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Business Economic Value Accounting Principles & Strategic Management Discussion

Business Economic Value Accounting Principles & Strategic Management Discussion

Question Description

I’m working on a business writing question and need guidance to help me study.

two classmates discussion responses with one reference each.

one: Business valuation determines the economic value of a business or the business unit. This is valuation can be used to determine the fair value of the process and this values are needed especially if you’re planning to sell and to buy another business. Ventilation is important also for the company for tax purposes. (Hayes, 2020).

Developing a business is learning is not an exact science. There are principles that can be employed to determine this value. (Hill, 2020). One of the methods of evaluation is using four methods and obtaining and average of the four methods (David and David, 2020) This method is employed in determining the value of Coca Cola. Using the financial data from Coca Cola 2020

It is estimated to worth 121 million dollars.


David, F. R., & David, F. R. (2019). Strategic management: a competitive advantage approach, concepts and cases (17th ed.). Upper Saddle River: Pearson

Hayes, A(2020). How to Value a Company retrieved from

Hill, B (2020). Business Evaluation Method. retrieved from

Macrotrends (2021). Coca Cola Financial Trends. Retrieved from


Four Valuation Method.

Four Valuation Method

Shareholders Equity


Net Income


Stock Price




Number of OutstandingShares






(Macrotrends, 2021)

Four Valuation Method

NetWorth Method

Share Holders Equity-Goodwill -Inthangibles


Net Income Method

Net Income X5


Price Earning Ratio Method

(Stock Price/EPS)X NetIncome


Outstanding Shares Method

Number of outstanding shares X Stock price




Average of the Four Method


two: The need to assess a companies’ value is an important factor to retaining and gaining new investments. This means that it places a crucial role when comparing a company competitively to their competitors. Assessing financials can be a difficult task in an accurate manner, but if financial facts, common sense, good judgement, and transparency are being used then financial information can be deemed reliable (David & David, 2019, pp. 256). Performing these analyses allow Investor Relation Department to create information to be delivered to investors and potential investors to help retain and gain market edge. This is why the following calculations in Table A were performed using real time information from the Wall Street Journal coupled with accurate information from Coca-Cola Financial Statement.

Table A: Information Retrieved from Wall Street Journal

Coca-Cola Net Worth Analysis (in millions)

Valuation Method



Net Worth

$19,299,000(SE) – $17,506,000(GW) – $11,044,000(Intangible)

$ (9,251.00)

Net Income

$7,747,000 (NI) x 5

$ 38,735.00

Price-Earnings Ratio

$54.41 / $1.79 (Stock Price/EPS) x $7,747,000 (NI)


Outstanding Shares

4,295 (Shares Outstanding) x $54.41 (Stock Price)


Four Method Average

$ 129,509.65

One important aspect of these financial information to understand is that Coca-Cola is seen as defensive stable to investors. The reason being is that Coca-Cola is recognized by 94% with consumers purchasing 1.9 billion services a day (Hoy, 2018). This type of brand image is one of the reasons that Coca-Cola has positioned themselves defensively to investors. One aspect that gains investors and retain current investors is how much in dividends Coca-Cola is willing to pay with the current dividend yield at 3.32% (Hoy, 2018). This allows for Coca-Cola to report a negative Net Worth due to high intangible products but allows to show reflection on aspects that need to change. One element comes from the fact that Coca-Cola is still largely positioned with their sugary beverages as the cash cow. This as we learned last week is not the case as these sugary beverages are beginning to become the dogs in the market. They need to begin to revamp products and acquire new healthier options to release to the industry if they should hope to retain their position as the beverage leader.


David, F., David, M. E., & David, F. (2019). Strategic management : a competitive advantage

approach, concepts and cases (17th ed.). Upper Saddle River: Pearson.

Hoy, L. (2018, February 8). Should you BUY Coca-Cola Co stock? 3 Pros, 3 Cons. Retrieved April 22, 2021,


Wall Street Journal. (2021, April 22). KO | Coca-Cola CO. annual income statement – WSJ. Retrieved April 22, 2021, from…

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