Starbucks Corporation Ensuring Ethical Financial Behavior

Cite this

Ethics is defined as the moral principles, which govern one’s or people’s behavior. Starbucks demonstrates moral and ethical behavior to their customers and employees. They have a Mission Statement, which says, “Our missions are to inspire and nurture the human spirit, one person, one cup, and one neighborhood at a time.”

Starbucks is always passionate and an ever ethical store that is proud in serving varieties of the very best tasting coffee. Starbucks is also fully involved in “connecting, laughing with, as well as uplifting lives of customers – even only for a little moment.” Starbucks believe “it starts from promising of a well-made beverage, though their work is far more than that, it’s all about connecting with people.”

There is a learning Team in place that is mandated to handle ethics and compliance in Starbucks. The team has described the procedures Starbucks has in place to ensure good ethical behavior. This team also identifies the process Starbucks uses in order to be in line with SEC regulations (Clyde P. Stickney, 2009).

The firm has maintained its filing records over the years thereby ensuring transparency and accountability. The availability of publicized information ensures no fraudulent activity, for example mischievous adjustments on the financial statements commonly referred to as creative accounting.

Corporate social responsibility refers to a beneficial co-existence with the surrounding society by carrying out activities that would benefit the firm’s external environment rather than unscrupulous profit-making moves that harm the community. Starbucks, which has been in existence since the 1970s, was founded on this principle. More resources are spent on employee healthcare, even more than the company spends on product purchase.

All full-time as well as part-time employees are provided with full insurance. Starbucks has installed guidelines known to every member of the company on how to take care of the environment. This measure has ensured environmentally friendly ways of waste disposal and general treatment of its environment. Starbucks has in addition participated in many social responsibility areas like supporting Planned Parenthood as well as ensuring it offers quality products to its customers amongst a diverse range of social responsibility. Starbucks is one of the leading companies in corporate social responsibility, if not the best.

Liquidity Ratios

Also called working capital ratios, liquidity rations indicate ability of the firm to meet its short term maturing financial obligation or current liabilities as and when they fall due.

The ratios are concerned with current assets and current liabilities. Current ratio falls in this category. :

Current ratio = Current Assets/Current liabilities

For year 2011

Current ratio=3795000000/2076 000000 =1.83

For year 2010

Current ratio=2756000000/1779000000 = 1.55

This ratio indicates the number of times the current liabilities can be paid from current assets before these assets are exhausted.

The most recommended ratio is 2.0 (Filmore, 2009) i.e. the current asset must at least be twice as high as current liabilities. Year 2011 is marginally closer to 2.0 that is by 0.87 as compared to year 2010. The company therefore was able to meet its current liabilities from its current assets better in 2011 than in 2010.

Gearing/Leverage/Capital Structure Ratio

The ratio indicates the extent in which the firm has borrowed fixed charge capital to finance the acquisition of the assets or resources of the firm.

An example of such is debt ratio.

Debt ratio = Total debts (total liabilities)/Total assets

For 2011

Debt ratio=2976000000/7360000000 =0.38

For 2010

Debt ratio= 2711000000/6386000000 = 0.42

Debt ratio indicates the proportion of total assets that has been financed using long term and current liabilities. A debt ratio of 0.38 mean 38% of total asset has been financed with debt while the remaining 62% was financed with owners’ equity or capital. 42% of total asset has been financed with debt in the year 2010. Hence, the firm performed better in the year 2011 as it only borrowed less financial resources.

Profitability in relation to investment ratios

Return on equity (ROE) = Net profit x 100/equity

or Return on net worth (RONW)

or Return on shareholders equity (ROSE)

For 2011

ROE=1250000000/4385000000= 0.28

For 2012


The ratio indicates the return of profitability for every one shilling of equity capital contributed by the shareholders. A ratio of 28% means one shilling of equity generates Sh.0.28 profit attributable to ordinary shareholders.

The ratio is 28% in 2011 as compared to 2010’s 22%. This shows that the firm performed better in 2011.

Turnover Ratios/efficiency/asset management ratio

Turnover ratio indicates the efficiency with which the firm utilized the asset or resources at its disposal to generate sales revenue or turnover.

Debtors collection period = 365/Debtor’s turnover

Or 365 x Average debtors/Annual credit sales

For 2011

From forms: Starbucks receivables turnover=31.8


Days receivable = 365/31.8 = 11.47

For 2010

Starbucks receivables turnover==34.0

Days receivable = 365/34.0 =10.7

his refers to credit period that was granted to the debtors on the period within which they were supposed to pay their dues to the firm. In 2011, the figure was 11.47 while in 2010 it was 10.70. This shows that the firm performed better in the year 2010 in terms of day’s receivable.


The ratios generally show an improvement in the company’s performance over the last two years analyzed. The SEC articles display that the company has been adhering to government regulations and that all derivatives were either exercised or not exercised as per the appropriate dates.


Clyde P. Stickney, R. L. (2009). Financial Accounting: An Introduction to Concepts, Methods, and Uses. Cengage Learning: London.

Filmore, C. (2009). Understanding the Relationship between Business and Ethics. California: Wiley and Sons.

Cite this paper

Select style


BusinessEssay. (2022, November 1). Starbucks Corporation Ensuring Ethical Financial Behavior. Retrieved from


BusinessEssay. (2022, November 1). Starbucks Corporation Ensuring Ethical Financial Behavior.

Work Cited

"Starbucks Corporation Ensuring Ethical Financial Behavior." BusinessEssay, 1 Nov. 2022,


BusinessEssay. (2022) 'Starbucks Corporation Ensuring Ethical Financial Behavior'. 1 November.


BusinessEssay. 2022. "Starbucks Corporation Ensuring Ethical Financial Behavior." November 1, 2022.

1. BusinessEssay. "Starbucks Corporation Ensuring Ethical Financial Behavior." November 1, 2022.


BusinessEssay. "Starbucks Corporation Ensuring Ethical Financial Behavior." November 1, 2022.