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When researching a publicly traded corporation that has exhibited global business strategies one of the top performers in today’s market includes Starbucks. Starbucks was founded in 1971 in the popular Pike’s Place market in Seattle, Washington. A lot has changed since then with stores exceeding 20,500 worldwide. Starbucks had its first IPO offer in 1992 and has split into a two-for-one stock five times under the NASDAQ trading symbol SBUX. Incorporated in the State of Washington in 1985, Starbucks has now branched out to include Starbucks Coffee, Seattle’s Best Coffee, Teavana, Tazo,Evolution Fresh, La Boulange and Torrefazione Italia Coffee as part of their business portfolio.
In showing the global corporation that Starbucks has become, the analysis of financial statements will provide additional information on debt securities and stock investments. The analysis will also show figures will provide information as to the investments of stocks and debt securities that Starbucks has invested in. In looking at the difference between equity and debt securities, Starbucks will have some risks and rewards of equity versus debt securities.
Reporting on Financial Statements
Debt Securities, according to Investopedia (2015), are “Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount borrowed), interest rate and maturity/renewal date.” Debt securities for corporations include government or corporate bonds, certificates of deposit, preferred stock, collateralized securities, and zero-coupon securities (Investopedia, 2015). Companies use debt securities to gain financing for expansion, operations, or for any other activity where the business needs access to cash.
Starbucks has long-term and current debt listed on its balance sheet, which makes up its debt securities. The listed liabilities for Starbucks are being used for expansion into domestic and foreign markets, as while as acquisitions of other companies. Starbucks current liabilities for debt securities were $794,500,000 and its long-term liabilities for debt securities totaled $2,440,500,000.
Starbuck Corporation’s stock and investments are reported on the company’s Consolidated Balance Sheet. Short and long-term investments are listed under the asset section and Common Stock is listed under Shareholder’s equity. On the Consolidated Statement of Cash Flows, stock is listed under Investment Activity and Financing Activities, which include transactions such as proceeds from the issuance of common stock and repurchase of common stock. The Consolidated Statement of Equity also has Stock Detail included in it. Under Note 12: Employee Stock and Benefit Plans, there is a breakdown of employee stock, listed on the consolidated financials, as well as a table listing outstanding shares. Note 14: Earnings per share, gives additional information. The 8K form also includes additional Stock information.
A corporation will invest heavily in stocks and debt securities to help them raise capital to reinvest into the company. A company will also invest to have easily available liquidate assets in case they need to cash out money to pay off debts (John, 2015). Some corporations like Starbucks will also invest in stocks and debt securities to have a steady income coming into the business in case if the company’s usual business actives fall below expectation (John, 2015). Starbucks has made debt-based financing decisions before, where they have borrowed from its investors to fund the corporation (Starbuck, 2014). The most logical reason the Starbucks Corporation would raise capital by the sale of debt securities in long-term securities is to expand the corporation globally, provide dividend payments and share acquisitions (Starbucks, 2014). According to Kimmel, Weygandt, and Kieso (2011) when a corporation incorporates to sells stocks it is then easier to raise the funds it needs to be a growing successful corporation. John (2015) states, “Major Corporation often invests heavily in the stock market, but stocks, bonds and other securities are also attractive investment options for small-business owners” (para. 1). According to John, (2011) corporation that invest in stocks and securities can make money to help increase a company’s net worth.
When our team looked at Starbucks we saw the basis of what the business intel as well as potential investment opportunities that this organization has had in its past. Starbucks has the privilege of being in a very rare group of business in its industry that is well renowned in terms of what they service and the quality of the products in the discussion. When looking at Starbucks’ 2014 Annual
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Stock market, Corporate finance, Equity securities, Starbucks, Security, Financial markets, Stock, Investment, Debt, Bond, Balance sheet, Private equity
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