Coca Cola Capital Structure Analysis

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Coca-Cola Company is one of the multinational companies in the United State. Its capital structure plays an influential role in Shareholder’s Wealth Maximization. Normally, US multinational companies have the relatively higher indebtedness, so they often use the debt financing (Dobrica, 2007).
According to Puravankara (2007), Coca-Cola Company uses debt financing to reduce the overall cost of capital, which can increase the return on shareholders’ equity. Besides, they coupled with management of mix of short-term debt and long-term debt and mix of fixed-rate and variable rate debt to results in a lower overall cost of lending. Under the debt management policies in Coca-Cola Company, the share repurchases programs and investment activities are
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On the other hand, according to Dobrica (2007), some companies are more likely to issue the equity when their market values are higher. When the market values become lower, the company would repurchase the equity. Therefore, this capital structure of the company tends to be equity market.
Besides, equity financing can lower agency costs because of the dividend payment leads to lower agency costs of equity. So the dividend policy can raise more equity and lead to lower debt
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This means that the Nestle Company offers equity financing (Annual Report, 2013). Under the equity financing, the investor purchase shares in the firm in order to reclaim the profit in the future. In addition, shareholders have the privilege to share the profits of the firm in the form of dividends or future capital gains (Sibilkov, 2009; Modugu, 2013). The shareholders also will have limited liability when the firm suffer loss, means that the shareholders would only loss the amount that they had invested in the firm (Sibilkov, 2009; Modugu, 2013). Hybrid capital also is a type of capital structure which incorporates the capital structure of debt and equity (Mjøs, 2007). When using the hybrid capital structure, company would consider the benefits and drawback of capital structure of debt and equity (Modugu, 2013). Therefore, some multinational company would consider using the capital structure of combination of debt financing and equity financing.
Amazon is one of the multinational companies from American; the company offers hybrid financing (mix of debt and equity) as their capital structure. This is because the capital structure of Amazon will slowly move to a stable capital structure at 85% for equity and 15% for debt (Agarwala, Katiyar & Singh,

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