Coca-Cola Financial Model

For each geographic segment (North America, Europe, Middle East & Africa, Latin America, Asia Pacific):

• Segment name: Reported geographically as listed above.
• Revenue driver formula: Unit Case Volume x Price/Mix Factor x Foreign Exchange Impact.
• Historical growth rate: 4% to 6% organic revenue CAGR over the last 3 years.
• Key growth levers and headwinds: Premiumisation of the portfolio, smaller pack sizes driving higher revenue per case, and emerging market middle-class expansion act as levers. Headwinds include strong US Dollar translation impacts and sugar taxes in specific jurisdictions.
• Pricing dynamics: Highly dependent on local inflation and bottler negotiations. The company has successfully pushed 4% to 11% price/mix increases recently to offset commodity inflation.
• Revenue recognition notes: Concentrate revenue is recognised when control transfers to the bottler.
• Seasonality: Q2 and Q3 are historically the strongest quarters due to warmer weather in the Northern Hemisphere driving higher consumption.

For Global Ventures:

• Segment name: Global Ventures.
• Revenue driver formula: Retail Sales + Wholesale Coffee Bean Volume x Price/Unit.
• Historical growth rate: 5% to 8% CAGR.
• Key growth levers: Expansion of Costa Coffee retail footprint and ready-to-drink coffee distribution.

For Bottling Investments:

• Segment name: Bottling Investments Group (BIG).
• Revenue driver formula: Finished Goods Volume x Wholesale Price.
• Historical growth rate: Declining structurally due to the company's refranchising strategy.

• Total assets: Approximately $95 billion to $100 billion.
• Key asset categories: Equity method investments (stakes in major bottlers like Coca-Cola Europacific Partners and Coca-Cola FEMSA), trademarks with indefinite lives, and goodwill.
• Goodwill & intangibles: Represents roughly 35% to 40% of total assets due to historical acquisitions of brands and bottlers.
• Working capital profile:
• Days Sales Outstanding (DSO): 30 to 35 days.
• Days Inventory Outstanding (DIO): 35 to 45 days.
• Days Payable Outstanding (DPO): 70 to 80 days.
• Net working capital as % of revenue: Consistently negative (approx. -5% to -10%).
• Working capital dynamic: The company operates with negative working capital, meaning it collects cash from bottlers faster than it pays suppliers, providing a source of cash during growth phases.
• PP&E: Primarily bottling plants, distribution equipment, and fountain dispensers. Useful lives range from 3 to 15 years for equipment and up to 40 years for buildings.
• Right-of-use assets: Operating leases are present but not a dominant feature of the balance sheet (approx. $1.5 billion).

• Capex as % of revenue: 3.5% to 4.5% (approx. $1.5 billion to $2.0 billion annually).
• Maintenance vs. growth: Roughly 60% maintenance (fountain equipment, IT) and 40% growth (supply chain optimisation, new product lines).
• Major capex programmes: Digital transformation and sustainable packaging initiatives.
• Capitalised software: Material but stable, amortised over 3 to 7 years.
• M&A pattern: Bolt-on acquirer focusing on premium hydration, coffee, and sports drinks (e.g., Costa, BodyArmor, Fairlife).
• Typical acquisition multiple: 15x to 20x EV/EBITDA for high-growth premium brands.

• Total debt: Approximately $35 billion to $40 billion.
• Debt/EBITDA ratio: Currently around 1.8x to 2.0x, well within target ranges.
• Credit rating: A1 (Moody's) / A+ (S&P).
• Key debt instruments: Commercial paper for short-term liquidity, and a laddered portfolio of unsecured senior notes (bonds) in multiple currencies.
• Maturity profile: Well-staggered with average maturities exceeding 7 years.
• Interest rate profile: Predominantly fixed rate through issuance or interest rate swaps. Weighted average cost of debt is approximately 3.0% to 3.5%.
• Covenants: Standard investment-grade covenants (interest coverage ratios), none of which are currently restrictive.
• Share repurchase programme: Active programme used primarily to offset dilution from employee stock options, historically $1 billion to $2 billion annually.
• Dividend policy: Dividend aristocrat with over 60 consecutive years of increases. Target payout ratio is approximately 70% to 75% of free cash flow.

• Operating cash flow conversion: Consistently exceeds 1.0x net income (approx. $11 billion to $12 billion annually).
• Free cash flow margin: 20% to 24% of revenue.
• Major non-cash items: Depreciation, amortisation, stock-based compensation, and equity income from bottlers (which must be adjusted for actual dividends received).
• Working capital cash flow impact: Generally a source of cash due to the negative working capital cycle.
• Capex intensity: Low intensity due to the concentrate business model.
• Cash tax rate: Often lower than the GAAP effective tax rate due to the timing of deductions and foreign tax credits.

1. Control Panel: Model toggles, scenario switches (Base, Bull, Bear), and formatting legend.
2. Assumptions: Hardcoded inputs for volume growth, price/mix, FX impacts, margins, and working capital days.
3. Revenue Build: Segment-level build for North America, EMEA, Latin America, Asia Pacific, Global Ventures, and Bottling Investments.
4. Income Statement: Consolidated P&L mirroring the 10-K, including equity income from investees and non-GAAP adjustments.
5. Balance Sheet: Standard assets, liabilities, and equity, highlighting equity method investments and indefinite-lived intangibles.
6. Cash Flow Statement: Indirect method starting from net income, explicitly breaking out dividends received from equity method investees.
7. Debt Schedule: Tranche-by-tranche debt build, commercial paper, interest expense calculation, and debt paydown logic.
8. Working Capital: Schedule calculating receivables, inventory, and payables based on DSO, DIO, and DPO.
9. PPE & Intangibles: Capex, depreciation waterfall, and amortisation schedule.
10. Equity & Dividends: Share count roll-forward, share repurchases, and dividend payout calculations.
11. DCF Valuation: Unlevered free cash flow build, WACC calculation, terminal value, and implied share price.

1. `Segment Revenue = Prior Year Segment Revenue x (1 + Unit Case Volume Growth) x (1 + Price/Mix Growth) x (1 + FX Impact)`
2. `Consolidated Net Revenues = Sum of Segment Revenues + Bottling Investments Revenue + Global Ventures Revenue`
3. `Cost of Goods Sold = Consolidated Net Revenues x (1 - Gross Margin %)`
4. `SG&A Expense = Consolidated Net Revenues x SG&A % of Revenue`
5. `Comparable Operating Income = Consolidated Net Revenues - COGS - SG&A`
6. `Equity Income from Investees = Total Net Income of Bottler Affiliates x Coca-Cola Ownership %`
7. `Accounts Receivable = (Consolidated Net Revenues / 365) x DSO`
8. `Inventory = (COGS / 365) x DIO`
9. `Accounts Payable = (COGS / 365) x DPO`
10. `Free Cash Flow = Cash from Operations - Capital Expenditures`
11. `Dividends Paid = Prior Year Comparable EPS x Target Payout Ratio x Diluted Shares Outstanding`
12. `Interest Expense = Average Debt Balance x Weighted Average Interest Rate`

• The Revenue Build feeds the top line of the Income Statement and drives the Working Capital sheet (Accounts Receivable).
• The Income Statement generates Net Income, which is the starting point for the Cash Flow Statement.
• The Working Capital sheet calculates the change in NWC, which feeds the operating section of the Cash Flow Statement.
• The PPE & Intangibles sheet calculates Depreciation and Amortisation, feeding both the Income Statement (operating expenses) and the Cash Flow Statement (non-cash add-back).
• The Debt Schedule calculates interest expense for the Income Statement and ending debt balances for the Balance Sheet. This creates a circular reference if interest expense reduces cash, which in turn increases the need for debt. A circuit breaker toggle must be included.
• The Cash Flow Statement determines the ending cash balance, which links to the Balance Sheet to ensure Total Assets equal Total Liabilities plus Equity.

• Income Statement: Revenues are positive. Expenses (COGS, SG&A, Interest, Taxes) are negative.
• Balance Sheet: All assets, liabilities, and equity balances are positive.
• Cash Flow Statement: Cash inflows are positive. Cash outflows (Capex, dividends paid, debt repayment) are negative.
• Working Capital: An increase in an asset (e.g., Receivables) is a negative cash flow. An increase in a liability (e.g., Payables) is a positive cash flow.

1. "Foreign currency translation can swing reported revenue by 5% to 9% YoY; the model must explicitly separate organic growth (volume + price/mix) from FX impacts."
2. "Equity income from bottlers is a non-cash P&L item; the cash flow statement must deduct equity income and add back actual cash dividends received from these investees."
3. "The company frequently reports 'Comparable' (non-GAAP) margins that exclude trademark impairments and restructuring; the model must forecast on a comparable basis to reflect underlying economics."
4. "Concentrate sales volume and unit case volume can diverge due to shipment timing and extra selling days; the model should use unit case volume as the primary consumer demand driver."
5. "Bottling Investments revenue will structurally decline if the company executes further refranchising (e.g., Coca-Cola Beverages Africa); historical growth rates cannot be straight-lined."
6. "The company operates with negative working capital; projecting positive working capital will incorrectly penalise free cash flow generation."
7. "Interest income is material due to large cash and short-term investment balances; failing to forecast interest income will understate EPS."
8. "The effective tax rate includes benefits from equity method investments; using the statutory US corporate tax rate will overstate cash taxes."

1. "Gross margin should be in the 60.0% to 62.0% range based on the last 3 years; flag if outside this band."
2. "Comparable operating margin should remain between 29.0% and 32.0%."
3. "Capex as a percentage of revenue should typically run between 3.5% and 4.5%."
4. "Operating Cash Flow to Net Income conversion should consistently be greater than 1.0x."
5. "Net Debt to EBITDA should remain below 2.5x to align with the company's A1/A+ credit rating profile."
6. "The Balance Sheet must balance perfectly in every period (Total Assets = Total Liabilities + Equity)."
7. "The dividend payout ratio should remain within 70% to 75% of comparable EPS based on stated management policy."
8. "Return on Invested Capital (ROIC) should remain above 15%."

• Filings: SEC EDGAR database for 10-K and 10-Q filings; The Coca-Cola Company Investor Relations website for earnings releases and margin analysis schedules.
• Key Peers: PepsiCo (PEP), Keurig Dr Pepper (KDP), Monster Beverage (MNST).
• Bottler Benchmarks: Coca-Cola Europacific Partners (CCEP), Coca-Cola FEMSA (KOF), Coca-Cola Consolidated (COKE).
• Industry Data: Nielsen or IRI scanner data for US retail market share; GlobalData for international non-alcoholic ready-to-drink beverage volumes.
• Consensus Estimates: Bloomberg or FactSet for forward-looking analyst estimates on unit case volume and comparable EPS.

• The Coca-Cola Company Q4 and Full Year 2025 Earnings Release (February 10, 2026).
• The Coca-Cola Company 2024 and 2025 Form 10-K Filings via SEC EDGAR.
• The Coca-Cola Company Investor Relations Website (investors.coca-colacompany.com).