The Coca-Cola Company (KO)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 61.06% | 59.52% | 58.14% | 60.27% | 59.31% |
| Operating profit margin | 21.23% | 24.72% | 25.37% | 26.67% | 27.25% |
| Pretax margin | 27.81% | 28.31% | 27.17% | 32.14% | 29.53% |
| Net profit margin | 22.59% | 23.42% | 22.19% | 25.28% | 23.47% |
The Coca-Cola Company's profitability ratios show a fluctuating trend over the past five years. The Gross Profit Margin, which indicates the percentage of revenue remaining after deducting the cost of goods sold, increased from 59.31% in 2020 to 61.06% in 2024, indicating improved efficiency in production and pricing strategies.
On the other hand, the Operating Profit Margin, representing the proportion of revenue left after subtracting operating expenses, declined from 27.25% in 2020 to 21.23% in 2024. This downward trend suggests that the company's operating costs have been increasing at a faster rate than its gross profit.
Similarly, the Pretax Margin, reflecting the percentage of revenue retained after deducting all operating expenses and before taxes, fluctuated between 27.17% in 2022 and 32.14% in 2021. This variability may indicate changes in the company's tax obligations and overall financial performance.
Lastly, the Net Profit Margin, which shows the proportion of revenue that translates into net income, ranged from 22.19% in 2022 to 25.28% in 2021. This metric indicates the company's success in managing its bottom-line profitability amidst changing market conditions.
In conclusion, while The Coca-Cola Company experienced improvements in gross profit margin, its operating profit margin showed a declining trend. The fluctuations in pretax and net profit margins suggest varying levels of efficiency and financial performance over the five-year period. The company may need to closely monitor its cost structures and revenue streams to ensure sustained profitability in the future.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 9.94% | 11.58% | 11.76% | 10.92% | 10.31% |
| Return on assets (ROA) | 10.57% | 10.97% | 10.29% | 10.36% | 8.87% |
| Return on total capital | 59.31% | 55.87% | 52.05% | 56.89% | 57.64% |
| Return on equity (ROE) | 42.77% | 41.30% | 39.59% | 42.48% | 40.14% |
The profitability ratios for The Coca-Cola Company show a varying trend over the years.
- Operating return on assets (Operating ROA) increased from 10.31% in December 2020 to 11.58% in December 2023, reflecting a positive operational efficiency in generating profits from its assets. However, it slightly decreased to 9.94% by December 2024.
- Return on assets (ROA) also improved from 8.87% in December 2020 to 10.57% in December 2024. This indicates that the company was able to generate higher profits relative to its total assets over the period.
- Return on total capital fluctuated, with a decrease from 57.64% in December 2020 to 52.05% in December 2022, before rebounding to 59.31% by December 2024. This ratio signifies the company's ability to generate returns for both equity and debt holders.
- Return on equity (ROE) witnessed an increase from 40.14% in December 2020 to 42.77% in December 2024. This demonstrates the company's proficiency in generating profits for its shareholders relative to their equity investments.
Overall, these profitability ratios indicate that The Coca-Cola Company experienced improvements in profitability and efficiency in utilizing its assets and capital throughout the period, with some fluctuations but maintaining a positive trend.