, 2016, how much cash did we have? How much investments? How much did we owe, right? All of these things at this point in time. And notice how it's set up here. We start with our assets and remember that assets - this is the statement that shows us that assets equal liabilities plus equity, right? That's what's going to be shown on this statement. And here we go. We start with our assets, and it starts with the current assets, right? Current assets are assets that are cash or converted to cash in under 1 year. Right? So it shows us all of these current assets all here, and then it gets to a total current assets. Right? And then it starts showing us other assets. These are more long-term assets, other things, things we've talked about. Property, plant, and equipment, this is where we're going to have land, this is where machinery, buildings that we own, they're all going to be in property, plant, and equipment. Notice trademarks, right? We talked about patents, Trademarks could be something that the Coca Cola Company has over their products as well. So that's basically it. There's other kind of crazy ones in there. I don't want to get into too much detail, but notice, we get to a total of assets. Total assets and we've got this number. I want to circle it here, 87,270. That's our total assets as of this point in time, December 31, 2016 and notice that this is in 1,000,000. So this is actually pretty crazy. Coca Cola's balance sheet is in 1,000,000 so that right there, their total assets this, we would actually add six 0s behind it, so 87,270 and it's in 1,000,000. So we're actually talking about $87,000,000,000 in assets. Alright? This is a huge company. Now, let's go down to the other part of the statement. So we've seen the assets and here come liabilities, right? Right after total assets, we've got our current liabilities and that's money that we're going to owe within the next year, right? And we're going to show all our liabilities there, long-term debt and deferred income taxes. Right? We're going to get to a total of liabilities. Actually, what they generally do and it looks like they did it here, they didn't show a total liabilities because what they like to show is the total liabilities plus equity, right? Because down here, total liabilities plus equity, well, there's our number. There's that 87,270, right, the balance of the assets plus liabilities and equity. So it showed our liabilities here and then it got to the equity here. Right? Here's equity and it showed some equity stuff and then it got to the totals, right? So it shows us how it balances out. Assets equal liabilities plus equity. Alright? So obviously here's a pretty complicated statement, but I'm just showing you that our fundamental equation is even shown even in these crazy big companies. Alright? So let's go ahead and move on to the next financial statement.

Statement of Cash Flows - Coca Cola

So last but not least, we have Coca Cola's cash flow statement. Again, it's in 1,000,000. Right? But remember that cash flows show for a period of time. Only the balance sheet is showing us a snapshot. This is showing us the 12 months ended on this day, so it's over the period of time. So you can imagine, we started the year with some amount of money and then things happened all year and we ended with a different amount of money, right? So when we show our cash flow statement which I know we haven't talked about yet, we break it up into 3 sections. We have our operating activities section, the operating activities show us things that happen from operations, okay? This is our day-to-day business, this is the actual business of the company that goes into operating activities and it shows all the different things that affected cash here from operating and then we show our investing activities. Notice investing activities here. So we started with operating activities up here, right, operating activities then we show investing you know purchase land you know purchase land or sell land, those types of activities are going to be shown as investing activities. Okay? And we talk about the cash flow statement in a lot of detail near the end of the book. I'm just showing you here. Don't get too caught up in all the details. I'm just showing you on a high level what's going on. So we show our operating, our investing, and finally our financing activities. So financing activities is when we're dealing with our debtors like the bank or our shareholders. Right? So when we pay dividends, something like that would show up as a financing activity. Okay? So we take that that is all of our activity either falls as an operating and investing or financing activity and then we take all of those changes in cash, right? Notice payments of debt right here is a financing activity as an example, that means they paid that much money. They paid that much money in cash to pay off their debt, right? But they also issued debt, right? And they got this much in debt, so they were able to finance, they brought in money from debt and then they also paid off other debt as well so they're just showing you how all this cash is flowing around. Okay? So what we do is we find the effect of or excuse me, the net increase down here. After we do all of our activities, we come down to the bottom where we summarize everything. Here, the net increase decreased during the year, this 1246. Well, Well, that's going to be the sum of this number right here, the net cash provided or used by financing activities. This number here, the net cash provided used in investing activities and up here, the net cash provided by operating activities. If we sum all those numbers and I believe they have this kind of an interesting effect of exchange rates that's kind of like a just a higher-level problem that we don't talk about in this course, but if we add those three numbers operating, investing, and financing, that tells us the change in cash during the year. So if we take the change in cash during the year and we add it to the beginning balance, the balance at the beginning of the year, well, it's gonna get us to the ending balance of cash, 8555. Alright? And this ending balance should tie back to our balance sheet. Right? It should show us, hey, we started with 7309, things happen and we got to 8555 55. So I'm gonna scroll back up to our balance sheet and I'm gonna show you that these numbers are there. So let's see. Cash, there it is. Cash 8555 and the beginning balance was this 7309 right there, right? So it just showed us how we got from the 7309 to the 8555. Alright? So that's the whole point of the cash flow statement is to show us how that cash changed. Right? Cash is king and it's important to know how cash is affecting everything. Alright? So that's it here. That is our cash flow statement. Let's go ahead and move on to the next video.

Here’s what students ask on this topic:

What are the key components of Coca Cola's income statement?

Coca Cola's income statement includes several key components. It starts with net operating revenues, which represent the total sales revenue. From this, the cost of goods sold (COGS) is subtracted to determine the gross profit. The statement then lists various operating expenses, such as selling, general, and administrative expenses. Other sources of income, like interest income, are also included. Finally, the net income is calculated by subtracting total expenses from total revenues. This net income figure is crucial as it indicates the company's profitability over the reporting period.

How does Coca Cola's balance sheet adhere to the accounting equation?

Coca Cola's balance sheet adheres to the fundamental accounting equation: Assets = Liabilities + Equity. The balance sheet provides a snapshot of the company's financial position at a specific date. It lists current and long-term assets, such as cash, investments, and property, plant, and equipment. On the liabilities side, it includes current liabilities, long-term debt, and other obligations. The equity section shows shareholders' equity, including common stock and retained earnings. The total assets must equal the sum of total liabilities and equity, ensuring the balance sheet is balanced.

What information is provided in Coca Cola's statement of stockholders' equity?

Coca Cola's statement of stockholders' equity, also known as the statement of shareowners' equity, details changes in equity accounts over a period. It includes common stock, capital surplus (additional paid-in capital), reinvested earnings (retained earnings), and treasury stock. The statement shows increases and decreases in these accounts due to various activities, such as issuing new shares, repurchasing shares, and distributing dividends. The ending balance of each equity account is provided, giving a comprehensive view of the company's equity changes during the reporting period.

How does Coca Cola's cash flow statement categorize cash activities?

Coca Cola's cash flow statement categorizes cash activities into three sections: operating, investing, and financing activities. Operating activities include cash flows from the company's core business operations, such as receipts from sales and payments for expenses. Investing activities cover cash flows related to the purchase and sale of long-term assets, like property and equipment. Financing activities involve cash flows from transactions with creditors and shareholders, such as issuing debt, repaying loans, and paying dividends. The statement shows the net increase or decrease in cash over the period, reconciling the beginning and ending cash balances.

Why is the cash flow statement important for understanding Coca Cola's financial health?

The cash flow statement is crucial for understanding Coca Cola's financial health because it provides insights into how the company generates and uses cash. Unlike the income statement, which includes non-cash items, the cash flow statement focuses solely on cash transactions. It helps stakeholders assess the company's ability to generate cash from operations, invest in growth opportunities, and meet financial obligations. By analyzing the cash flow from operating, investing, and financing activities, investors and analysts can better understand the company's liquidity, solvency, and overall financial stability.