Is Coca Cola the “Perfect” Business

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Is Coca Cola the “Perfect” Business This case study will provide an overview of the Coca-Cola Company as the perfect business as it pertains to the characteristics that make up a good business. Understanding the quality of a business is critical to being a successful. 1) A good company can attract top talent. Without an influx of fresh talent all the time, companies are forced to lay off their stale, aged work force at some point and often have difficulty in recruiting young talent after having done so. This company probably relies heavily on a solid internship program, promotes from within, and offers tuition reimbursement for its employees in qualified training programs. 2) A good company invests in the future, either in a good R&D department or through careful advertising. Without investing profits wisely for future gains, a company can seldom survive on current success alone. 3) A good company is profitable. The bottom line is always the most important metric when determining the relative success of a company. The perfect business has huge free cash flows that will grow for a very long time. If a company isn't profitable over the long term, it will fail to exist. A measure of financial performance and stability is calculated as operating cash flow minus capital expenditures. Free cash flow represents the cash that a company has on hand after it maintains and/or expands its asset base. This is important because it allows a company to pursue opportunities that enhance shareholder value. With little or no cash, it is difficult to develop new products, make acquisitions, pay dividends and most importantly reduces debt. The biggest concern is long-term debt. Increases in interest rates can drastically affect company profits and make future cash flows less predictable. (Investopedia) 4) A good company has or is currently positioning itself in the

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