Barnes and Noble's Ethics and Compliance

Barnes and Noble's Ethics and Compliance

Barnes & Noble was founded in 1873 by Charles M. Barnes who took on a partnership with Clifford Noble to become Barnes & Noble, which started off as a book printing business back in Wheaton, Illinois. The business was later brought by Leonard Riggio in 1971 for 1.2 million dollars. Barnes & Noble has become the largest book retailer in the United States. In this team paper we will discussed Barnes & Noble analyzing the data in the annual reports and SEC filing while addressing; the roles of ethics and compliance of the Barnes & Noble organization, the procedures that takes place to enforce ethical behavior, how their financial market works in the United States, and lastly evaluate their financial performance during the past two years.

Role of Ethics and Compliance

Ethics and compliance play a huge role in a company's financial performance. "Although financial decision making is generally limited to the financial factors of risk and return over time, ethics include a consideration of the ethical treatment of everyone affected by a decision, and the consequences for the whole society" (Jamnik, 2011, p. 154). Hence, financial managers and company officers have the responsibility to drive company profits and to maximize the investments of their shareholders. They have to work as shareholders' agents, behave ethically, and make decisions that benefit shareholders (Titman, Keown, & Martin, 2011). Management must take into account that rules and regulations have been put into place to protect shareholders, such as the Sarbanes Oxley Act, and that failure to comply with the law will lead to fines and even imprisonment for management.

Procedures for Ethical Behavior

Like all corporations, Barnes & Noble ensures ethical behavior by developing a code of ethics, which describes in detail the rules of the company. In the code of ethics topics are broken down into paragraphs to make it easy to follow and when looking for a specific subject. In terms of financing some of these topics include compliance with laws, rules and regulations, insider trading, record-keeping and public communications, and protection and proper use of Barnes & Noble assets. While taking a closer look at some of these subjects we can see that there is a clear description on what the ethical approach is on each topic. For instance, according to Code of Business Conduct and Ethics (2012), the subject record-keeping and public communication states that "for those employees that use business expense accounts, business expenses must be documented and recorded accurately." It also states any records or documents that Barnes & Noble files or submits to the SEC should contain full, fair, accurate, timely and understandable disclosure (Code of Business Conduct and Ethics, 2012).

Typically every associate that works for Barnes & Noble must read and either sign manually or electronically that they agree to the terms that are outlined in the code of ethics and will adhere to what is stated within. An employee that breaks the code risks the possibility of being penalized, terminated, or possible sued by the company depending on the severity of the crime. The code of ethics is made public so that anyone can read what the company stands for and is available to associates whenever they need to reference it.

Financial Markets

Financial markets are where investors and traders go to buy and sell stock, bonds, securities, and commodities. These markets are public. The financial market has three types of people involved in interacting in the market which are; borrowers, investors, and financial institutions. Borrowers are those that are looking to get their purchases financed. Investors are those looking to invest their money. Financial institutions are those that match the borrowers and investors together. The financial market is a way that businesses can go and get capital for their business. The government can also get in the financial market if they have extra money to spend and want to invest it. There are different markets but just to name a couple there is money markets and capital markets. Money markets are short term. The maturities of the money market are less than one year. Capital markets are long term. The maturities of the capital markets are over one year. The financial market provides an easy way for sellers to get cash when needed.

Processes for SEC Compliance

A process for SEC Compliance is the 10-K form. The 10-K form was a portion of the Securities Exchange Act of 1934 (United States Securities and Exchange Commission, 2013) and is a yearly record that must be encoded within 90 days of a corporation's economic year if the assets surpass 10 million and the corporation has more than 500 proprietors of securities. "Barnes & Noble combined balance records indicate the corporation's present assets were amounting to 2.05 billion and 193.54 million stockholders" (Market Watch Inc., 2013). The 10-K form is identical to a corporation's yearly record to stockholders and is always done at the same period. 10-K report involves:

* Company History - In the ending of the economic year of 2013, the SEC report Barnes & Noble examined the role of the establishment, how attracted new clients, examines the companies involving how many locations have been established, closed, and expanded since 2009 and the future plans of the corporation. The SEC report examines the company's reportable corporation that the company refers to Barnes & Noble, Inc. and its subsidiaries (United States Securities and Exchange Commission, 2013).

* Organizational Structure - Records the administrative authorities of the registrant by their name, experience, address, span of time the rank was obtained and present age.

* Equity - Involves a combined statements regarding Shareholder's Equity for three years.

* Audited Statements - Barnes & Noble involves data from the Statement of Income, Balance Sheets, Shareholders' Equity, Comprehensive Income, Cash Flow, Notes for Financial Statements, and Report of Independent Registered Public Accounting Firm.

Ratios and Trends

The following is a list of ratios that are used in the company. These ratios are then compared to previous years to determine trends on how the company is performing as well as comparing them to other similar companies to see how they are doing against their competition.

1. Current Ratio: Current Assets/Current Liabilities. Current ratio establishes if the current liabilities of a business is