Starbucks is an American worldwide global coffee company with its headquarters in Seattle, in Washington DC. As a global company, Starbucks records adversely high financial performance. This is based on the fame of the coffee commodities that the company manufactures in the world. As a company having adverse stakeholders, financial analysis for the company is extremely essential. Therefore, Starbucks conducts systematic audit of its financial performance.
The company that has been entrusted the analysis for Starbuck’s financial position and performance is Deloitte and Touche Tohmatsu Limited. This is a firm that offers audit services to companies with exclusive experience on handling financial analysis for big companies like Starbucks. As a company with adverse experience in handling financial information for various companies in the world, Deloitte has built its name that can be trusted for informative delivery on excellent audit services. It is a company that has employed exclusive technology in auditing with specific software programs to conduct certain financial operations. Each of these software programs is designed in a unique way so as to save the company extensive manual work. This makes the company extremely reliable in producing exclusively unique and reliable financial statements. Its analysis is based on the performance of a company for a given period of time. The company conducts quarterly and annual audit for Starbucks making it produce a reliable base of accounting.
Errors in audit
For the long time that Deloitte has been in charge for audit on behalf of Starbucks, there have been exclusive challenges that have been witnessed in the financial presentation for the company. However keen the company has been trying to make its audit software programs give outstanding information without errors it has always become a challenge. Most of the challenges that have been witnessed during Deloitte’s audit period for Starbucks are associated with technical errors which result from in accuracy of some software programs used in the audit process. However, the company reports that most of the errors that the company makes are never repeated. They try to solve an error and eliminate it completely. As one of the mostly respected audit companies in the world, Deloitte is usually keen on any situation that may tarnish its name. Therefore, it has been able to avoid all legal challenges as well as ill practices that may pose exclusive challenge for the company as agent for irregularities, errors and ill transactions.
Trend in total assets and total liabilities
For excellent and reliable analysis of the performance of the company, excellent analysis for Starbucks financial performance has been based on three fiscal years; 2010, 2011, and 2012 (Nasdaq, 2013). Outstanding argument for the financial performance of Starbucks is based on Assets performance as well as liabilities’ trend. For these three fiscal years, Starbucks has experienced a variant trend in performance for assets and liabilities of the company. The following table indicates the assets value and liabilities levels for the company in 2010, 2011, and 2012 fiscal years in millions (Nasdaq, 2013).
This indicates that since 2010 to 2012 assets have had a rising trend for Starbucks. These shows there have been improvements in the performance of Starbucks. On the other hand, liabilities indicate an extremely unpredictable trend. In 2010 the liabilities level was higher than 2011, which later rose past the 2011 performance in 2012 (Nasdaq, 2013).
Largest assets and liabilities
As a company operating in extremely many countries in the world, Starbucks has the highest ranked asset as property, plant and equipment, which are worth $2658.9 million. On the other hand, the highest set of liabilities for the company is accrued liabilities which hit $1133.8 million in 2012 (Nasdaq, 2013). This is an indication that the company has been in a position to invest intensively in several countries in which it has been operational. As a manufacturing company, a lot of property, plants and equipment are required to ensure activities in the company take place accordingly. This property, plants and equipment are used in housing various activities that take place in Starbucks. Although, there are headquarters for the company in Washington DC, the company requires offices through which it may operate in domestic markets. Therefore, as the company expands more property will be enacted to house all the activities that the company may choose to undertake. Liabilities are extremely low for the company as excellent measures have been undertaken to cover certain loopholes that may have rendered Starbucks a loss making company.
Type of stock
Starbucks operate under a common stock. This is one of the most common types of stock available in the stock exchange market. This stock is not usually complicated but it is full of privileges for people who may be willing to trade in the stock. One of the merits of the stock is that it operates in an open market. This indicates that the stock can be purchased by any investor who feels that he or she has adequate money to invest in the company. In most cases, this form of stock is dependent on the economic status of the region at the moment. During poor economic times, the company will attract adverse demand for shares as various people will be having adequate money to purchase the shares. Starbucks has opened its shares to various investors in the world. The company has not set the minimum number of shares that an individual may purchase. Therefore, the company has witnessed some people with adversely high numbers of shares as well as other with extremely low number of shares in the company. The company operates with basic and diluted shares. Basic shares traded at $74.27 while diluted traded at $72.24 (Nasdaq, 2013).
Multiple step income statement
Starbucks Company uses Multi-step income statement. This is a form of income statement that involves beyond one subtraction to get to the net income. It also provides more information compared to the single step income statement. Looking at the financial statement for Starbucks, it involves information that is critical in making the financial statement reliable to give the required information as per the financial performance of the company. This form of financial statement is divided into two main parts; the non-operating section and the operating section. The operating section entails expenses as well as revenues of the main business activities. It is in the operating section of the statement that operating figures are calculated. All operating revenues are located at the top of the income statement. The non-operating section typically labeled as other incomes and expenses consists of revenues as well as expenses that are not directly earned through main business activities but are critical to them. The financial statement prepared by Deloitte has remained in this standard for vehemently long time.
Separately reported items
The financial statement for the company has been extremely critical and keen on the elements that are being incorporated in the definition of various activities that have been taking place in the country. Apart from the normal elements that are supposed to be involved in financial statements, the company has not involved other elements. This is as a result of representation of the real operations of the company. Although, the company engages in corporate social responsibilities there are no unique set ups brought in the financial statements. However, such responsibilities are usually accounted as normal for the company as it is supposed to play critical role in the well being of the society within which it operates. For Starbucks, the statement is prepared with all details about the financial statement are presented in a coherent and reliable manner.
Trend in net income
Net income for the three fiscal years was as follows.
This is an indication that there has been a rising trend for the net income of the company from 2010 to 2012 (MarketWatch, 2013). The company has continuously invested in production through bringing up new plants as well as campaigning for wider use of resources in the company to bring up exclusive competitiveness in the organization. The company has managed to maintain the operational systems up to their tasks to suit the roles that they are supposed to play in the organization. The significant increase in the net income for the company may also have resulted from exclusive work that has been done by the management for an outstanding deal of time. Also, the employees of the company must have been supportive all over the world to suit the excellence that has been witnessed in the exclusively high performance of the organization. The contribution of the organization towards the wellbeing of the society may have been a major boost to the excellent performance of the organization.
Direct method of the cash flow statement
Starbucks uses the direct method of cash flow statement. This is a method that gives reports on cash disbursements as well as reports on cash receipts. In other words, the direct method has been extremely useful in the indication of operating cash receipts as well as operating cash disbursements. However, in the cash flow statement for Starbucks there are excellent representations of how the company gains revenue and how some of its revenue is used in the determination of what is to be paid as tax to the government. There is direct relationship between the earnings of the company to the amount it is supposed to pay to the various governments within which the company operates.
Comprehensive income
The financial statement for Starbucks stands for net assets from known owner sources. They must be spread within a given financial period. This is an indication that there is no comprehensive income condoned in the financial statement for Starbucks. This is because, comprehensive income refers to a statement of total income and expenses that are recognized during the changes that take place on net assets from non-owner sources in a given period of time. In most cases, comprehensive income includes statements on finance costs, revenue, discounted operations, profit or loss and profit per share.
Trend in cash from operations
(MarketWatch, 2013).
Cash for operations may refer to the amount of money available for the management to ensure that all activities in the organization run accordingly. As a multinational company, Starbucks has been exposed to adverse amount of money that is meant to make the business for the organization takes place accordingly. This money is supposed to ensure that all activities supported by the organization take place in a timely manner with none of them being derailed by untimely operations which may have resulted from the irresponsibility of the governance of the organization. The daily running of the business of a company must be managed in the right manner with the avoidance of anything that may hinder concrete handing of the activities. All stakeholders must be ready to conduct their duties accordingly without being pushed around. This will guarantee excellent operations for Starbucks Company.
Two largest items included in cash from investing activities
The two main sources of cash in investing activities are capital expenditures and net divestitures which are known as acquisitions. Capital expenditure may refer to the amount of money that a company is willing to part with as a form of investment in shares. As a method of securing the company from the misfortunes that may occur in the operational process investment in shares is extremely critical. This assures the company that there is future as the financial security may be given out of extreme security investments. Acquisitions refer to techniques through which large organization acquire small companies to widen their scope in the market. In most cases, the acquired companies are small competitors who seem to have an extremely great future in the industry. For example, Starbucks may acquire various small companies that may be threats in future in the market. This is an investment technique that fetches the company adversely high returns.
References
MarketWatch. (2013, March 23). SBUX Annual Income Statement - Starbucks Corp. Annual Financials. MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved August 3, 2013, from http://www.marketwatch.com/investing/stock/sbux/financials
Nasdaq. (2013, April 23). Starbucks Corporation (SBUX) Stock Report – NASDAQ.com - NASDAQ.com. NASDAQ Stock Market - Stock Quotes - Stock Exchange News - NASDAQ.com. Retrieved August 3, 2013, from http://www.nasdaq.com/symbol/sbux/stock-report
