Starbucks Annual Report and Sec Ilings
Business and Management
Submitted By scasto8437
Starbucks Annual Report and SEC Filings
Shawn Casto, Jessica Ferraro, Leslie Haynes Samantha Eason, Cyntia Portal
Finance for Business
Dr. Dana Williams
February 15, 2014
Starbucks Annual Report and SEC Filings Starbucks first opened their doors in 1971, and since then they have felt a responsibility to make a positive impact one person, one cup, and one neighborhood at a time. Starbucks has grown to now more than 18,000 in over 60 countries; they recognize that commitment to corporate citizenship is also a business imperative. Each Starbucks is part of the fabric of the neighborhood it serves, as a gathering place and a place to connect. Our evaluation and analysis of the company’s growth over the past two years will give you a clear picture of the biggest international coffee corporation performance. Ethical business-making is something Starbucks considers one of the main and most valuable traits of the global brand, as it not only benefits the business in the long-term, but employees, partners and consumers as well. These practices are discussed with employees extensively. As instructed by Starbucks' Business Ethics and Compliance Booklet, commonly reviewed by new employees, "Starbucks is committed to full compliance with the laws, rules and regulations of the countries in which it operates. You must comply with all applicable laws, rules and regulations when performing your duties" (Starbucks, 2011). These guidelines are carried out by Starbucks Policy Office, and offers employees access to local Partner Resource representatives in case unethical behavior is detected. In order to make employees feel that they have security, anonymous calls can be made to Starbucks Ethics and Compliance Hotline, so that the reporting of unethical behavior is encouraged, while also protecting the interests of those reporting the unethical behavior. "Calls to the Helpline are answered by a third party outside of Starbucks. Trained specialists speak with callers regarding their questions or concerns and then forward a report to a Business Ethics and Compliance partner who works with the appropriate party or department for investigation and any appropriate action" (Starbucks, 2011). Another procedure that the company has instituted to ensure ethical behavior is the Ethics and Compliance Webline, an online source that allows workers to submit social claims and to seek advice from professionals associated with the company so that employees can not only have a safe and efficient way to report unethical behavior, but can actively ensure that they themselves make ethical decisions. By offering multiple sources for employees, Starbucks can enforce their stance on ethics in the workplace, while also encouraging employees to participate and take on active roles as enforcers as well. Beyond complying with legal practices financially, Starbucks makes it a point to demonstrate ethical practices within the work environment and while outsourcing. The organization's stance on ethical practices is consistent and is not limited to the manner in which financial practices are conducted. In order to understand how financial markets work, let me explain what a financial market is. Financial markets can be defined as a mechanism that allows people to easily buy and sell financial claims. (Sharidan Titman, 2011) In layman’s terms, a financial market is any place where money and credit are exchanged. Institutions that make up financial markets are commercial banks, finance companies, insurance companies, and investment banks and companies. It is important to know that there are three key sets of players that interact within the financial market. These players are known as borrowers (those who are in need of money), savers (those investing money), and financial institutions (those who bring borrowers and savers together). Financial markets aid in the movement of money from savers to borrowers. Borrowers will provide the savers with a return on their investment (interest) for the use of their money. The financial market is made up of two key markets. These markets are the primary market in which new securities are bought and sold for the first time and the secondary market where all subsequent trading of previously issued securities takes place. (Sharidan Titman, 2011) Products that are traded within the financial market include, but are not limited to fixed-income securities, equities, foreign exchange, and derivatives. Keep in mind that with all this money and credit being exchanged that the financial market is regulated by the SEC to make sure these exchanges are conducted correctly. Starbucks as a publicly traded company has to follow certain laws and regulations determined by the Securities and Exchange Commission (SEC). Some of the steps Starbucks takes to comply with these requirements are for example notifying every directive on each quarterly, and annually filling with the SEC. Starbucks has an Audit Compliance Committee to prevent reporting issues. This Committee is in charge of overseeing accounting reporting and procedures for Starbucks Corporation. This Committee is divided in external and internal audit taken the necessary measures to comply with the rules and regulations required by the SEC. Starbucks's Committee also reviews the outcome of these audits with upper management and even independent auditors to have 100% accuracy. The responsibility of this Committee into ensures the integrity of management and the adequacy of disclosure to shareholders. This Committee also selects, evaluates and even replace if necessary the independent auditor. The independent auditor’s goal is to provide recorded information reassuring the objectivity and transparency of the company referring to receipts, expenditures, unauthorized acquisition, use and disposition of company assets that can influence the financial statements will be detected in a timely manner to prevent negative financial consequences. The purpose of having independent auditors is to avoid the conflict of interest and be able to have a subjective approach to the audit than if the auditors worked within the company. An example of their role could be how in 2009 they recommended to the Board for the annual financial statement to include the Company's Annual Proxy Statement required also by SEC (Starbucks, 2009). In addition all the documentation submitted to SEC is public to the shareholders reassuring those Starbucks fulfilling the requirements as a publically trading company.
Starbucks has delivered record performance for the year 2013. Since Starbucks has been founded 42 years ago, each year, the company grows more and continues to achieve the goals set throughout all geographic locations. In 2013, Starbucks consolidated revenues at a record high of 14.9 billion dollars which was a 12% increase from 2012. They were able to open up 1701 new stores in 2013 globally. “Their non-GAAP operating income was $2.5 billion, a 23 percent increase, with record non-GAAP operating margin of 16.5 percent, an impressive 150 basis points higher than last year”(B.W. Brooks, 2012). With their 200,000 employees, Starbucks, who were founded in Seattle, has amazing operational excellence that we have seen spread throughout the world as shown by their growing numbers by their strategic planning.
At the end of the 2013 fiscal year, Starbucks had 2.4 million dollars in debt due to equity investees, and an operating loss of 2,365.2 million. In 2012, the debt due to equity investees was at 2.1 million and the operating costs were at 2,020.4 million. This information is just for the United States. There are several other countries that have other numbers that account for the final numbers. With AMEA, China/Asia pacific, channel development and all other segments the total debt for 2013 is 251.4 million in equity investees and 3131.6 million in operating costs. Return on equity is the amount of income returned as a percentage of shareholders equity. With that being said, it simpler terms, return on equity is how much a company makes from the money shareholders have invested. Starbucks had a return equity percent of 2.28 which was significantly lower than the return percent in 2012 of 28.04 percent. Starbucks hit a record low percent of .16 in Sept 2013 and a record high of 29.99 in Sept 2011. The average over the past four years is 22.28 percent.
In simple terms, day’s receivable is how many days out of the year a company has had a profit versus a loss. Every day Starbucks had a profit versus a loss. To get this amount, we take their net sales divided by 365. This gives us an average of 1.538 million dollars a day for 2013, and 1.33 million for 2012. Looking at the debt that Starbucks has verses the return on equity and Days receivable, it looks like the amount of sales keeps rising which keeps Starbucks at a profit every day verses the amount of debt. The return on equity has dropped significantly, which shows that more people are not buying shares and stocks from Starbucks. However, the company is still doing very well, in spite of the drop in return on equity.
While other companies are experiencing major setbacks financially, Starbucks has remained stable. In the financial world and in every neighborhood worldwide, Starbucks remains above the rest. In reality, their success is owed to one entrepreneur who believed in strong operations management and having a central focus for everyone in the company to follow (San Juan, 2014).
2014 Starbucks Financial Releases Retrieved from http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-news&nyo=0
Resources for Entrepreneurs The Starbucks Business Plan San Juan Retrieved from http://www.gaebler.com/Howard-Schultz-and-Starbucks.htm
Seaford, B. C., Culp, R. C., & Brooks, B. W. (2012). STARBUCKS: MAINTAINING A CLEAR POSITION. (). Arden: Jordan Whitney Enterprises, Inc. Retrieved from http://search.proquest.com/docview/1037815154?accountid=458
Sharidan Titman, A. J. (2011). Firms and the Financial Market. In A. J. Sharidan Titman, Financial Management: Principles and Application (pp. 20-33). Prentice Hall.
Starbucks. (2011). Business Ethics and Compliance. Retrieved from Starbucks, Public Policy & Internal Standards website.