Examine the liabilities on Coca-Cola’s balance sheet. a. How much interest-beari

Question

Examine the liabilities on Coca-Cola’s balance sheet.

a. How much interest-bearing debt does Coca-Cola have outstanding? (You can assume that other short-term liabilities represent sundry payables, and other long-term liabilities represent health care and pension obligations.)

b. How much did Coca-Cola obtain in equity capital when it issued stock originally to the financial markets?

c. Is there any significance to the fact that the retained earnings amount is much larger than the original paid-in capital?

QUESTIONS AND SHORT PROBLEMS In the problems following, use an equity risk premium of 5.5 percent if none is specified Coca-Cola's balance sheet for December 1998 is summarized (in millions of dol- lars) for problems 1 through 9 S 1,648Accounts payable Cash and near-cash Marketable securities Accounts receivable Other current assets 1,049Short-term borrowings 1,666Other short-term liabilities 2,017 6,380 Long-term borrowings 1,863 5,486 $ 3,141 4,462 1,037 8,640 687 1,415 2,102 Current liabilities Current assets Other long-term liabilities Noncurrent liabilities Long-term investments Depreciable fixed assets Nondepreciable fixed assets Accumulated depreciation 199 2,016 3,669Retained earnings 7,233 3,060 5,343 8,403 Share capital (paid-in) Net fixed assets Other assets Total Assets Shareholder's equity $19,145Total Liabilities and Equity $19,145

Explanation / Answer

a. Interest-bearing debt of Coca-Cola outstanding

b. Coca-Cola obtained in equity capital when it issued stock originally to the financial markets is 3,060

c. The significance is that company has much larger amount of profit than the capital received from the financial markets, it means that company's financial performance is very good

Short-term borrowings 4462 Long-term borrowings 687 Total 5149

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