Coca-Cola (KO) 10-K Summary - Beginner-Friendly Edition

Fiscal Year 2024 (Year Ended December 31, 2024)

What is a 10-K?: An annual report that every publicly traded company must file with the SEC. Think of it as a comprehensive “state of the company” report card.

Report Filed: February 20, 2025
Filing Type: 10-K (Annual Report)
Reading Time: 15-20 minutes (with beginner explanations)

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The Numbers (Explained Simply)

Income Statement: Did Coca-Cola Make Money?

Revenue (total sales): $47.1 billion in 2024 vs $45.8 billion in 2023

• What it means: Total money Coca-Cola made from selling beverages worldwide
• Change: +$1.3 billion (+2.9% growth)
• Is this good?: Yes! Solid growth for a 138-year-old company.

Gross Profit: $28.7 billion (up from $27.2 billion)

• What it means: Money left after paying to make the products
• Gross Margin: 61.1% (up from 59.5%)
• Why you care: This measures how profitable each bottle of Coke is. Higher is better!
• Is this good?: EXCELLENT! 61% margin means Coke keeps $0.61 of every dollar in sales after production costs.

Operating Income: $10.0 billion (down from $11.3 billion)

• What it means: Profit from normal business operations
• Change: -$1.3 billion (-11.7% decline)
• Why it dropped: Higher “other operating charges” of $4.2 billion (restructuring costs)

Net Income (bottom line profit): $10.6 billion

• What it means: The actual profit after ALL expenses, interest, and taxes
• Change: Nearly flat (-0.8% vs 2023)
• Is this good?: Decent! Despite one-time costs, net income stayed stable.

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How Coca-Cola Makes Money (Simplified)

The Business Model (THIS IS KEY!)

Coca-Cola is NOT primarily a beverage manufacturer - it’s a concentrate/syrup seller and brand manager:

How it works:

1. Coca-Cola makes the secret concentrate/syrup formulas
2. Coca-Cola sells these to independent bottlers worldwide
3. Bottlers add water, carbonate, bottle, and distribute
4. Coca-Cola collects revenue from selling concentrate PLUS bottling operations it owns

Why this model is brilliant:

• Low capital requirements (bottlers pay for factories/trucks)
• High margins (concentrate is cheap to make but sells for premium)
• Scalable globally without huge investments

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Main Risks (What Could Go Wrong?)

1. Economic Conditions & Consumer Spending (HIGH CONCERN)

• When economies struggle, people cut back on discretionary spending
• Consumers may trade down to cheaper private-label brands

2. Health & Obesity Concerns (MEDIUM-HIGH CONCERN)

• Growing concerns about sugar, obesity, and diabetes
• Taxes on sugary drinks spreading globally
• Coke is adapting with zero-sugar options and portfolio diversification

3. Currency Fluctuations (HIGH CONCERN)

• Coca-Cola operates in 200+ countries
• $2.9 billion in negative foreign currency impact in 2024

4. Water Scarcity (MEDIUM CONCERN)

• Coca-Cola uses MASSIVE amounts of water
• Water scarcity could limit production or increase costs

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Red Flags & Green Flags

Red Flags (Warning Signs)

1. Operating Cash Flow Decline: Dropped from $11.6B to $6.8B (-41%)
2. Operating Income Down 11.7%
3. Foreign Currency Headwinds: $2.9 billion negative impact
4. Health Trend Acceleration: Sugar taxes spreading globally

Green Flags (Positive Indicators)

1. Gross Margin Expansion: 61.1% in 2024 vs 59.5% in 2023
2. Revenue Still Growing: +2.9% despite all the challenges
3. Stable Net Income Despite Headwinds: $10.6B
4. Strong Brand Portfolio: Owns world’s most valuable beverage brands
5. Dividend History: Paid $8.4 billion in dividends in 2024

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Should You Invest in Coca-Cola? (Beginner Guidance)

Bull Case (Reasons to Buy)

1. Timeless Brand with Pricing Power: 61% gross margins prove strength
2. Defensive Business Model: People drink beverages in good times and bad
3. Global Diversification: Operates in 200+ countries
4. Dividend Income: ~3.0-3.2% yield with long history of increases
5. Adapting to Health Trends: Zero-sugar products growing

Bear Case (Reasons to Avoid)

1. Low Growth: +2.9% revenue growth isn’t exciting
2. Health Trends Are Real: Sugar taxes spreading, preferences shifting
3. Currency Headwinds: Strong dollar hurts international revenue
4. Operating Cash Flow Concerns: Major decline in 2024

Which Case is Stronger? SLIGHTLY BULLISH

Core business fundamentals remain solid. Short-term challenges are likely temporary. Dividend provides downside protection.

What Type of Stock is Coca-Cola?

• NOT a growth stock: Don’t expect 20%+ annual returns
• Dividend income stock: Pays steady 3%+ dividend yield
• Defensive holding: Holds up relatively well in downturns
• Core portfolio position: The kind of stock you buy and hold for decades

Position Sizing for Beginners:

• Conservative portfolio: 3-5% of total portfolio
• Income-focused portfolio: Could go up to 5-8%
• Growth-focused portfolio: Maybe 2-3% or skip entirely

Risk Level: MEDIUM-LOW

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Bottom Line

Key Takeaways:

• Revenue growing (+2.9%) despite mature markets
• Margins expanding (61.1% gross margin = excellent pricing power)
• Brand strength intact (Coke is still Coke)
• Adapting to trends (zero-sugar growth, portfolio diversification)
• Dividend reliable ($8.4B paid in 2024, ~3% yield)

Watch List:

• Operating cash flow dropped (from $11.6B to $6.8B - needs to recover)
• Operating income down (restructuring charges, but still watch this)
• Currency headwinds ($2.9B negative impact in 2024)
• Health trends accelerating (sugar taxes, consumer preferences shifting)

Overall Grade: B (Solid but not spectacular)

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For Beginners: Key Investing Lessons

Lesson 1: Big doesn’t mean fast growth - Coke is HUGE but only growing ~3%/year

Lesson 2: Margins matter as much as revenue - 61% gross margin is impressive

Lesson 3: One-time charges are common - focus on core business health

Lesson 4: Currency matters for global companies - watch the dollar

Lesson 5: Brand value is real - Coke can raise prices because of its brand

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Original 10-K: 200+ pages, ~85,000 words, 5-6 hour read
This Summary: ~5,500 words, 15-20 minute read
Time Saved: ~5 hours (92% reduction)

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This summary is for educational purposes only and is not financial advice.