group 5: amanda grieco tevin chapman james mccarty
TRANSCRIPT
Group 5:
Amanda Grieco
Tevin Chapman
James McCarty
INDUSTRY: Specialty Coffee
PRIMARY PRODUCTS: Coffee, Handcrafted Beverages, Merchandise, Fresh Food, and Consumer Products.
RAW MATERIALS: Coffee Beans, Dairy, Cups/Lids, Food and Drink Ingredients, and Teas.
COMPANY SIZE:SALES: $14.9 BillionASSETS: $11,516.7 millionEMPLOYEES: 182,000 worldwide
ANNUAL REPORT
LOCATION: Seattle, Washington20,891 stores in 64 countries
OTHER AFFILIATIONS: Seattle’s Best and MANY orgs!
IMAGE CONVEYED? …Sustainable growth by a company that has core values to maintain its image and control of its products and distribution.
SEGMENTS AND FUNCTIONAL CONTENTS – Same as 10-K with intro from CEO
ANNUAL REPORT
KEY ECONOMIC FACTORS: Growth rates Interest rates
Levels of employment Price stability
LIFE CYCLE: Growth Stage
FACTORS OF SUCCESS: Quality of products Quality of products
Shop Design Social Responsibility
Customer loyalty rewards.
THE COFFEE INDUSTRY
STANCE OF SUCCESS: Exceeded all of their expectations in all aspects
BUSINESS RISKS: Economic conditionsNot successfully implementing important
strategic initiativesIncreases in the cost of high-quality
Arabica coffee beansInterruption of supply chain Failing to meet market expectations
THE COFFEE INDUSTRY
NOTABLE ACCOUNTING CONSIDERATIONS:Property, Plant, and Equipment and Definite-
lived Assets Goodwill and Indefinite-lived Intangible AssetsIncome Taxes Litigation Accruals
LEGAL AND REGULATORY MATTERS: Starbucks VS. Kraft Foods
SOCIAL MATTERS: Community Service Community Stores Youth Leadership
Farming Communities Diversity and Inclusion Starbucks Foundation
THE COFFEE INDUSTRY
GOVERNANCERevised November 5, 2011Board of Directors
SARBANES-OXLEY ACT COMPLIANCE Deloitte & Touche, LLP Unqualified Opinion
THE COFFEE INDUSTRY
FINANCIAL STRENGTHDelivered record
performance and exceeded expectations on almost all fronts.
$14.9 billion in Revenues
12% increase!
GROWTH OVER NEXT YEAR:According to 4-Traders, the financial ratios have
stated an estimated company value of $57,533 M and $57,644 M in fiscals 2014 and 2015, respectively.
1,500 net new stores
Product Growth:Tevana Tea® Fine Teas + Tea Bars, La Boulange™ bakery itemsEvolution Fresh™ juice lines
FINANCIAL STRENGTH
SOURCES AND VALUE OF CAPITAL:$750 million unsecured, revolving credit $150 million may be used for issuances of
letters of creditApproved maximum of $1 billion of unsecured
commercial paper notesApproximately 18,470 shareholders of record26,359,511 sharesAs of March 19, 2014, the market rate went up
2.14% at $76.20
FINANCIAL STRENGTH
FINANCIAL STRENGTH
CAPITAL MARKET RESPONSE: Financial analysts state a “buy” status
and a “B” rating on stocks.
COMPETITOR COMPARISON: Revenues - 5.6% higher than the industryDebt-to-Equity ratio - below the industry
Company’s shares - risen by 27.04%
FINANCIAL STRENGTH
MAJOR TRANSACTION CYCLES:
SALES AND COLLECTION CYCLE
ACQUISITION AND PAYMENT CYCLE
PAYROLL AND PERSONNEL CYCLE
INVENTORY AND WAREHOUSING CYCLE
CAPITAL ACQUISITION AND REPAYMENT CYCLE
AUDIT PLANNING
Selected Ratios SBUX 2013
SBUX 2012
SHORT-TERM DEBT PAYING
Cash Ratio .60 .92
Quick Ratio .71 1.14
Current Ratio 1.02 1.9
LIQUIDITY ACTIVITY RATIOS
Accounts Receivable Turnover 21.01 21.68
Days to Collect A/R 17.38 16.84
Inventory Turnover 5.74 4.68
Days to Sell Inventory 63.55 77.95
ABILITY TO MEET LONG-TERM OBLIGATIONS
Debt to Equity 1.57 .6
Times Interest Earned -11.59 61.08
PROFITABILITY RATIOS
Earnings Per Share – Basic .01 1.83
Gross Profit Percent .57 .56
Profit Margin -.03 .15
Return on Assets -.02 .25
AUDIT PLANNING
FRAUDLENT REPORTING OPPORTUNITIES:Segment ReportingMaterial Misstatements
Raw Materials – Coffee BeansDistributionProductionStock Price PressuresLitigations
REDUCTION OF ASSESSED CONTROL RISK Can be slightly reduced
Core values of maintaining control of brand and distribution
Effective segregation of duties Proper documentation and recording procedures
AUDIT PLANNING
Based on the information contained in the 2013
Annual Report, the financial ratios assessed,
and the previous auditor’s history with Starbucks, we
expect an
unqualified opinion will be issued.
TYPE OF REPORT ISSUED