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Money Management: Investing in a Company, Investment Strategy Based on Funds

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Added on  2019-09-20

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This article discusses investing in Coca Cola Company and developing an investment strategy based on funds. It covers risk profiles, self-analysis, and macro-economic view for better asset allocation. The article provides insights on money management.

Money Management: Investing in a Company, Investment Strategy Based on Funds

   Added on 2019-09-20

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Money Management(Question #1, #2, and #3)Student Name: Student ID: Course Name: Course ID:Faculty Name: University Name:
Money Management: Investing in a Company, Investment Strategy Based on Funds_1
Table of ContentsQuestion 1a: Investing in a Company........................................................................................2References..............................................................................................................................4Question 2: Investment Strategy Based on Funds......................................................................6Introduction............................................................................................................................6Self-Analysis..........................................................................................................................6Understanding Risk Profiles..............................................................................................6Self-Assessment.................................................................................................................7Identifying Risk Profile......................................................................................................9Macro-Economic View..........................................................................................................9Asset Allocation...................................................................................................................12Conclusion............................................................................................................................14References............................................................................................................................15Question 3: Invest in a bond.....................................................................................................17References............................................................................................................................18
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Question 1a: Investing in a CompanyThe company that has been selected for assessment is Coca Cola Company. Coca Cola is a beverage company. At present the company has more than 500 non-alcoholic beverages under its brand. There are various forms of beverages that are supplied by the company around the world. Most of them are sparkling and others belong to still beverages. The company came into existence in the year 1886. After the purchase of the company Ernest Woodruff in the year 1919, the company has made many innovations. The company was purchased by Ernest at the valuation of $25million (Pendergrast, 2000). Some of the innovative elements of Coca Cola are twelve ounce cans, standardizing carton having six bottles, and others. The product of the company is present in most of the countries around theworld and it is functioning appreciably well (Miller, 1998). Around 130 years of service of the company is appreciable and it shows that people from around the world has shown faith in the company as it has continuously grown in value since its inception. In the year 2012, thecompany announced that it will be entering Burma with its distribution of products. Considering this announcement, it can be stated that the company is now present in almost allthe countries around the world except Cuba and North Korea.The company is listed on the New York Stock Exchange. There are multiple competitors for the company in the local market and at the global market the company has some bigger competitors such as PepsiCo and others. The market in which the company is operating is global in nature and therefore the changes in the economic situation of any country makes substantial impact on the company’s profitability. However, due to its wide presence, most ofthe times loss generated in one location are mitigated with the profits from others. Therefore, considering the size of the company, its wide presence, and the future intention of the global economy, the investment in this company can be suggested. However, the size of the
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company should not be the selection criteria always. While moving ahead with the discussionit should be stated here that the US Market has been considered in general to understand the relationship of various factors if encountered. As per the US market is concerned, the beverage industry has two categories in general, they are alcoholic and non-alcoholic. The products of Coca Cola Company come under the non-alcoholic category. The overall beverage industry of the United States is generating around more than $140 billion per year in revenue. The pricing strategies, packaging and other marketing elements are the key to master if a company is willing to operate in this industry (Kim and Zheng, 2017). At present, the non-alcoholic market of US is around 60%. One of the key aspect that has come up as per the US market is concerned, that the market has gainedgreater degree of saturation and this has impacted the growth aspects. Considering this, one can state that the developing markets outside United States is still an option, even for Coca Cola, which there is no doubt company is willingly pursuing. The gross profit margin for the company is high. At present it is at 64.61% (Stock Analysis on Net, 2017). However, the profit margin should not be the indication of appreciation as in comparison to the last year, the profit margin has decreased. Even if the profit margin is showing fluctuation, if the overall industry is considered then it can be stated that the company’s profit margin trend has diligently followed the trend of the industry. Interestingly,the major change can be witnessed in the net income of the company. In the previous year, the net income of the company was $1237.00 million however in the current year the net income fell to $550.00 million. The 55.5% decrease in the net income can be witnessed which is indicating towards some major challenges (Ycharts.com, 2017). At present, the company’s debt to equity ratio is 1.98. The debt to equity ratio is high in an unprecedented manner and it can be stated that there is the need of some improvement in the management of
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