Finance – Prob1
Chapters 2
Chapter 2: Financial Statement Analysis
1) At the beginning of 2017, Coca-Cola (ticker KO) had a book value of equity of $23.1 billion,
4.345 billion shares outstanding, and a market price of $41.74 per share. KO also had cash of
$8.6 billion, and total (interest bearing) debt of $64.2 billion. One year later, at the beginning of
2018, KO had a book value of equity of $17.1 billion, 4.261 billion shares outstanding at a
market price of $46.07 per share, cash of $6.0 billion, and total (interest bearing) debt of $70.8
billion. Over this period, what was the change in KO’s:
a. Market Capitalization?
Year 1: Market Capitalization= 4.345B*$41.74 = 181.36
Year2: Market Capitalization= 4.261*$46.07 = 196.30
Change= $14.94 Billion
b. Market-to-book ratio?
Year 1: M-to-B ratio= 181.4/23.1 = 7.85
Year2: M-to-B ratio= 196.3/17.1 = 11.48
Change= 3.63
c. Enterprise value?
Year 1: EV= 181.36 + 64.2 – 8.6 = $236.96 Billion
Year2: EV= 196.3 + 70.8 – 6 = $261.1 Billion
Change= $24.14 Billion