Sample Financial Statements - Coca Cola

Alright. So now I want to show you some sample financial statements so you can see what they actually look like in the real world. I've chosen coca cola as the company to show you financial statements for now, coca cola is a gigantic company with very complicated financial statements. But I picked this because although it's complicated, you can see that our, our fundamental equation and all these things that we've talked about so far are still apparent in their financial statements. All right, let's check it out. So let's start here with the income statement. Okay, I pulled this from the government website where where companies have to submit their financial statements to the government. Okay, so this is notice an income statement and notice that it says 12 months ended, right? It's for a period of time just like we discussed, the income statement is gonna show us the revenues and expenses of a company over a period of time. Okay. And notice there's a lot going on here, but I just want to show you on a high level what's going on. We start with our revenues up here. This is the revenues of the company. And then as we go down, we're subtracting out all the expenses maybe here and there. There's gonna be other sources of revenue that we get maybe from interest. Maybe we have loans out that we have to other companies or something like that. We might be getting little sources of revenue, but our main revenue probably from coca cola of selling bottles of coca cola. That revenue, that's that top line net operating revenues And then they start to subtract things from it, cost of goods sold, they make a gross profit. Where they show along the way, they show some uh some summations, right? Uh So they're they're here where they're showing gross profit. Well, that's just the subtraction of this number minus that number gets us there and we keep going down, we're taking out more and more expenses as we go down. So we start taking out all these expenses and notice here, there there is another interest income right there. So there's a little bit more money that comes in. But overall, we start with our revenues, take out our expenses. And where does it lead us net income, right? Revenues minus expenses gets us to our net income. And then they show a little bit of extra stuff um earnings per share, some calculations that will go through later in the course. But they're also important information to show to the to the users there. Alright, so that's our income statement notice there's was pretty complicated. There's a lot going on there, but it really just boils down to the revenues minus expenses, gets us to our net income. Alright, so let's pause here and let's continue on to the next financial statement

Alright. So here we have a statement of stockholders equity. Notice they call it share owners equity. They can call it whatever they want. They could just call it the statement of equity, whatever here they're calling it the statement of share owners equity and coca cola. When I picked up this this this financial statement, it was long man, there was a lot going on here. And luckily for you, you're not going to have to go through any of the that detail in this class are our discussion of equity is going to be very high level um And we don't go into all sorts of detail. But what you'll notice is that the things that we've talked about still hold? All right. So it's gonna show a period of time here again, we're gonna go through a period of time in this case, we're starting from december 2013. And it shows what happens year over year. Okay. It's gonna show that increases to stockholders equity and then um other activities, right? It shows increases and decreases to stockholders equity. And it keeps going and it's gonna keep adding and subtracting what happened throughout the year in all the different accounts, notice here's the common stock account, capital surplus, which is like the additional paid in capital reinvested earnings. That's what they're calling their retained earnings. They've got other things here, notice Treasury stock, we've talked about. Don't worry about all the other ones. They're not so important. But notice these are the accounts we've talked about and they're showing us what's increased in that account, what's decreased in that account and what's affecting it? Right. That's good information that's being shown to the stockholders. And as we go we're increasing we're decreasing. We're showing all the activity. I even had to truncate it because it was so long. I just cut part of it out because I was like, we're not getting anything out of it. And what do we do? We end up with a balance at the end of the year. Okay. So gap noticed this one started at the beginning of 2013 here, right? They were showing all the way to 2013 and they got all the way to 2016. So gap actually requires quite a bit of past information when we talk about stockholders equity. Right? So that's basically what's going on here. We start with some balance, we show the changes in the account and we get to the ending balance. Alright, let's go ahead and move on to the next financial statement.

Alright, so here we have coca cola's balance sheet and notice that they show us two years here, but notice that they give us a date right snapshot this is at a point in time. They're saying, as of this day, as of december 31st 2016, how much cash did we have? How much investment? How much did we Oh right. All of these things at this point in time and notice how it's set up here, we start with our assets and remember that assets. This is the statement that shows us that assets equal liabilities plus equity, right? That's what's going to be shown on this statement. And here we go. We start with our assets and it starts with the current assets, right? Current assets are assets that are cash or converted to cash in under one year. Right? So it shows us all of these current assets all here and then it gets to a total current assets, Right? And then it starts showing us other assets, these are more long term assets, other things, things We've talked about property, plant and equipment, this is where we're gonna have land, this is where machinery, buildings that we own, they're all gonna be in property, plant and equipment. Notice trademarks, right? We talked about patents, trademarks could be something that the coca cola company has over their products as well. So that's basically it, there's other kind of crazy ones in there. I don't want to get into too much detail but notice we get to a total assets, total assets. And we've got this number, I want to circle it here, 87 to 70 that's our total assets as of this point in time december 31st 2016. And notice that this is in millions. So this is actually pretty crazy coca cola's balance sheet is in millions. So that right there, their total assets, this we would actually add six zeros behind it. So 87-70 And it's in millions. So, we're actually talking about 87, it's right there behind me. We're talking about $87 billion dollars in assets. All right, this is a huge company. Now, let's go down to the other part of the statement. So, we've we've seen the assets and here come liabilities right, right after total assets, we've got our current liabilities and that's money that we're gonna oh, within the next year. Right. And we're gonna show all our our liabilities, their long term debt, and deferred income taxes, Right? We're gonna get to a total of liabilities. Actually, what they what they generally do, and it looks like they didn't hear they didn't show a total liabilities, because what they like to show is the total liabilities plus equity. Right? Because down here, total liabilities plus equity. Well, there's our number, there's that 87-70, right? The balance of the assets plus liabilities and equity. So it showed our liabilities here. And then it got to the equity here, right? Here's equity and it showed some equity stuff, and then it got to the totals, right? So it shows us how it balances out assets, equal liabilities plus equity. Alright, so, obviously here's a pretty complicated statement, but I'm just showing you that our fundamental equation is even shown even in these crazy big companies. All right, so let's go ahead and move on to the next financial statement.

So last but not least, we have coca cola's cash flow statement. Again, it's in millions. Right? But remember that cash flows show for a period of time, only the balance sheet is showing us a snapshot. This is showing us the 12 months ended on this day. So it's over the period of time. So you can imagine we started the year with some amount of money and then things happened all year and we ended with a different amount of money. Right? So when we, when we show our cash flow statement, which I know we haven't talked about yet, we break it up into three sections. We have our operating activity section. The operating activities show us things that happen from operations. Okay. This is our day to day business. This is the actual business of the company goes into operating activities and it shows all the different things that affected cash here from operating. And then we show our investing activities, notice investing activities here. So we started with operating activities up here, right? Operating activities. Then we show investing activities, this is investments that we make in our long term assets or sale of our long term assets. So if we let's say, you know, purchase land or sell land, those types of activities are going to be shown as investing activities. Okay. And we talk about the cash flow statement in a lot of detail near the end of the book. I'm just showing you here, don't get too caught up in all the details. Just showing you on a high level what what's going on. So we show our operating are investing and finally our financing activities. So financing activities is when we're dealing with our debtors like the bank or our shareholders. Right? So when we pay dividends, something like that would show up as a financing activity. Okay, so we take that that is all of our activity either falls as an operating and investing or financing activity. And then we take all of those changes in cash. Right? Notice payments of debt right here as the financing activity. As an example. That means they paid that much money. They pay that much money in cash to pay off their debt, right? But they also issued debt, right? And they got this much in debt. So they were able to finance, they brought in money from debt and then they also paid off other debt as well. So they're just showing you how all this cash is flowing around. Okay. So what we do is we find the effect of excuse me, the net increase down here. After we do all of our activities, we come down to the bottom where we summarize everything here. The net increase decrease during the year. This 1246. Well, that's gonna be the sum of this number right here. The net cash provided or used by financing activities. This number here. The net cash provided used in investing activities And up here the net cash provided by operating activities. If we sum all those numbers and I believe they have this kind of an interesting effect of exchange rates that's kind of like uh just a higher level problem that we don't talk about in this course. But but if we add those three numbers operating investing and financing, that tells us the change in cash during the year. So if we take the change in cash during the year and we add it to the beginning balance, the balance at the beginning of year, well, it's going to get us to the ending balance of cash. 8555. Alright. And this ending balance should tie back to our balance sheet, right? It should show us, hey, we started with 7309 things happen and we got 28555. So I'm gonna scroll back up to our balance sheet and I'm gonna show you that these numbers are gonna be there. So let's see cash. There it is cash 8555. And the beginning balance was this 7309 right there. Right? So it just showed us how we got from the 7309 to the 8555. Alright, So that's the whole point of the cash flow statement is to show us how that cash changed cash is king and it's important to know how cash is affecting everything. Alright, so that's it here. That is our cash flow statement. Let's go ahead and move on to the next video