Stock Analysis on Net

Coca-Cola Co. (NYSE:KO)

Financial Reporting Quality: Aggregate Accruals 

Microsoft Excel

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

Coca-Cola Co., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating Assets
Total assets 100,549 97,703 92,763 94,354 87,296
Less: Cash and cash equivalents 10,828 9,366 9,519 9,684 6,795
Less: Short-term investments 2,020 2,997 1,043 1,242 1,771
Less: Marketable securities 1,723 1,300 1,069 1,699 2,348
Operating assets 85,978 84,040 81,132 81,729 76,382
Operating Liabilities
Total liabilities 74,177 70,223 66,937 69,494 66,012
Less: Loans and notes payable 1,499 4,557 2,373 3,307 2,183
Less: Current maturities of long-term debt 648 1,960 399 1,338 485
Less: Long-term debt, excluding current maturities 42,375 35,547 36,377 38,116 40,125
Operating liabilities 29,655 28,159 27,788 26,733 23,219
 
Net operating assets1 56,323 55,881 53,344 54,996 53,163
Balance-sheet-based aggregate accruals2 442 2,537 (1,652) 1,833
Financial Ratio
Balance-sheet-based accruals ratio3 0.79% 4.65% -3.05% 3.39%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
Mondelēz International Inc. -5.84% -4.19% 7.90% 0.47%
PepsiCo Inc. 0.89% 3.36% 0.98% 4.76%
Philip Morris International Inc. -11.32% 5.21% 75.98% 10.28%
Balance-Sheet-Based Accruals Ratio, Sector
Food, Beverage & Tobacco -2.93% 2.19% 11.97% 3.62%
Balance-Sheet-Based Accruals Ratio, Industry
Consumer Staples 1.15% 2.58% 7.61% -0.13%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Net operating assets = Operating assets – Operating liabilities
= 85,97829,655 = 56,323

2 2024 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2024 – Net operating assets2023
= 56,32355,881 = 442

3 2024 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 442 ÷ [(56,323 + 55,881) ÷ 2] = 0.79%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, Coca-Cola Co. improved earnings quality from 2023 to 2024.

Cash-Flow-Statement-Based Accruals Ratio

Coca-Cola Co., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to shareowners of The Coca-Cola Company 10,631 10,714 9,542 9,771 7,747
Less: Net cash provided by operating activities 6,805 11,599 11,018 12,625 9,844
Less: Net cash (used in) provided by investing activities 2,524 (3,349) (763) (2,765) (1,477)
Cash-flow-statement-based aggregate accruals 1,302 2,464 (713) (89) (620)
Financial Ratio
Cash-flow-statement-based accruals ratio1 2.32% 4.51% -1.32% -0.16%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
Mondelēz International Inc. -1.85% -5.47% 8.02% 0.42%
PepsiCo Inc. 4.80% 2.17% 1.04% -1.48%
Philip Morris International Inc. -12.14% 6.40% 57.17% -3.48%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Food, Beverage & Tobacco -0.56% 1.72% 9.94% -0.70%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Consumer Staples -0.17% 2.27% 4.81% -4.89%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 1,302 ÷ [(56,323 + 55,881) ÷ 2] = 2.32%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, Coca-Cola Co. improved earnings quality from 2023 to 2024.