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Coca-Cola Altman Z-Score Analysis (2022–2024)
We gathered The Coca-Cola Company’s official financial data from its consolidated financial statements for 2022, 2023 and 2024. Key balance-sheet and income-statement figures are shown in Table 1 below. Working capital is computed as Current Assets – Current Liabilities. Total Assets and Total Liabilities are from the consolidated balance sheet, while EBIT is taken as the reported Operating Income. The Altman Z-score is calculated as: Z = 1.2·X₁ + 1.4·X₂ + 3.3·X₃ + 0.6·X₄ + 1.0·X₅ , where the X’s are defined in the prompt. All values are in $ millions. Sources: Coca-Cola 10-K filings and earnings releases .
Metric 2022 2023 2024
Current Assets (CA) 22,591 26,732 25,
Current Liabilities (CL) 19,724 23,571 25,
Working Capital (WC = CA–CL) 2,867 3,161 748 Total Assets 92,763 97,703 100,
X₁ = WC/TA 0.0309 0.0324 0.
Retained Earnings 71,019 73,782 76,
X₂ = Retained/TA 0.7652 0.7554 0. EBIT (Operating Income) 10,909 11,311 9,
X₃ = EBIT/TA 0.1176 0.1158 0.
Year-end Stock Price ($) 63.61 58.93 62.
Shares Outstanding (M) 4,328‡ 4,308‡ 4,302‡ Market Equity (Price×Shares) 275,304 253,870 267,
Total Liabilities (TL) 66,937 70,223 74,
X₄ = MktEq/Book TL 4.11 3.61 3.
Sales (Net Revenues) 43,004 45,754 47, X₅ = Sales/TA 0.4636 0.4683 0.
Altman Z-score 4.43 4.12 4.
‡ Outstanding shares (in millions) ≈ issued (7,040) minus treasury (2,712–2,738). These yield market equity values above. All component figures are drawn from Coca-Cola’s official statements .
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Ratio Trends (2022–2024)
Each X‑ratio exhibits the following multi-year trend:
X₁ (Working Capital/Total Assets): 2022: 0.0309; 2023: 0.0324; 2024: 0.0074. Working capital was high in 2022–2023 (due to current assets slightly exceeding liabilities) but plummeted in 2024. As Table 1 shows, Coca-Cola’s current assets fell (from $26,732M to $25,997M) while current liabilities rose sharply (from $23,571M to $25,249M). This compression caused X₁ to drop by ~75%. The decline in X₁ contributed negatively to the Z-score in 2024. X₂ (Retained Earnings/Total Assets): 2022: 0.7652; 2023: 0.7554; 2024: 0.7564. Retained earnings grew steadily ($71,019M → $73,782M → $76,054M) , while total assets also increased. The ratio remained fairly constant. X₂’s contribution to Z was ~1.06 in all years, providing strong support (reflecting the cumulative profitable history). X₃ (EBIT/Total Assets): 2022: 0.1176; 2023: 0.1158; 2024: 0.0994. Operating income (EBIT) rose from 2022 to 2023, then fell in 2024 (from $11,311M down to $9,992M). Total assets grew, so EBIT/TA declined. This drop in X₃ indicates lower operating profitability relative to asset base. The reduction in X₃ (2024 contribution = 0.0994×3.3 ≈ 0.328) pulled the Z-score down compared to 2023’s 0.382 contribution. X₄ (Market Equity/Book Liabilities): 2022: 4.11; 2023: 3.61; 2024: 3.61. Year-end share prices were $63.61 (2022), $58.93 (2023), $62.26 (2024) and shares outstanding ≈4.3B. Market capitalization fell in 2023 and recovered slightly in 2024 (≈$267.8B). At the same time, book liabilities rose each year (to $74,177M in 2024 ). The net effect left X₄ almost unchanged from 2023 to 2024 (~3.61). This ratio remains the largest positive contributor to Z (≈0.60×3.61 ≈ 2.17 in 2024) and indicates ample equity buffer over debt. X₅ (Sales/Total Assets): 2022: 0.4636; 2023: 0.4683; 2024: 0.4680. Net revenues steadily increased ($43,004M → $45,754M → $47,061M) , roughly in line with asset growth. X₅ stayed around 0.46–0.47, contributing about 0.46 to 0.47 to Z each year. This shows consistent asset turnover and sales growth.
Each component’s impact on the Z-score is visible in Table 1. In particular, the dramatic drop in X₁ and the decline in X₃ from 2023 to 2024 lowered the overall Z-score in 2024. X₄ and X₅ remained stable, while X₂ was steady. The net Z-scores were 4.43 (2022), 4.12 (2023), and 4.03 (2024), well above the distress threshold (≈1.8 for the original Z-score model) in all years.
2024 Z-Score and Bankruptcy Risk
A Z-score of 4.03 in 2024 indicates a low risk of bankruptcy (scores above ~2.7 are considered safe in Altman’s model). The slight decline in 2024 reflects shifts in Coca-Cola’s financial structure rather than emerging distress. The biggest factor was the collapse of working capital: higher current liabilities (e.g. short-term debt repayments and payables) offset current asset growth, driving X₁ sharply down. Lower profitability (X₃) also shaved off part of the Z-score. Conversely, Coca-Cola’s strong retained earnings and robust market equity (X₂ and X₄) continued to buoy its financial health.
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