Coca-Cola Co. (NYSE:KO)

The analysis of the annual current and deferred income tax expenses reveals several notable trends over the five-year period ending December 31, 2024.

Current Income Tax Expense

The current income tax expense exhibits a general upward trend from 2020 to 2024. Beginning at $1,999 million in 2020, it decreased slightly to $1,727 million in 2021. Subsequently, it increased steadily each year, reaching $2,237 million in 2022, $2,251 million in 2023, and $2,448 million in 2024. This pattern suggests a recovery and growth phase after a transient dip in 2021.

Deferred Income Tax Expense

The deferred income tax expense demonstrates notable volatility throughout the period. In 2020, it was a negative $18 million, indicating a net deferred tax benefit. However, in 2021, it surged significantly to a positive $894 million, representing a considerable deferred tax expense. This was followed by a reversal to negative figures of -$122 million in 2022 and near-neutral values of -$2 million in 2023 and -$11 million in 2024. This fluctuation might reflect changes in tax timing differences, adjustments in tax rates, or shifts in temporary differences affecting deferred taxes.

Total Income Tax Expense

Total income tax expense, combining current and deferred components, shows variability linked closely to the deferred tax component's fluctuations. Starting at $1,981 million in 2020, the total tax expense rose sharply to $2,621 million in 2021, driven mainly by the spike in deferred taxes. It then decreased to $2,115 million in 2022 as deferred taxes turned negative, slightly increased to $2,249 million in 2023, and further rose to $2,437 million in 2024. The overall trend indicates a moderate increase in total tax expense over the period, with significant year-to-year variation due to deferred tax movements.

Statutory U.S. federal tax rate

The statutory federal tax rate remained constant at 21% throughout the period from 2020 to 2024, indicating no legislative changes impacting the baseline federal tax rate applied to earnings.

State and local income taxes, net of federal benefit

State and local taxes were relatively stable, fluctuating slightly around 1.1%, except for an increase to 1.4% in 2022 before returning to 1.1% thereafter. This suggests minor variability in state tax obligations or benefits during the period, with a notable peak in 2022.

Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate

This metric showed a more volatile pattern. After increasing from 0.9% in 2020 to 2.3% in 2021, it declined into negative territory in 2022 and 2023 (-0.6% and -0.3% respectively), before rising again to 1% in 2024. The fluctuations indicate changing geographic income distributions or tax rate differentials in various jurisdictions, affecting the overall tax expense.

Equity income or loss

This cost factor consistently reduced the effective tax rate calculation by a negative percentage, with the impact increasing slightly over time from -1.4% in 2020 to -2.6% in 2024. This trend indicates growing equity-related losses or decreasing income, which may be reducing taxable income or tax liabilities.

Excess tax benefits on stock-based compensation

The effect of stock-based compensation benefits was consistently negative, ranging narrowly between -0.3% and -0.8%, showing some volatility but no clear upward or downward trend. This suggests a persistent but limited contribution to lowering the effective tax rate over the years.

Other, net

The "Other, net" category exhibited variability with mostly negative impacts on the effective tax rate. It became notably more negative in 2023 (-2%) compared to previous years and moderated slightly to -1.4% in 2024, indicating occasional one-off tax adjustments or miscellaneous effects influencing the overall tax burden.

Effective tax rate

The effective tax rate showed a declining trend from 20.3% in 2020 to a low of 17.4% in 2023 before increasing slightly to 18.6% in 2024. This decrease compared to the stable statutory rate suggests that the combined effects of state taxes, jurisdictional allocation of earnings, equity income or losses, stock compensation benefits, and other adjustments have generally lowered the overall tax burden during most years analyzed.

The financial data reveals several notable trends across key asset and liability categories over the five-year period ending December 31, 2024.

Property, Plant, and Equipment

The gross value of property, plant, and equipment decreased overall from $44 million in 2020 to $23 million in 2024, with fluctuations including a dip to 25 million in 2023. The associated deferred tax liabilities linked to these assets increased in magnitude from -$837 million to -$777 million, indicating a relatively stable but significant deferred tax impact over time.

Goodwill and Intangible Assets

There is a consistent decline in the gross value of goodwill and intangible assets, falling from $2,214 million in 2020 to $1,133 million in 2024. Correspondingly, deferred tax liabilities related to these assets have increased in absolute terms, moving from -$1,661 million to -$1,750 million, suggesting ongoing amortization or impairment activities that affect tax positions.

Equity Method Investments

Equity method investments showed volatility, starting at $580 million in 2020, dipping sharply to $239 million in 2023, then rising again to $503 million by 2024. The related deferred tax liabilities, however, steadily increased in negative territory, from -$1,533 million to -$1,649 million, reflecting a growing deferred tax burden despite the fluctuation in investment carrying values.

Derivative Financial Instruments

The gross value of derivative financial instruments declined from $523 million in 2020 to $156 million in 2023 but rebounded to $332 million in 2024. The corresponding deferred tax liabilities increased markedly in absolute terms, especially by 2024 (-$877 million), which may indicate heightened tax risks or changes in valuation methodologies.

Other Liabilities

Other liabilities increased steadily from $1,401 million in 2020 to $2,650 million in 2024. In contrast, the deferred tax liabilities associated with this category grew moderately from -$402 million to -$443 million, representing a relatively stable tax impact compared to the rising gross liabilities.

Benefit Plans

The gross liability for benefit plans decreased from $893 million to $483 million over the period, pointing to a reduction in obligations. Deferred tax liabilities connected to benefit plans fluctuated but showed a slight overall decrease in magnitude, from -$321 million to -$441 million, potentially reflecting changes in actuarial assumptions or funding status.

Net Operating Loss and Other Carryforwards

This item exhibited a significant upward trend, increasing from $320 million in 2020 to $874 million in 2024, with a notable leap in 2024. This implies an accumulation of deferred tax assets related to loss carryforwards, indicating potential tax benefit realizations in future periods.

Gross Deferred Tax Assets and Valuation Allowances

Gross deferred tax assets initially declined from $6,366 million in 2020 to $4,815 million in 2023, before rebounding to $6,323 million in 2024. Valuation allowances remained negative and fairly stable but increased slightly in magnitude to -$485 million in 2024, suggesting ongoing assessments of realizability of deferred tax assets.

Net Deferred Tax Assets (Liabilities)

The net deferred tax asset position shifted from a positive $627 million in 2020 to negative territory by 2021 (-$692 million) and remained negative through 2024 (-$1,150 million). This transition indicates an overall increase in deferred tax liabilities exceeding deferred tax assets, which may reflect changes in tax regulations, asset valuations, or expectations about future taxable income.

Other Items

This category showed some volatility, with gross values increasing sharply in 2022 followed by declines, and a large negative deferred tax liability recognized in 2024 (-$1,051 million). This suggests some non-recurring or unusual tax positions affecting the deferred tax balance.

In summary, the data demonstrates a general decline in tangible and intangible asset values accompanied by increasing deferred tax liabilities, indicating potential depreciation, amortization, or impairment effects. Deferred tax assets related to loss carryforwards and other tax attributes have risen, partially offsetting liabilities but not sufficiently to prevent an overall negative net deferred tax position. The trends imply a cautious tax outlook with significant deferred tax considerations influencing the financial position.

Deferred Tax Assets

The value of deferred tax assets has shown a consistent decline over the five-year period. Starting at 2,460 million US dollars at the end of 2020, it decreased annually to 2,129 million in 2021, 1,746 million in 2022, 1,561 million in 2023, and further down to 1,319 million in 2024. This represents a significant reduction of approximately 46% from the beginning to the end of the period, indicating a gradual decrease in recognized future tax benefits.

Deferred Tax Liabilities

Deferred tax liabilities exhibited a different pattern compared to assets. Beginning at 1,833 million US dollars in 2020, these liabilities sharply increased to 2,821 million in 2021 and slightly further to 2,914 million in 2022. However, from 2022 onward, the values began to decline, falling to 2,639 million in 2023 and 2,469 million in 2024. Despite the decline in the latter years, the overall trend from 2020 to 2024 reflects an increase of approximately 35%, with a peak occurring in 2022.

General Observations

The contrasting trends between deferred tax assets and liabilities suggest a shift in the company's tax position. The steady decline in deferred tax assets coupled with an initial increase and subsequent slight decrease in deferred tax liabilities may imply changes in underlying temporary differences or tax planning strategies. These movements could impact the company's future tax obligations and financial flexibility.

The financial data indicates several notable trends in the company's balance sheet and income performance over the five-year period ending December 31, 2024.

Total Assets

Reported total assets show a general upward trend, increasing from approximately 87.3 billion USD in 2020 to around 100.5 billion USD in 2024. Adjusted total assets follow a similar pattern but are consistently slightly lower than the reported figures, reflecting the impact of the income tax adjustments. Both reported and adjusted totals experience a slight dip or plateau in 2022 before resuming growth in subsequent years.

Total Liabilities

Total liabilities, both reported and adjusted, increase over the period but at a slower pace compared to total assets. Reported liabilities rise from about 66.0 billion USD in 2020 to 74.2 billion USD in 2024. Adjusted liabilities mirror this trend, remaining slightly below the reported amounts throughout, consistent with the adjustments applied. The liabilities show a minor decline in 2022 similar to the assets, followed by growth.

Equity Attributable to Shareowners

Equity shows growth from 2020 to 2023, with reported equity increasing from 19.3 billion USD to approximately 25.9 billion USD, peaking in 2023 before a slight decrease in 2024. Adjusted equity figures reflect a similar trajectory but remain marginally higher than reported equity from 2021 onwards, indicating the positive effect of deferred tax adjustments on shareholder equity in those years.

Net Income Attributable to Shareowners

Net income attributed to shareowners demonstrates a positive trend overall. Reported net income increased from 7.7 billion USD in 2020 to a peak of 10.7 billion USD in 2023, with a minor decline to approximately 10.6 billion USD in 2024. Adjusted net income exhibits more variability, peaking in 2021 at about 10.7 billion USD, declining in 2022, then rising again in 2023 and stabilizing in 2024. Adjusted figures generally exceed reported amounts, particularly notable in 2021, suggesting the impact of tax adjustments boosting reported earnings in certain years.

Net Profit Margin Trends

The reported net profit margin showed a moderate fluctuation over the five-year period, starting at 23.47% in 2020, peaking at 25.28% in 2021, and then declining to 22.59% by 2024. The adjusted net profit margin exhibited a similar pattern but with a more pronounced peak of 27.59% in 2021, followed by a sharper decline to 22.57% in 2024. This indicates that adjustments related to income tax had a notable impact, enhancing profitability in 2021 but then aligning closely with reported figures by 2024.

Total Asset Turnover Trends

Both reported and adjusted total asset turnover ratios displayed a steady upward trend from 2020 to 2023, improving from approximately 0.38-0.39 to about 0.47-0.48. This suggests more efficient asset utilization over time. In 2024, the ratios stabilized with a minor decline in the adjusted ratio, indicating a plateau in asset turnover efficiency.

Financial Leverage Trends

Financial leverage ratios showed a downward trend from 2020 through 2023, with reported leverage decreasing from 4.52 to 3.77 and adjusted leverage from 4.54 to 3.56, suggesting a reduction in reliance on debt or increased equity base over these years. However, in 2024, there was a reversal as both reported and adjusted leverage increased to 4.05 and 3.82, respectively, indicating a modest rise in leverage position.

Return on Equity (ROE) Trends

Reported ROE remained relatively stable, fluctuating within a narrow band between 39.59% and 42.77%. Adjusted ROE experienced more volatility, rising to a high of 45.02% in 2021 before dropping to 37.27% in 2022, and then recovering to 40.84% by 2024. The adjusted figures reflect the effect of tax adjustments, which temporarily enhanced equity returns in 2021 but led to a subsequent decline and partial recovery.

Return on Assets (ROA) Trends

The reported ROA showed a consistent improvement from 8.87% in 2020 to a peak of 10.97% in 2023, followed by a slight decrease to 10.57% in 2024. Similarly, adjusted ROA increased from 9.11% to 11.14% over the 2020-2023 period, with a marginal drop to 10.7% in the final year. This indicates increasing efficiency in asset use to generate profits, with tax adjustments consistently reflecting somewhat higher returns.

Overall Insights

The company's profitability, asset efficiency, and returns improved notably between 2020 and 2023, driven in part by favorable adjustments related to deferred income taxes. However, the period after 2023 shows stabilization or slight declines in several metrics, accompanied by an uptick in financial leverage, suggesting cautious financial positioning. The close alignment between reported and adjusted measures by 2024 implies that the effect of tax adjustments diminished over time, leading to more consistent financial ratios.

The financial data reveals several notable trends in the reported and adjusted net income and net profit margins over the five-year period ending December 31, 2024.

Reported Net Income Attributable to Shareowners

The reported net income shows a generally positive trajectory from 2020 to 2023, increasing from 7,747 million USD in 2020 to 10,714 million USD in 2023. However, a slight decline is observed in 2024, where net income decreases marginally to 10,631 million USD. The growth from 2020 to 2023 suggests improving profitability, though the dip in 2024 indicates potential emerging pressures or adjustments reducing profitability slightly.

Adjusted Net Income Attributable to Shareowners

The adjusted net income presents a somewhat more volatile pattern. It peaks in 2021 at 10,665 million USD, higher than the corresponding reported figure for that year, before declining in 2022 to 9,420 million USD. It rises again sharply in 2023 to 10,712 million USD and then slightly decreases to 10,620 million USD in 2024. This fluctuation indicates that adjustments, such as deferred taxes or other items, have a significant effect on the net income, especially evident in the peak and trough observed around 2021 and 2022.

Reported Net Profit Margin

The reported net profit margin follows a pattern similar to reported net income, beginning at 23.47% in 2020 and rising to a high of 25.28% in 2021. It then decreases to 22.19% in 2022 but partially recovers to 23.42% in 2023 before falling again slightly to 22.59% in 2024. This trend reflects fluctuations in profitability relative to revenue, with the margin being strongest in 2021 and somewhat stabilizing thereafter.

Adjusted Net Profit Margin

The adjusted net profit margin shows more pronounced volatility compared to the reported margin. It starts at 23.41% in 2020, peaks substantially at 27.59% in 2021, and then drops significantly to 21.90% in 2022. The margin then recovers to 23.41% in 2023 and slightly decreases to 22.57% in 2024. The 2021 spike suggests that specific adjustments positively impacted profitability that year, while the subsequent decrease points to more challenging conditions or increased adjustments in 2022.

Overall, both reported and adjusted financial metrics indicate a period of growth culminating around 2021, followed by a correction and stabilization phase through 2024. The differences between reported and adjusted figures highlight the impact of accounting adjustments on the company's profitability metrics, emphasizing the importance of examining both perspectives for a comprehensive understanding of financial performance.

Asset Levels

The reported total assets demonstrate an overall increasing trend from 87,296 million USD in 2020 to 100,549 million USD in 2024, indicating steady growth in asset base. The adjusted total assets, which account for annual reported and deferred income tax adjustments, follow a similar upward trajectory, rising from 84,836 million USD in 2020 to 99,230 million USD by the end of 2024. The adjustments consistently show slightly lower asset values compared to reported figures across all periods.

Total Asset Turnover Ratios

The reported total asset turnover ratio improves progressively over the period, moving from 0.38 in 2020 to 0.47 by 2023 and stabilizing in 2024. This suggests enhanced efficiency in generating revenue from reported asset bases. The adjusted total asset turnover exhibits a very similar pattern with slightly higher ratios than reported figures, increasing from 0.39 in 2020 to peak at 0.48 in 2023 before slightly retreating to 0.47 in 2024. This indicates that the company's operational efficiency, when considering tax adjustments, aligns closely with reported figures.

Insights

The concurrent increase in both asset levels and turnover ratios suggests that the company not only expanded its asset base but also improved the productivity of those assets over the five-year span. The consistency between reported and adjusted measures highlights that tax-related adjustments have a limited impact on the overall asset utilization trends and efficiency assessments. The stabilization in turnover ratios towards the final years indicates a possible maturation in asset usage efficiency.

Total Assets

Both reported and adjusted total assets demonstrate a consistent upward trend over the five-year period. Reported total assets increased from US$87,296 million in 2020 to US$100,549 million in 2024. Similarly, adjusted total assets rose from US$84,836 million to US$99,230 million during the same timeframe, showing steady growth with slight variations between reported and adjusted figures.

Equity Attributable to Shareowners

Equity attributable to shareowners, both reported and adjusted, shows a general increasing trend from 2020 to 2023, followed by a slight decline in 2024. The reported equity grew from US$19,299 million in 2020 to a peak of US$25,941 million in 2023, then decreased to US$24,856 million in 2024. Adjusted equity followed a similar path, increasing from US$18,672 million in 2020 to US$27,019 million in 2023, then declining to US$26,006 million in 2024. This suggests some adjustments or events in 2024 impacted equity values downward despite the continued asset growth.

Financial Leverage

Financial leverage ratios, both reported and adjusted, reveal a decreasing trend from 2020 through 2023, indicating a reduction in leverage over this period. Reported financial leverage declined from 4.52 in 2020 to 3.77 in 2023, before increasing slightly to 4.05 in 2024. Adjusted financial leverage followed a similar pattern, decreasing from 4.54 to 3.56 by 2023, then rising to 3.82 in 2024. This pattern corresponds with the behavior observed in equity figures, where leverage decreased as equity increased, then increased again as equity decreased in the last year.

Overall Insights

The data reflects a strengthening asset base with consistent growth across both reported and adjusted measures. Equity improved steadily for the majority of the period, which contributed to a reduction in financial leverage, implying improved solvency and potentially lower financial risk. The reversal in equity and leverage trends in 2024 suggests a shift in capital structure or other factors impacting equity, leading to increased leverage despite asset growth. The adjusted figures typically show slightly lower leverage and somewhat higher equity compared to reported figures, which could indicate the impact of deferred income tax adjustments on the company's financial position.

Net Income Trends

The reported net income shows a generally increasing trend from 7,747 million US dollars in 2020 to a peak of 10,714 million US dollars in 2023, before slightly declining to 10,631 million US dollars in 2024. The adjusted net income follows a similar pattern, rising from 7,729 million US dollars in 2020 to a high of 10,665 million US dollars in 2021, dipping to 9,420 million in 2022, and then recovering to around 10,600 million US dollars in 2023 and 2024. This indicates overall profitability improvement with some fluctuation in adjusted figures.

Equity Trends

Reported equity attributable to shareowners steadily increased from 19,299 million US dollars in 2020 to 25,941 million US dollars in 2023, before a slight decrease to 24,856 million in 2024. Adjusted equity shows a consistent upward trend from 18,672 million in 2020 to a peak of 27,019 million US dollars in 2023, followed by a marginal decline to 26,006 million US dollars in 2024. The equity growth suggests strengthening financial foundation over the period, with adjustments revealing slightly higher equity levels compared to reported figures.

Return on Equity (ROE) Analysis

The reported ROE remained relatively high and stable, increasing from 40.14% in 2020 to 42.77% in 2024, with a slight dip to 39.59% in 2022. Adjusted ROE exhibited more volatility, peaking at 45.02% in 2021 but falling to 37.27% in 2022, then gradually recovering to 40.84% by 2024. Despite the fluctuations in adjusted ROE, both measures reflect robust profitability and efficient equity utilization throughout the period.

General Insights

The data reveals consistent growth in both net income and equity over the observed period, indicating successful operational and financial management. The slight declines in 2024 across some metrics may warrant further investigation but do not significantly undermine the overall positive trend. Differences between reported and adjusted figures suggest that adjustments, possibly related to deferred tax considerations, have a meaningful impact on the evaluation of profitability and equity, highlighting the importance of considering both sets of figures for comprehensive analysis.

The financial data reveals several notable trends in profitability, asset base, and efficiency over the five-year period ending in 2024.

Net Income Attributable to Shareowners

The reported net income shows a general upward trend from 7,747 million USD in 2020 to a peak of 10,714 million USD in 2023, followed by a slight decline to 10,631 million USD in 2024. Adjusted net income follows a similar pattern but exhibits a higher peak of 10,665 million USD in 2021 and a trough at 9,420 million USD in 2022, before recovering to just over 10,600 million USD in the final two years. This indicates some volatility likely due to adjustments related to income tax or other non-operating items, but overall net profitability has grown significantly since 2020.

Total Assets

Reported total assets increased steadily from 87,296 million USD in 2020 to 100,549 million USD in 2024, signaling ongoing asset growth. Adjusted total assets demonstrate a comparable upward trend, rising from 84,836 million USD to 99,230 million USD across the same timeframe. The adjustment slightly reduces the asset base figures consistently but does not alter the overall trajectory, suggesting that the company has been expanding its resource base moderately and consistently over the period.

Return on Assets (ROA)

Reported ROA improved from 8.87% in 2020 to a high of 10.97% in 2023, before declining marginally to 10.57% in 2024. The adjusted ROA trend is similar but consistently higher than the reported metric, starting at 9.11% in 2020 and peaking at 11.14% in 2023, then dropping slightly to 10.70% in 2024. This consistent premium of the adjusted ROA over the reported ROA suggests the adjustments enhance the perception of asset efficiency and profitability, possibly reflecting more accurate or normalized earnings attributable to the core business.

In summary, the company has demonstrated sustained growth in its asset base accompanied by increasing profitability and efficiency in asset utilization over the period reviewed. Despite some fluctuations in adjusted net income, the overall financial health appears robust with improvements in returns and asset growth indicative of solid operational performance. The small declines observed in 2024 require monitoring but do not currently indicate a reversal of positive trends.