Financial analysis of the worldwide performance of Starbucks - Free Essay Example

The aim of this financial analysis of Starbucks is to obtain a deep knowledge of annual financial reports and other corporate information, which can provide us measurable conclusions about the company. It is essential to understand the nature of companys business, by analyzing its economic and financial environment and strategy choices made in the past. This report will begin with industry and company description, followed by financial performance overview and projection of company development over the next two years. Conclusions drawn from above analysis will support managers in making a decision whether to invest in the company. 2. The industry description The coffee industry is growing since 2002, and in recent years there was a boom caused by consumers becoming more educated about espresso-based drinks and how they are made (H. Holmes, 2004). The coffee industry includes 20,000 outlets with combined revenue of $11 billion. Approximately 20 million people work in the coffee industry worldwide. Market is very concentrated at the top with the 50 companies taking up 70% of the sales, and fragmented at the bottom. Starbucks is the market leader (Franchise direct, 2010). 2.1. Starbucks description Starbucks Corporation is involved in: purchasing, roasting, and sale of whole bean coffees, cold-blended beverages, various food items, selection of teas, and beverage-related accessories and equipment, primarily through its company-operated retail stores. It was established in 1971 in Seattle, Washington. In 1986 Howard Shultz, Retail Sales and Marketing Manager, left the company to start his own retail coffee outlet, Il Giornale. In 1987 the original investors of Starbucks bought Peets Coffee and sold Starbucks to H.Shultz, who renamed Il Giornale to Starbucks. Firm expended with shops in Chicago and Vancouver. Starbuck was the first coffee company to offer employee stock options in 1991 and went public in 1992. In 1990s Starbucks started distributing coffee through department stores, bookstores, hotels, supermarkets and online; it signed contract with PepsiCo, AOL and Dyers and opened stores in Japan, Singapore, and UK. (Hoovers.com, 2008) Starbucks has built one of the worlds most powerful and recognizable brands and the image of a unique Starbucks Experience. Its mission statement was to revolutionize the coffeehouse industry by building a perception of a coffee shop as the third place between work and home. Wi-fi internet access in all stores makes it a place where customers can work. The companys goal was to make each location a community center for higher-income crowd of the young and college-educated, a group that tends toward higher luxury-consumption levels. (Wikinvest.com, n.d.) 2.2. Competition Starbucks close competitors include other specialty coffee shops, doughnut shops, and restaurants. Starbucks holds a dominant position in the coffeehouse market which is dispersed among the thousands of independent or small-chain coffee shops. Their largest direct competitors are Dunkin Donuts and McDonalds. Both offer specialty coffee at a lower price. Main competitors short description: Dunkin, specializes in fresh baked goods, but began offering coffee in 2005. Their level of sales is at $4.3b. Currently, their coffee sales start to exceed food sales, 5-10% of total sales are from espresso-based drinks. Dunkin has a 22.9% market share. (Starbucks in the aggregate category controls a 24.7% market share) McDonalds entered the coffeehouse industry in 2007, offering coffee at its flagship stores and opening its espresso-centric McCafe concept in some markets. McDs coffee sales generate $813m in additional annual income. Current revenue from coffee is around $490m, about 6-6.5% of Starbucks coffee sales. Their price point is at 18% discount on Starbuckss. The two competitorss targets are slightly different from Starbucks. They focus on cheaper coffee to go, whereas Starbucks is providing a premium experience for a luxury price. Consequently, they compete with each other more directly than with Starbucks, however McCafe has a negative impact on Starbucks. Analysts believe that competitors will settle into separate niches, McDonalds being the better value proposition and Starbucks offering higher quality experience. 3. Financial Performance 2007-2009 3.1. Overview of Starbucks performance 2007-2009 In the fiscal year 2007, Starbucks achieved a solid performance. All goals like new stores opening, total revenue growth, comparable store sales growth and considerable cost rises from dairy products were completed. The consolidated operating income in 2008 was $503.9 and operating margin 4.9%. This was a significant decrease compared with the past few years, the reason for decrease was a changing of structure. In 2009, Starbucks faced many challenges caused by unexpected economic environment and more intense competition, which had impact on the revenue, comparable store sales, operating income and margins. 3.2. Income statement analysis 2007-2009 While net revenues of Starbucks havent been stable from 2007 to 2009 (first increasing then decreasing), its total operating income have also been moving in 2008 it decreased by 52,2% and it was $503.9 million, 4.9% of total net revenues. The reason for decrease was high distribution costs and high rent expenses. In 2009 it increase again by $58.1. Main reason for this improvement was the restructuring charges which contain: assets impairment, lease exit and severance costs. In 2008 and 2009 while net revenues were $10,383 million and $9,774.6, total operating expenses were $9,992.7 million in 2008 and $9,334.5 in 2009 that means expenses were highly eating up more than 96% of the net revenues. The company suffered a major loss of 113.185% in net earnings between 2007 and 2008. Starbucks realized that he need to re-think its business strategy. In 2008, the company incurred restructuring charges of $266.9 million due to store closures in the US and Australia and reduction of the work force. Starbucks Company derived 84% of total net revenue from the company-operated retail stores. They opened 681 new stores in the last 12 months and this offset -3% losses in comparable store sales. Total net revenue of 2009 was showed a decrease of 5.9%, stayed at $9,774.6. The company-operated retail also went down. In detail, there was a change of nearly 6.7% in comparable, for 4% decrease in transactions and a 2% decrease in the average value per transaction. Figure : Net Revenue of Starbucks 2007-2009 (Starbucks annual financial report) Figure : Operating Income of Starbucks 2007-2009 (Starbucks annual financial report) Figure : Net earnings of Starbucks 2007-2009 (Starbuck annual report) 3.4. Balance sheet In term of assets, the total assets for the three years kept staying around $5,600 million. The total current assets in 2009 were $2,036 million. This was higher than in 2008 and 2007 due to the high cash and cash equivalents in 2009. The marketable securities in 2007 were $157 millions so in 2007 the company had more short term investment. On the other hand, the total liabilities in 2008 were the highest in three years because of the commercial paper and short-term borrowing in 2008. Additionally, there was no short-term debt in 2009 but it was the highest accrued expenses during the three years. The shareholders equity in 2009 was the highest in three years owing to the additional paid-in capital. 3.4. Ratio analysis: By doing ratio analysis, the company performance would be evaluated more clearly. As we can see the current ratio for the 2009 was higher than 2008 and 2007. In 2008 and 2007, the current ratio was under 1. That means Starbucks was not in good financial health in these two years. However, this situation didnt exist for a long time but it was not a good sign. The current ratio for 2009 was 1.29, so the company had 1.29 times more current assets than current liabilities. That means Starbucks was able to cover its own obligations. As the Exhibit 1 shows the quick ratio was low for 3 years that is all below 1. This indicates that the company had difficult to turning their inventory into cash like a short-term liability which the company could not pay off immediately. In 2007, the profit margin of Starbucks was 7.15%. This means 7 cents of each dollar is companys profit. In the next two years, the profit margin decreased by nearly 3 percent. That means the net income in 2009 was visibly lower than 2007. It may mainly caused from the increase of the restructuring charges. The return on assets ratio in the year 2007 was 13.77% while the ratio declined to 6.95% in 2009. From this we know Starbucks earned more in 2007 and the net income in 2007 was higher than in 2009. The reason for this decrease results is also from increase cost of the restructuring and innovation in 2008 and 2009. In terms of leverage ratio, to measure its ability to meet financial obligation from 2007 to 2009 the debt ratio was around 50%. That means nearly 50% of funds for assets came from debt. This does not seem good for the company and the most liabilities were long-term liabilities. The debt to equity ratio from 2007 to 2009 was pretty high and the highest point was in 2007, so in 2007 more debt was used. Interests earned ratio in Starbucks during the 3 years was extremely high like in 2007, the ratio was nearly 28 times, but finally in 2009 the ratio was around 15 times a year. It could be a really good margin since the company was able to cover its interest expenses 15 times with operating income. 3.5. Cash flow Operating activities: the net cash provided by operating actives in 2009 was highest during the 3 years. The main part of activities was depreciation and amortization. Same as in 2008 the company spent $604.5 thousands on depreciation and amortization. Investing activities: the net cash used by investing activities in 2007 was $-1201.9 thousands. The main costs here were addition to property, plant and equipment and the company also spent money on purchasing available-for-sale securities. But in 2009 the net cash used by investing activities was $-421.1 thousands. This was much less than in the 2007. The reason for this was the company spent less money on additions to property, plant and equipment. Financing activities: the net increase/ (decrease) in cash and cash equivalents in 2009 was $330.0 thousands. That means Starbucks gained money from financing activities in 2009 while in 2008 and 2009 they had losses in financing activities. The reason for the gain of money in 2009 was the profit in short-term borrowing and nothing spent on the issuing of long-term debts. 4. Forecasting 2010-2011 In order to project the next two fiscal year performance of Starbucks, particularly to construct the pro forma income statements of 2010 and 2011, establishing the revenue (or sales) projection should be the first task of all. In the next steps, the rest items of the statement would be projected by the percent of sales method since it does provide simple, logical estimate of many important variables (Higgins, 2009). In fact, there was a visible growth of Starbucks revenue in both volume and speed during the period of time from 2000 to 2009. Especially, from 2000 to 2007, the annual company sales increased in steady pace in the range of 20% to 29%. This impressive growth of Starbucks revenue was a sophisticated proof for its great business strategies during the beginning of this decade. However, the story had some changes since 2008. At the end of this fiscal year, Starbucks finished with $10,383 million revenue, in comparison with 2007, the growth ratio was 10.3% only, the lowest rat io since 2000. Continuously, in the midst of the US economic crisis, Starbucks sales got negative growth at 5.9% after finish the fiscal year 2009, stay at $9,744 million. Figure : Starbucks Sales chart in 2000-2009 (in Millions) Obviously, the trustable estimation should be the sophisticated one, that normally came from data base statistic analyses. Specifically, with the availability of the last ten years data of Starbucks revenue, it was possible to apply most of time series forecast methods such as moving average, weighted moving average, exponential smoothing, and so on. Since each method had its own advantages and limitations, it is necessary to compare how every method would reflect the same provided data (Exhibit 4). The value of W3 (for the Weighted moving average method) and ÃÆ'Ã… ½Ãƒâ€šÃ‚ ± (for the Exponential smoothing method) were decided high at 0.6 and 0.3 due to the emphasis of the closest time period in term of its impact to the next following year. As a result, the forecasts for 2010 sales were quite low though there was still a slightly growth than 2009. Among the three methods, the weighted moving average method seems to be the most appropriated one since it had the smallest value of the Mean Absolute Deviation. Basically, it proved that this method had less forecasting error than others and might be the best choice of all. To be clear, the plot chart was established base on the result of the three forecast methods in Figure X. Figure : Plot of Actual Sales and Forecast Sales for 2010 in three different models (in $ Million) Visibly, the line created from weighted moving average method was the closest one to the actual sales line. Its trend reflected almost similarly to the actual during the period of time from 2003 to 2009. That is why this method was chosen to determine the 2010 Starbucks sales instead of the two methods remaining. Objectively, $9,920.81 million may not be a number that Starbucks shareholders and investors really expect, even it showed slightly growth at 1.5% than 2009. However, in some levels, it seems to reflect quite appropriately the reality of the economic conditions as well as the Starbucks status. In spite of many positive signs of the economic recovery, Starbucks is still continuing its plan to close 800 retail stores over two year 2009 and 2010. Since the 566 stores had already released in 2009, another 244 are expecting to be cleared in fiscal year 2010. Thus, it could be hard to see a rapid growth in revenue of Starbucks at the end of fiscal year 2010. In regard to fiscal year 2011, since all of the three forecasting method above only allowed forecaster to see the result of 2010 revenue, the Linear Regression method was applied to estimate the sales in 2011. By collecting the sales data from the last three years (2007 to 2009) in quarterly, by the calculation of the regression line (Exhibit 11), the value of a ( the y intercept) and b (slope of regression line) were found. These two values were use to determine the dependent variable (y). The regression forecast of sales in equation is: y = a + bx (Exhibit 5 ). The forecast results of $10,078.21 and $10,189.41 for each year of 2010 and 2011 once again confirmed about the growth trend of Starbucks sales in the next two year. Nonetheless, base on the Starbucks plan of opening over 500 new stores in US and over sea during 2011, there should be a stronger increase in sales of Starbucks in this year. Subjectively, the authors believed that Starbucks revenue would increase no less than 15% in 2011. In other words, if the 2010 revenue was forecasted at $9,920.81 million, the same item in 2011 would be around $11,408.93 million. This result was also determined base on many positive factors that Starbucks could get benefits from such as the economic recovery in higher volume and speed, the more effective operating of Starbucks after the reorganizing process in its retail stores system as well as the objective increase in customers demand. Moreover, the volume of average transaction would be higher due to the increase in cost of goods sold and the im pact of inflation. In the Exhibit 6, all the operating performances of Starbucks from 2005 to 2009 were displayed in detail by the percent of total revenue. Base on those historical data and theirs visible trends, it was possible to anticipate logically the operating results for next two fiscal years 2010 and 2011 (Exhibit 7). According to the Exhibit 14, the net income of Starbucks stays at $466.27 and $479.18 million for each of 2010 and 2011. This may be considered as the acceptable results in regard to the challenges of the current circumstance. In fact, the forecast net income of 2010 is 19.3% higher than 2009. Since the revenue of 2010 did not rise in a strong level (only 1.5%), this impressive net income mainly came from the reducing the stores operating expenses and the more effective tax rate. In 2011, the operating expenses are expected to increase and stay at 95.2% of total sales, this is an objective fact that many items in operating expenses areas are in trend of steady increase year by year accompany with the business enlarge strategy of Starbucks, such as store operating expenses or general and administrative expenses. However, this ratio might be less in the next following years if the restructure process of Starbucks would get its aims of improving efficiency of cost control in various act ivities. Conclusion and recommendation Starbucks has been the largest specialty coffee retailer in its industry, but due to the problems with our economy, it has been seeing an effect on its sales and profits. The economic situation has affected consumers spending at Starbucks and other luxury goods. Starbucks also raised prices by an average of 9 cents a cup in July of 2007, causing U.S. customers who face higher food, fuel and housing expenses to go to McDonalds and Dunkin Donuts for cheaper coffee. These issues have affected Starbucks stocks performance in the market and are slowly making this stock an unfavorable one for potential investors. My recommendation for potential investors would be to hold off on purchasing stocks from Starbucks at this moment because now is not a good time to invest in them. I would advise these investors to keep looking into this stock until they see a positive change in its market pattern and that would be when I would advise them to purchase the stock; before its price increases higher t han the average market price. My recommendation for investors holding the share of the company would be to hold on to it until they can see for certain if Starbucks stocks will continue to go down and become a loss or maybe potential go back up and become profitable as they once were. After conducting my research, I believe the Starbucks stock will eventually start going up again after they put into effect their plans for the upcoming year. This stock is definitely a valuable one that I would not let go of if I owned shares in it. Starbucks hold value to its stock, which is why my advice to shareholders is to hold off on selling their shares until they see how the upcoming year goes for the company. In a response to the McDonalds challenge Starbucks is teaming up with Burger King, which has announced that by September 2010 it would begin selling Starbucks Seattles Best Coffee in about 7,250 U.S. outlets it would launch its first national advertising campaign. India, Russia, and China represent key areas of focused future expansion.

Objectives For Effective Financial Management Finance Essay - Free Essay Example

Sample details Pages: 3 Words: 816 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? The objective of financial management is the same as the objective of a company which is to earn profit. But profit maximization alone cannot be the sole objective of a company. It is a limited objective. If profits are given undue importance then problems may arise as discussed below. The term profit is vague and it involves much more contradictions. Profit maximization must be attempted with a realization of risks involved. A positive relationship exists between risk and profits. So both risk and profit objectives should be balanced. Profit Maximization fails to take into account the time pattern of returns. Profit maximization does not take into account the social considerations. 2) Wealth Maximization: It is commonly understood that the objective of a firm is to maximize value and wealth. The value of a firm is represented by the market price of the companys stock. The market price of a firms stock represents the assesment of all market pa rticipants as to what the value of the particular firm is. It takes in to account present and prospective future earnings per share, the timing and risk of these earning, the dividend policy of the firm and many other factors that bear upon the market price of the stock. Market price acts as the performance index or report card of the firms progress and potential. Prices in the share markets are affected by many factors like general economic outlook, outlook of the particular company, technical factors and even mass psychology. Normally this value is a function of two factors: The anticipated rate of earnings per share of the company The capitalization rate. The likely rate of earnings per shares depend upon the assessment of how profitable a company may be in the future. The capitalization rate reflects the liking of the investors for the company. Methods of Financial Management: In the field of financing there are multiple methods to procure funds. Funds may b e obtained from long term sources as well as from short term sources. Long term funds may be procured by owners that are shareholders, lenders by issuing debentures, from financial institutions, banks and the general public at large. Short term funds may be availed from commercial banks, public deposits, etc. Financial leverage or trading on equity is an important method by which a finance manager may increase the return to common shareholders. At the time of evaluating capital expenditure projects methods like average rate of return, pay back, internal rate of returns, net present value and profitability index are used. A firm can increase its profitability without adversely affecting its liquidity by an efficient utilization of the current resources at the disposal of the firm. A firm can increase its profitability without negatively affecting its liquidity by efficient management of working capital. Similarly, for the evaluation of a firms performance there are different me thods. Ratio analysis is a common technique to evaluate different aspects of a firm. An investor takes in to account various ratios to know whether investment in a particular company will be profitable or not. These ratios enable him to judge the profitability, solvency, liquidity and growth aspect of the firm. Financial Management Defined What is Financial Management? Financial Management can be defined as: The management of the finances of a business/organization in order to achieve financial objectives Taking a business as the most common structure, the key objectives of financial management would be to: †¢ Create wealth for the business †¢ Generate cash, and †¢ Provide a return on investment keeping in mind the risks that the business is taking and the resources invested There are three primary elements to the process of financial management: (1) Financial Planning Management need to ensure that sufficient funding is available to m eet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit. In the medium and long term, funding may be needed for significant additions to the productive capacity of the business or to facilitate acquisitions. (2) Financial Control Financial control is a critically important activity to help the business ensure that said business is meeting its goals. Financial control addresses questions such as: †¢ Are assets being used efficiently? †¢ Are the businesses assets secure? †¢ Does management act in the best interest of the shareholders and in accordance with business rules? (3) Financial Decision Making The primary aspects of financial decision making relate to investment, financing and dividends: †¢ Investments must be financed in some way; however there are always financing alternatives that can be considered. For example it is possible to raise funds from selling new shares, borrowing from banks or taking credit from suppliers. †¢ A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits. 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Stand By Me (movie Review For Small Group Com) Essay

A Summer To Remember nbsp;nbsp;nbsp;nbsp;nbsp;The movie Stand By Me is based upon a novel by Steven King. It doesn’t have the same eerie feel as some of his other books and is generally a more serious movie. It takes place in the small town of Castle Rock, Oregon. It is the middle of the summer in approximately the early 1960’s. The kids are bored and that is the setup for their adventure to go find a dead body in the woods. nbsp;nbsp;nbsp;nbsp;nbsp;The main role of Gordie LaChance is played by Wil Wheaton. He is having trouble in his life at this time because he just lost his brother and his parents are having a very difficult time dealing with it. Chris Chambers was played by River Phoenix. Chris is considered a loser†¦show more content†¦Vern whines that it means they are all doomed and should go back. Vern also slows the group when he refuses to go into the woods away from the tracks towards the trail. He then plays the role of backseat driver (class notes) when they reach the swamp saying, â€Å"I told you we should have kept following the train tracks†. Vern hindered the development of the group. While they could have been devoting time to the task at hand, they had to spend time helping him with trivial things like dealing with him being scared when they are in the woods. While Vern slowed the group by challenging many of the group’s ideas, Teddy presented a much different c hallenge to the group. Teddy is described in the beginning as being reckless and wild. He holds to that description right in the beginning with two crazy incidents. When they leave in the beginning and are walking on the train tracks, Teddy goes a little bit nuts and says he is going to dodge the train. It takes the entire group to pull him away from the train tracks before the train comes. Teddy also becomes difficult when the run away from the old man in the junkyard. When the old man calls his father â€Å"looney† Teddy flips out. He starts kicking and punching even though he’s on the other side of the fence. This remains a problem with the group because they have to spend time comforting him before they get back on the road again. On more then one occasion Teddy got in small fights with almostShow MoreRelatedEssay11356 Words   |  46 Pagesyears hit TJ like a hammer. TJ was coming down from the high she felt when the CEO called last week to promote her to a new position within Time Warn er—effective today, September 1, 2004. 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Persuasive Advertisement Analysis free essay sample

Currently in the United States there are 9 different commercials for FreeCreditReport. om circulating on numerous channels daily. In these advertisements there are usually three men singing a different jingle about FreeCreditReport. com and what the website can offer many consumers. The advertisement offers anyone the chance to go online and check his or her credit report for free. Every commercial shows a different scenario about how having a poor credit score can affect your life. They also state that having a low credit score can cause major stress on relationships, hurt your pride, and change your quality of life; weather or not you acquire a good job and being able to purchase quality goods. These upbeat jingles provide the message that before making any life-changing decisions or large purchases, you should go online and check your credit scores first. Each commercial for FreeCreditReport. com has its own theme and jingle to go along with it. Jingles are a great way to promote a product. Commercials with jingles are usually more interesting than ones without. By having a catchy melody, jingles also give the consumer the chance to relate back to the product after time has passed rather than struggle to remember a short catchphrase or slogan. One of the commercials jingle begin with â€Å"My mother always told me, dress for the job you want. So why am I dressed up like a pirate in this restaurant? It’s all because some hacker stole my identity. Now I’m here ever evening selling chowder and ice tea. Should have gone to FREE-CREDIT-REPORT-DOT-COM†¦Ã¢â‚¬  The commercials for FreeCreditReport. com are 30 seconds long and have actors singing the multiple reasons why people should visit their website and check their credit report. Each jingle has a catchy beat rhythm, with lyrics that are humorous and rhyme. The same three actors star in all 9 commercials. The actors give the illusion that these commercials are informative and a great opportunity to help raise your credit score; while at the same time seeming to be upbeat and happy while singing their songs. Though these commercials include some positive information, they are actually filled with negative lyrics and false accusations. The FreeCreditReport. com commercials offer many positive and negative reasons to sign up and check your credit score. There are 9 different themed commercials: * Pirates * New Bike * Married my Dream Girl * Rock-star * New Car * Cowboys in Reno * New Phone * Rollercoaster Renaissance Fair In each of these commercials the consumers are swayed to visit the website by giving them the opportunity to learn â€Å"valuable† knowledge about their credit scores for free. The advertisement offers free secure monitoring of credit scores, email alerts about recent credit activity, and prevention of identity theft. The main themes of these commercials are most ly negative. They try to guilt you into using their product. The commercials show examples of what would happen if you were to have bad credit. They explain that before making any major purchase all businesses will check for good credit. For example, if you were to buy a house and had bad credit, you would not be able to take out a loan to afford that new home. One commercial shows the three men driving around in an old, rusty, damaged car due to the fact that they had a low credit score and couldn’t afford a quality vehicle. Another commercial shows the three men wearing ridiculous costumes, working low-end jobs, trying to avoid their bad credit reports while working the best job they can at the time. FreeCreditReport. com advertises that all these negative attributes can be prevented just by longing onto their website and signing up for their program. In each advertisement for FreeCreditReport. com appears four out of fifteen of Jib Fowles’ Basic Appeals for Advertising. A huge appeal in these commercials is â€Å"the need for sex†. In six out of nine commercials there are multiple attractive women in skimpy clothing. In each commercial the girls are pointing and laughing at the guys because they have poor credit scores. These ads try to express that if you check your credit and handle your money well, or have a lot of money in general you would be able to have attractive women in your life. Two other appeals are â€Å"the need to achieve† and â€Å"need for prominence†. In most of the commercials the actors are working very low-end jobs. They are wearing gaudy outfits and claim to living in the basement of their in-laws. The ad states that checking their credit reports would have prohibited their now unsuccessful and unaccomplished lives. The commercials try to convey that if you were to visit the website and find out your credit report, you will automatically heighten your chances of finding a better job, and buying expensive luxury items. This is not true; you can only heighten your chances of being successful after your credit score has gone up. The website does not offer have any promotions to help raise your score, just find out the number. The last advertising appeal is â€Å"the need to feel safe†. FreeCreditReport. com commercials do a great job in reassuring consumers that they can protect them from identity theft, defaulting on credit cards, and by providing updated monthly reports on your credit. These ads try to convince consumers that if they check their credit reports online it will prevent the harmful effects caused by their own poor credit. When visiting the FreeCreditReport. om home page, the first thing you see is a huge blown-up picture of the three main actors in every commercial. Unlike in the commercials, where the actors wear bizarre get-ups and dingy clothing, on the website they are all dressed with a sharp clean style, wearing sophisticated suits and ties. The men are all standing next to a checklist of what the website can offer and how it may help you personally. All under a large bold banner stating: â€Å"get your free credit report and scores now! † When you scroll down the page the next bold text seen is a warning. The warning states that this page is secure and it is safe to submit your personal information into its database. The site states multiple times that is easy to check your report and scores. The website also stresses the fact that you can check your information for free. This information contradicts a large paragraph of fine print on the bottom left side of the webpage entitled, â€Å"Important Information/Fees†. The print is extremely small and the font is almost the exact same color as the background display. Many people may have a hard time reading this information due to its irregular placement on the site and poor font choices.