The Fed's policy is monetary. "Monetary policy" is the Fed's efforts to achieve maximum employment, stable prices, and moderate long-term interest rates (BGFRS, 2021). Federal funds rate implements monetary policy. Modern Economics explains short-term lending rates (Cowen & Tabarrok, 2021, p. 749). Federal funds rate variations effect family and business borrowing rates and the economy. ECB coordinates EU financial policies (ECB). The EU says the ECB intends to keep Eurozone inflation below 2%. Economic development and job creation are strongest around 2% inflation (European Commission, 2021, p. 5).
The Federal Reserve began its first-ever public comprehensive evaluation of its monetary policy framework (strategy, instruments, and communication practices) this year. Employment and inflation were near Fed targets when the review was announced, making it a good opportunity to consider changing the U.S. monetary policy framework to better manage future problems. (2017)
Coca-2019 Cola's revenue was $37.3 billion, up 9%. 2019 annual report: concentrate sales up 1%, price/mix up 5%. (Coca-Cola Financial Reports, 1/19) Low interest rates fueled the company's growth. The company's loan rates and operating costs dropped. 2019 Fed monetary policy and economic growth.
The Fed acquired $428 million in corporate bonds in 2020 because of coronavirus. Coca-debt Cola's was valued at $6.6 million (Sardana, 2020). Coca-Cola sold the most euro bonds by a U.S. issuer in 2015, $9.5 billion (Heller, 2019). Wall Street Journal's Mike Cherney argues Coca-Cola can benefit from euro bonds (Cherney, 2019, para 1). According to Cherney, selling might lower a company's borrowing costs (Chernery, 2019, para 4). Coca-2020 Cola sales were $33 billion, down 11%. 2020 financial reports reveal lower concentrate sales and price/mix. Financial Reports, 2020, p.
The FOMC's monetary policy framework demands that inflation expectations be anchored at 2 percent (BGFRS, 2021, p 4). The Fed has a plan to stop inflation's three-year increase. Page 35 of the study notes, "Overseas monetary policy remained supportive as central banks focused on expanding GDP and viewed recent inflation as transitory." BGFRS p. The Fed adds $80 billion to Treasury and $40 billion to agency MBS monthly (BGFRS, 2021, p 39). This will continue until employment and prices stabilize. Coca-2021 Cola's sales climbed 16% to $10 billion. $9.7 billion in 2019. 2021 sales grew 14% organically. Concentrate sales climbed 8% and price/mix grew 6% in 2021. Strong global growth, especially where coronavirus fears have subsided (Coca-Cola Financial Reports, p. 1, 2021).
Europe loves Coca-Cola. The EU chose EMU to "achieve sustainable economic growth and high employment" (European Commission, 2021, p. 1). This fuels four economic sectors. "Ensuring a smooth single market, regulating and monitoring financial institutions, and establishing an efficient monetary policy for the Euro zone with price stability" are EU tasks (European Commission, 202, p. 1). EMU monetary policy have helped the economy recover from COVID-19 for three years. Coca-Cola benefits from low inflation and stable interest rates. EMU returned Coca-loan Cola's in 2020 to expand and become more productive.
Coca-Cola Great Britain's 2020 tax return says the company pays overseas taxes. Employer payroll taxes and VAT/GST are not deductible. We collect payroll, VAT, and sales taxes for credit. Our taxes benefit local economies (Coca-Cola Great Britain Tax Policy, 2020, para 5-6).
Coca-Cola paid €3.8 billion in taxes in Europe in 2020, helping it hire 374,222 jobs and gain 1.6 million customers (Coca-Cola Company Financial Statement, 2020, p. 19). "Taxes paid by us, our suppliers, and trade partners are vital to government budgets," the company added (Coca-Cola Company Financial Statement, 2020, p.18).
Coca-Cola is accused of hiding U.S. revenues in tax havens. Single-company models share parent and foreign subsidiary profits more often. Coca-Cola must pay back taxes on packaging earnings in Brazil, Ireland, and Egypt from 2007 to 2009. (2020)
The Coca-Cola Company's effective tax rate is lower than the statutory U.S. rate of 21 percent because of "significant operating and non-operating items, as well as the tax benefits of having significant operations outside the U.S. and significant earnings generated in investments accounted for under the equity method" (Coca-Cola Company income tax quarterly report, 2020, section 13).
Muhtar Kent, former Coca-Cola CEO, mentioned tax difficulties. According to Kent, Australia, Britain, France, Germany, and Switzerland tax multinational firms territorially. Few governments, including the U.S., use deferral to help foreign industry. Multinational corporations only pay taxes in the country where they operate, while American companies are taxed twice if they bring abroad earnings home. "Deferral advantages would be lessened under U.S. principles, placing U.S. companies at a disadvantage," says Kent ( Rubenstein, 2010, para 14). This would affect Coca-Cola. The US threatens its inhabitants' and businesses' economic well-being with one of the highest corporate tax rates and the most onerous foreign income tax regime. Coca-Cola economy has benefited from looser Fed and EMU monetary policy in the last three years. Coca-major Cola's market is Europe, therefore taxes in the U.S. and Europe hurts it.
References
Cherney, M., & Cox, J. (2015, February 26). Coca-Cola sells $9.5 billion in Euro-denominated Bonds. July 29, 2022, from https://www.wsj.com/articles/coca-colasells-9-5-billion-in-euro-denominated-bonds-1424992985
Coca-Cola Company statistics and Facts. (2021, October 06). Retrieved July 29, 2022, from https://market.us/statistics/food-and-beverage-companies/coca-cola-company/
Cowen, T., & Tabarrok, A. (2021). Modern principles of economics (4th ed.). Macmillan learning.
Heller, M. (2015, February 27). Coca-Cola joins Euro Bond Rush. Retrieved July 29, 2022, from https://www.cfo.com/capital-markets/2015/02/coca-cola-joins-euro-bondrush/
Rubenstein, D. (2010, September 8). Archived content. Retrieved July 29, 2022, from https://www.businessroundtable.org/archive/media/news-releases/remarks-by-ceomuhtar-kent-on-trade-and-global-competitiveness
Smith, D. (2021, September). Rethinking the role of Bonds - Janus Henderson Investors. Retrieved July 29, 2022, from https://www.janushenderson.com/engb/investor/article/rethinking-the-role-of-bonds/
Coke defiantly has an advantage with all the overseas operations. Also, the world is getting back to pre pandemic status. Although the price of coke is higher, more people are back to work and their coke is a priority. I feel like coke is one of those companies that will survive no matter what the Federal Reserve throws at them.
Isabsch,
Most businesses "pass" their income "through" to their owners, which is reported on the owners' Individual Income tax returns. Overall, pass-through businesses account for more net income than corporations, meaning an increase in individual income tax rates will impact a majority of U.S businesses. Pass-through businesses represent the ideal tax treatment of a business form. Unlike C corporations, pass-throughs are only subject to one layer of tax, the proper tax structure. Overtime, the size of the pass-through sector has increased. Since the 1980s, the number of corporations has decreased from a high of almost 2.6 million in 1986 to about 1.6 million in 2013. On the other hand, the number of sole proprietorships has increased from about 9 million in 1980 to more than 24 million in 2013.
I enjoyed reading your post. Thank you it was well thought out. Coca-Cola has definitely benefited from having a lot of its operations outside of the US. Coca-Cola in recent events has seen growth even in the midst of global inflation in the developed countries and now in the emerging markets. As the world is returning to a pre-pandemic environment sales of Coca-Cola products have increased which has helped the economic growth of the company. "For perspective, in 2021, Coca-Cola saw its sales surge 17% to $38.7 billion. All five segments – EMEA, Latin America, North America, Asia Pacific, and Bottling – saw double-digit sales growth." (Forbes, 2022). The fact that Coca-Cola saw an increase in all markets is quite impressive. The feds' increase in interest rates can slow the growth the company is seeing. However, inflation and interest hikes make for discretionary spending to slow down with consumers. "Consumer confidence is also declining as surging energy, food, and housing prices eat into household budgets." (Forbes, 2022). Nonetheless, Coca-Cola is less likely to feel the impact of a potential recession.
Reference:
Forbes. (2022). "What A Recession Would Mean For Coca-Cola Stock?" Published July 11,
2022. Retrieved from:
https://www.forbes.com/sites/greatspeculations/2022/07/11/what-a-recession-
would-mean-for-coca-cola-stock/?sh=24d1295e36b7