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Essay / Research Paper Abstract
A 9 page paper using Coca-Cola’s annual report for 2004 to examine a long-term financing decision and assess it in terms of the economic, business and competitive environments at the time it was made. The paper also discusses the company’s risk management policies and proposes Cott, the leading supplier of private-label soft drinks, as a possible acquisition target for Coca-Cola. The theme of the paper is valuation analysis; it provides instruction for assessing conditions according to the Modigliani-Miller and Black-Scholes models but does not provide those calculations. Bibliography lists 6 sources.
Page Count:
9 pages (~225 words per page)
File: CC6_KSfinCokeCapStruc.rtf
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Unformatted sample text from the term paper:
the worlds most recognizable brand and is available all around the world. The entire beverage industry has undergone changes in recent years that have affected Coke along with its
competitors, not the least of which has been that consumers tastes have been changing over a period of several years, moving away from the dark, sugary colas on which Coca-Cola
was built. This continuing trend is the reason behind the recent new additions to the Sprite(r) line, as well as Coca-Colas activity in various juice-based drinks and Dasani(r) bottled
water. It even launched a tea business in Japan in 2004 (Form 10-Q). Coca-Colas business results have been more favorable recently than
in the years and quarters preceding, but they still have not produced results on the order that the company - and its investors - would like to see. The
purpose here is to assess various aspects of Coca-Colas financing activities. Long-Term Financing Policies and Capital Structure Though Coca-Cola took on debt in
both 2004 ($818 million) and 2003 ($715 million) with maturities of more than 90 days, both of these issuances were in commercial paper. By definition, commercial paper is a
short-term loan. The most recent long-term financing decision was in 2003, when the company issued debt in the form of "long-term notes due
June 1, 2005" (Form 10-K, 2005; p. 50). The company has not issued additional stock in recent years; in fact it is in the process of repurchasing large numbers
of shares. It repurchased 14 million shares in 2002; 33 million in 2003; and 38 million in 2004 (Form 10-K, 2005; p. 30). A. Economic, Business, and Competitive Background
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