Newman_Starbucks Annual Report

docx

School

Trine University *

*We aren’t endorsed by this school

Course

5063

Subject

Finance

Date

Apr 3, 2024

Type

docx

Pages

Uploaded by ProfLionPerson807

1 Trine University Starbucks Annual Report Macy Newman FIN 5063: Corporate Finance Dr. Dana Leland 3 September 2023 Introduction:

2 “Committed to Transparency—People, Planet, Coffee” (ESG). This is the first line you see on the Starbucks website when you click on the page where you find their reports. Being committed to transparency Starbucks openly shares environmental, social, and governance reports on their everyday website. Through this they display any information consumers or investors need to understand what kind of organization they are. Throughout this paper we will be discussing the sections found within Starbucks annual report, we will look into the importance of the data being presented, who the annual report is for, why they would want to see it, and what the future of the company is looking like. Before we look specifically into the annual report of Starbucks, we will first look at what an annual report is. Firstly, an annual report can be defined as, “...a document that public corporations must provide annually to shareholders that describes their operations and financial conditions” (Hayes). This is simply saying an annual report is a document to provide public disclosure of important information. Most commonly it is used to present the information to shareholders, stakeholders, or others who find it important to evaluate a corporation’s financial standings to make investment decisions. It can be used to measure an organization’s ability to take on and pay debts, types of company’s financial growth over a specific number of years, and what it is costing to be operations and what kind of revenue is being created from it. Following the stock market crash during 1929 a mandate was put in place for public companies to report their financials, and it has stayed that way since. Section I:

3 On the financial statement Starbucks has divided the section into four parts, and we will start by breaking down Part I. There are four items listed under these sections, to we will begin with a section titles business. In this section the company goes over general information, profit- positive efforts, people-positive and plant-positive vision, and their human capital management. This is for readers to get an understanding of the companies’ values; this is important because as a person evaluating the report you want to be able to understand why the organization made certain financial decisions that do not necessarily make sense logically. For example, looking into the human capital management portion of the item they state, “We believe the strength of our workforce is one of the significant contributors to our success as a global brand that leads with purpose as part of our people-positive vision” (Johnson). With this being stated the viewer can understand why the organization may invest more into supporting their partners in certain situations, because it aligns with their vision not necessarily because it is the best decision financially. Under Item 1 there are items 1A and 1B, they discuss risk factors and any unresolved staff comments. Under risks they discuss any reasons they see that may call for their company to be at risk, for example, “Our success depends substantially on the value of our brands and failure to preserve their value could have a negative impact on our financial results” (Johnson). This lets potential investors and current shareholders understand any possible situations where their investments are in jeopardy. The unresolved staffing comments section on Starbuck’s annual report has no information left under it, this is good for the organization because this means they are working with their workers to solve any problems that are had. The last three items are

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 properties, legal proceedings, and mine safety disclosures. These things are all important to include and disclose in your annual report because it is information investors will want to have an overall idea of what is happening legally within an organization and where things happen. Section II: Under section II there are more financials discussed about Starbucks in the 2021 fiscal year. Item 5 talks about market for the registrant’s common equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. It informs readers on how to identify Starbucks on Nasdaq, under “SBUX” and more general information regarding common stock. Under this section it states, “Future decisions to pay comparable cash dividends continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant” (SUR). This is important for stakeholders to know information like this to be prepared for the future when this could come up for them, knowing it can help them make an informed decision on their investments. Item 7 reviews the Management’s Discussion and Analysis of financial condition and results of operations. This section is open to what the plan with management has been, this could be certain changes within the management team and even operating segments. This section also discusses revenues and they shared, “Starbucks results for fiscal 2021 demonstrate the overall strength and resilience of our brand. Consolidated revenues increased 24% to $29.1 billion in fiscal 2021 compared to $23.5 billion in fiscal 2020, primarily due to business recovery from the COVID-19 pandemic. Also contributing to the increase was $576 million of incremental revenue

5 attributable to the extra week in fiscal 2021” (Johnson). It then goes into comparable sales across their segments and how they relate to the growth of the organization. This is a key factor when investors are looking into working with a corporation, it is important to see improvements and get an explanation on areas where the numbers do not look the best. For Starbucks their numbers have been mostly positives and have shown improvements across the board, at least when revenues are concerned. On the topic of sharing specific financials, Item 8 goes into financial statements and supplementary data. Within this portion of an annual report corporations share relevant information, this included consolidated statements of earnings, consolidated statements of comprehensive income, consolidated balance sheets, consolidated statements of cash flows, and consolidated statements of equity. By putting this information out for everyone to see, in the form of a chart, it allows them to find their own conclusions on why a company is performing to the level they are through their own calculations and evaluations. The rest of the items found under section II are important when looking into potential investments because the main thing you need to understand is how a corporation spends their money and how they use that to being it revenue and create profits. The investors are trying to make money off their investment and the best way to know if that is plausible is by using numbers given by the corporation to come to your own conclusions. Under section III there are five items. This section talks more about the executive portions of the organization. The first item, item 10, informs the viewers on the directors, executive officers, and corporate governance. It goes into code regarding these positions and

6 where to find more information on the positions. Under items eleven through fourteen viewers will find information about executive compensation, security ownership of certain beneficial owners and management and related shareholder matters, certain relationships and related transaction and director independence, and principal accountant fees and services. All this information is import for stakeholders to note because it lets them know what is going on behind the scenes. For example, how much someone in an executive position is making, this is helpful because by learning how much an executive put back into the company is important and seeing how much they make can also tell you something good or bad about the companies’ values. The final section just gives you a run-down of the exhibits and financial statement schedules that are listed below it. These are important because it gives access to notes, indentures, transaction agreements and more. This gives full transparency to the reader and helps them find any information they feel they could be missing. Overall, an annual report is there to inform the reader about relevant information regarding making an investment, this included management, financials, and executive information. Through the evaluation of documents like this investor can come to their own conclusions and make well informed decisions on the company they are looking into. Looking specifically into Starbucks, you can feel safe making an investment whether you are looking into their financials or their missions. On the financial side, they have shown organization growth in areas like their revenue. With, in the 2022 fiscal year, ending June 30, 2023, there was a 9.48% increase in growth (Starbucks revenue 2010-2023). Their growth has shown to be consistent over the past few years. Financials are not the only thing investors investigate, but that is where an

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

7 annual report comes in. It consolidates necessary information all into one document, and then shows you where to go when there are areas with less information. All in all, if an investor were to invest in a company Starbucks is in decent standings and could be looked at as a potential investment. They do come with some weaknesses, but with the annual report a reader can come to conclusions on whether it is worth it for them. Work Cited

8 ESG resources: Starbucks Coffee Company . ESG Resources: Starbucks Coffee Company. (2023). https://www.starbucks.com/responsibility/reporting-hub/ Hayes, A. (2023, June 13). Annual report explained: How to read and write them . Investopedia. https://www.investopedia.com/terms/a/annualreport.asp Johnson, K. R. (2021). Form 10-K. 1-103. Starbucks revenue 2010-2023: SBUX . Macrotrends. (n.d.). https://www.macrotrends.net/stocks/charts/SBUX/starbucks/revenue#:~:text=Starbucks %20revenue%20for%20the%20twelve,a%2023.57%25%20increase%20from%202020.