For this blog, we will be focusing solely on the company Starbucks. Looking over the company’s past and current financial reports we can get a better idea of the company’s overall health. The company posts quarterly reports and annual reports for each year, these reports all follow under Non-GAAP rules and list under the IFRS. At the end of the 2018 Fiscal year on September 30th, 2018 the company had a total net revenue of $24,719.5 million in comparison to their report on October 1, 2017 of $22,386.8 million total net revenue (Starbucks, 2017). These numbers show how much money Starbucks is making through sales after direct expenses, over the past five years the company’s proclaimed net revenue has been constantly increasing meaning they are increasing their sales every year or reducing their expenses. This shows the company is growing exponentially each report following a healthy trend, as they have also opened 2,066 stores in the span of a year from 2017 to 2018 worldwide. In 2014 Starbucks declared cash dividends of 0.55 per share while in 2018 the company vastly increased its cash dividends per share to a whopping 1.32. This increase shows the company is much healthier than it was four years ago and means the shareholders are getting much more value resulting in more shares being bought because of their success.
Accountants and Auditors are the most responsible parties in regards to issuing these financial reports, although Starbucks claims these financial reports are done by the company as a whole. The company has its accountants create income statements, balance sheets, statement of cash flows, and statements of equity. Howard Schultz is the owner of Starbucks and has done an exceptional job of operating the business; leading to great success and an array of milestones identifying his business genius. His leadership skills and traits have led this company to become one of the biggest and most recognizable in the world “Starbucks has been named the fifth most admired company in the world by Fortune magazine”(Newsroom, 2018) and the company is only increasing their value. This shows the leadership from Schultz has worked out for the company, resulting in excellent financial reports that are increasing in their ratios, revenues, assets, and net income.
In Starbucks third-quarter report they reached new highs, but not in every category across the financial statement: “While Starbucks reported record revenue and earnings per share in the third quarter of fiscal 2018, its EPS growth was driven entirely by share buybacks and a lower tax rate” (Levine-Weinber, 2018). The lower tax rate helped significantly in the fact they were losing much less money on their sales globally. However, the company's fourth-quarter report showed much progress “Fortunately, the recovery continued last quarter, as Starbucks saw a marked improvement in comp sales in its two largest markets. On Thursday, the coffee giant reported 4% comp sales growth in the U.S. and 1% comp sales growth in China for the fourth quarter, beating expectations” (Levine-Weinber, 2018). These comp sales lead to higher revenues and higher-earnings per share for the company’s shareholders. With Starbucks still steadily increasing its value each quarter report, outsiders are becoming more positive about the public perception of the company through the release of their reports. This inclines and influences outsiders to buy more shares from the consistent success and increases of earnings per share. The only negative aspect of Starbucks is the footprint they leave on our planet. Their suppliers and constant product needs leads to deforestation and unsustainable process, which leaves outsiders questioning their ethics and power.
The company’s reports are complete as they claim to go under Non-GAAP earnings and follow under the International Financial Reporting Standards. By following these policies, Starbucks has been able to remain a very ethical organization in comparison to other companies throughout the coffee industry. Not only is Starbucks ethical throughout their financial reports, “According to CEO Howard Schultz, Starbucks’ commitment to social responsibility has played a significant role in producing this phenomenal growth” (Mellamocallejon, 2012) they are also immensely ethical by acting socially responsible over their operations globally. Overall, Starbucks has been impressive over many years with how proper and precise their financial reports have been, leaving consumers with no negative feelings towards the firm. The remarkable numbers and the positive brand view from the public are the main pillars of success for Starbucks, and their increasing quarterly numbers since 1971 show how much those things have benefited the company financially.
Interesting article regarding the future of Starbucks:
Willis, G. (2004, March 4). 5 Tips: Understanding a shareholder report. Retrieved from https://money.cnn.com/2004/03/03/pf/saving/willis_tips/.
- Knowing Starbucks performs in an ethical manner, does this influence your view of Starbucks?
References
Levine-Weinberg, A. (2018, November 4). Starbucks Comes Roaring Back With Solid Q4 Results. Retrieved from https://www.fool.com/investing/2018/11/04/starbucks-comes-roaring-back-with-solid-q4-results.aspx.
Mellamocallejon, tombomb4592. (2012, November 24). Starbucks: How Ethical Behavior Can Boost Business. Retrieved from https://bizgovsoc4.wordpress.com/2012/11/11/starbucks-how-ethical-behavior-can-boost-business/.
Newsroom, S. (2018, January 19). Starbucks named fifth most admired company worldwide. Retrieved from https://stories.starbucks.com/stories/2018/starbucks-fortune-most-admired-company-in-the-world/.
Starbucks. (2017). Financial Data. Retrieved from https://investor.starbucks.com/financial-data/annual-reports/default.aspx.
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