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Coca-Cola Femsa, a bottler and distributor of Coke products in Mexico, experienced a drop in its stock price and operating income after the devaluation of the Mexican peso in December 1994. A Morningstar analysis has questioned Mexican companies'' quality of earnings under the country''s mandatory inflation accounting procedures. Juanita Carlos, an Analyst with a Houston-based bank, must decide whether a US$100 million loan should be made to Coca-Cola Femsa. This case focuses on Mexican accounting procedures, particularly its inflation accounting requirements, which are illustrated with a simple example. Students are asked to evaluate the Coca-Cola Femsa''s financial performance with the aid of summary financial statement data for Panamco and Gemex, two other Mexican beverage companies, and the 20-F reconciliation between Mexican and US GAAP (generally accepted accounting principles) provided by Coca-Cola Femsa.