Working Capital and Financial Environment

Essay by ibkensterUniversity, Bachelor'sA-, January 2007

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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...