Ethics and Compliance of Starbucks

...

or

0.79 Times

0.78 Times

or

0.79 : 1

0.78 : 1

(All data represented in millions)

Analysis shows that Starbucks at the end of fiscal year 2007 would meet only 78.7% of their short term obligations and 79.83% in 2008. One also has to consider that the company’s first quarter is their busiest (October through December), and as such due to increased sales the company has always been able to maintain greater than 97% of their short term debt within 45 day terms. While Starbucks realized a 3.04% increase in ability to meet short term obligations.

Debit

As defined by Investopedia (2010), “debt is a metric that shows a company’s overall debt situation by netting the value of a company’s liabilities and debt with its cash and other similar liquid assets.” Short term debt + long term debt – cash and cash equivalents.

Fiscal Year Ended

Sept, 28 2008

Sept, 30 2007

Short term debt (current liabilities)

2189.7

2155.6

Long term debt

992

904.2

Total Debt

3181.70

3059.80

Cash & cash equivalents (current assets)

1748.00

1696.50

Debt

1433.70

1363.30

(All data represented in millions)

Return on Equity

This ratio is very useful for comparing the profitability of one company to that of other companies in the same industry. Calculating the return on equity at both the beginning and ending of the period assists investors in determining the profitability.

Fiscal Year Ended

Sept, 28 2008

Sept, 30 2007

Net Income

10383

9411.5

Stockholders’ Equity

2490.9

2284.1

Average Stockholders’ Equity

2387.50

2387.50

Return on Equity

435%

394%

(All data represented in millions)

Days Receivable

This is measured by dividing the net credit sales by the average net receivables.

Fiscal Year Ended

Sept, 28 2008

Sept, 30 2007

Net Sales

10383

9411.5

Accounts Receivable

329.5

287.9

Average Accounts Receivable

308.70

308.70

Days

33.63

30.49

This ratio is used to calculate the amount of time in days that it takes (on average) for the company to collect on its accounts receivable.

Conclusion

Starbucks is an organization that sets itself apart from other coffee competitors. They are always trying to improve on their customer relations and adhering to customers wants and needs, such as computer access in each facility, larger variety of coffee and teas, etc. Though Starbucks can seem like a large profitable organization it also acquires a lot of debt caused by the operation of day to day business. Besides Starbucks is still one of the top leaders in the coffee business and continues to better itself to stay in the game each year. Starbucks has also maintained an honest effort to follow SEC regulations and to uphold proper ethics to help build trust and reassurance between themselves, consumers, and investors.

References

Author Unknown. (2010). Investopedia-ULC Current Ratio, Retrieved February 6, 2010 from http://www.investopedia.com/terms/c/currentratio.asp

Starbuck Corporation (2008) Fiscal 2008 Annual Report. Retrieved February 5, 2010 from http://www.starbucks.com

Starbuck Corporation. (2004). Standards of Business Conduct. Retrieved February 4, 2010 from, http://www.starbucks.com/aboutus/UK_English_full_kit.pdf

Starbuck Corporation. (2004). Standards of Business Conduct. Retrieved February 4, 2010, from http://www.starbucks.com/aboutus/UK_English_full_kit.pdf