Hello only looking for some general guidelines to help my research:

What would be the advantages and disadvantages to issuing a share repurchase for a big company? Would income disparities grow or not be an issue? How could the long-term strength of a company be affected? Thanks

Coca-Cola Co. (NYSE:KO) said on Thursday (21st February 2019) that it will raise its dividend by 2.6% and set a new program to repurchase up to 150 million shares. The beverage giant's stock rose 0.8% in morning trade. Coke's stock has lost 6.7% over the past three months, while the consumer staples ETF has slipped 0.1% and the Dow has gained 5.7%.

There are currently 4.268 billion shares outstanding. The last trading price of Coca-Cola's stock is $45.10, which is the offer price in the share repurchase. The cost of debt can be estimated based on the yield to maturity of an outstanding bond, which is 2.727%. Assume that debt beta is 0.0171. The risk-free rate is based on the 10-year Treasury bond yield (2.625%). 2 The market premium is 5.96%.3 Corporate tax rate is 21%. Coca-Cola's balance sheet is presented in Exhibit 1.

Leveraged recapitalization can have positive or negative consequences for the existing shareholders. As the Chief Executive Officer (CEO) of Coca-Cola, you will be presenting to the board of directors (BOD) of Coca-Cola as to how the company value can be affected by the leveraged recapitalization.

As preparation for tomorrow's meeting with the BOD, you will have to prepare responses for the following question:

Critics of buybacks say companies enact them at the expense of investing in their own businesses and workers. "If corporations continue to purchase their own stock at this rate, income disparities will continue to grow; productivity will suffer; the long-term strength of companies will diminish."

Is this concern applicable to Coca-Cola Co.? You may consider the pros and cons of issuing a share repurchase for Coca-Cola Co. Support your arguments using relevant theories that you have learned in Corporate Finance. You are also encouraged to conduct additional research using reliable sources such as financial news sources and/or research articles from Google Scholar.

EXHIBIT I Coca-cola Co | Balance Sheet | Thomson Reuters Eikon* Balance Sheet Annual Standardised in Millions of LI.S. Dollars* 2014 2015 2016 2017 2018 31 - Der- Period End Date* 2114 31 - Der- 31 - Dec 31 - Der - 31 - Der - 21:115 20110 2017 2018 Assets ( $ Millions )\ Cash and Short "Term Investments 21 , 675 22, 201 20, 075 15,0 014 Accounts Receivable -"Trade , Net 4 , 4^ 3, 041 3, 8:50 3, 607 3, 3.90 " Total Inventory* 3 , 1010 2,0 012 2 , 675 2 , 655 2 , TO` I'VEpaid Expenses 2, 0102 2 , 135 1 , 76` 1 , 202 1, 8:49 Other Current Assets ,"Total* 1 , 683 3.512 9+9' L 1 19 ' t "Total Current Assets 32.08 0 3.3, 395 34, 1910 30 , 545 Property / Plant /" Equipment , "Total - Net 14 , 613.3 12, 571 101, 635 8, 203 8, 2.32 Goodwill , Net 12 , 1010 1 1 , 289 10, 029 9, 401 10, 203 Intangibles , Net 14 , 272 12, 8:43 10,49 9 7 . 235 TOOT Long Term Investments* 13, 6127 15 , 791 17 , 250 21 , 952 201 , 274 Other Long I'emm Assets ,"Total 4 , 4015 4, 107 4 , 247 4. 5^ "Total ASSETS 72,1123 80,090 $7, 270 $3, 210 Liabilities ( 5 Millions ) Accounts Payable 2, 0189 2 , 618.2 2, 248 2, 498 Payable / Accrued ( 10.3) Accrued Expenses 7 , 145 6, 1 10 6, 28:4 6, 205 Notes Payable / Short Term Debt* 19, 130 13, 129 12 , 498 13 , 205 13, 194 Current Part . of L ' T' Debt /' Capital Leases 3. 552 2, 670 3, 527 3 , 208 4,197 Other Current liabilities ."Intal 45% 1 , 780 1, 872 2, 119 2, 209 " Total Current Liabilities 32, 374 20, 029 201, 5.32 27 , 194 29, 223 "Total Long, "I'emm Debt 10,010.3 28, 31 1 20, 0184 31 , 182 25, 3.04 Deferred Income Tax 5, 630 4 , 6:21 3. 753 2, 522 1, 93.3 Minority Interest 241 210 158 1,005 2, 0177 Other Liabilities , Total 4. 3^ 4, 3.011 $, (121 7, 638 " Total Liabilities 6 1. 703 64, 442\ 6 4, 2018 70, $:24 60, 2:35 Shareholders Equity 15 Millions* " Total Equity 301, 320 25, 554 23, 0101 2 17 , 172 10.981 "Total Liabilities & Shareholders' Equity* 12.0123 `, 210