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Day 17

Spot Trends Using Funnel Shapes

Watch the video and scroll down for your homework.

Your Homework

Take a look at The Coca-Cola Company's 2022 10-K (or "annual report") and locate their Income Statement.

1. Calculate the gross margin % (aka gross profit %), operating income % and net income margin % for 2020, 2021 and 2022.

2. What has been the trend for each of those metrics over the three years? How has the profitability of the business changed over time? What questions would you want to ask the CEO?

Scroll down to see answers.

Answers

  1. See table in image. Despite a slight bump in gross margin % in 2021, it dropped back down in 2022. Operating and net income have been on the decline and dropped roughly 2 percentage points from 2020 to 2022 showing that COKE has become less profitable.

  2. Possible Question(s) to ask the CEO:  

    1. What contributed to the slight increase in gross margin % in 2021 and why wasn't that sustainable in 2022?

    2. Which operating expenses (aka overhead) increased from 2021 to 2022 which drove operating income % to drop from 27% to 25% which also tricked down to a decline in the Bottom Line or Net Income from 25% to 22% in 2022?

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