Payback Period

Considering the annual statement of the Coca-Cola Company over the past four years that have passed, it means that it is easier to evaluate its marketing trends over time as well as across other businesses found in the same industry. Thus, the common size income statement is typically perceived as being the percentage of sales which the company makes which this duration. This statement is tabulated below. Considering the various methods to be used by the management authority of the company, it implies that the payback period will assist them in pursuing a number of projects (Grant, 2003). The importance of these projects is that it will enable the management authority in recovering some of the investment it could have made just within a specified period of time.  In case, the company realizes that they have in place some of the profitable

Although some projects may be regarded as being more profitable, it means that the management authority may be reluctant in realizing the intended returns.  For example, in case the objective of the Coca-Cola Company takes the initiative of investing more on it day-to-day projects, it implies that the management authority will have the capacity of generating sufficient returns to be used in acquiring new production facilities. Regardless of the fact that the management authority will be able to earn more of the invested funds, the organization should take into consideration the duration it will take. Thus, the time frame of each activity should be perceived as being the one which have the capacity of enabling it company to earn more revenues in case such earnings are to be obtained through the key demerits of the payback period methods (Morin & Jarrell, 2000). But, in case the management authority of the Coca-Cola manages to record an increasing level of returns, the amount it will use in catering for the expenditures made should also be computed.

Net Present Value

Considering the net present value of the Coca-Cola Company over the past four years that have passed, it means that it is easier to evaluate its marketing trends over time as well as across other businesses found in the same industry. Thus, the net present values which the company obtains are typically perceived as being the percentage of sales which the company makes which this duration. This statement is tabulated below

Form the above data; it implies that the net income of the Coca-Cola Company is ultimately used for the purpose of comparing line products across the industry and other associated companies. Each individual item is divided by the sales the company made which that year, which in return gives the percentage of sale made. With that percentage at hand, it implies that it is easier to compare the value of different companies as well as that of differentiated industries. This implies that the common size income statement is typically compared with the net income numbers of the company achieves in each year (Keown et al., 2017).

            As shown in the table, the sales of the company had consistently increased over the past 3 years. The net present value had decreased by 15.43% in 2017 from 2016, after an increase of 18.44% in 2016. In 2016, it means that the company had managed to make more sales as compared to the percentage of sales which was obtained in 2015 (18.44%).

            From the above table, it implies that the company’s SG&A is comparable to the costs of sales since is based on the extensive product promotions the company makes. The other lines of products are ultimately fairly similar during these years. Conversely, this information indicates that the short-term obligations of the company had increased substantially because of the decline in sales and the extensive competition experienced in the same industry. Such a re-casted income statement suggest that the income generating trend the company have been experiencing indicates how well the management authority have been fairing on well in improving their economies of scale so as to continue thriving in the current beverage market (Morin & Jarrell, 2000). This implies that the more the returns, the better the financial position of the company in generating more returns in the near future. In computing these returns, the company should take into consideration the initial capital outlay made so as to realize its net present values.

The Internal Rate of Return (IRR)

For the past three years that have passed, it implies that the company have been having a reasonable internal rate of return (IRR) which in return enables it obtain enough capital for reinvesting or distributing to its shareholders. Thus, the decline in its internal rate of return can also be said to be brought about the extensive competition it encounters in the industry. Although the company has been having higher equity returns, IRR is a good indicator of how its assets are utilized in improving its financial base. Considering the number of investments which was made by the potential investors, it means that the company had the potential of increasing assets with such an investment (Kensinger & Kensinger, 2017).

            This suggests that the revenues that the company generates can be spread out effectively so as to cater for the expenses the company has as well as retaining enough money for investing or paying investors. The importance of the company’s IRR indicates that the management authority is given the opportunity of lowering their prices when the economy worsens. In case, the company managed to obtain a high IRR, it implies that it was possible for the company to accept less revenue but still have the ability of covering all expenses.