...(Dunkin’ Brands) 4 Starbucks Coffee (Starbucks Corporations) 4 Leader VS Follower 5 Financial Analysis 6 Liquidity Ratio Analysis 6 Debt Analysis 11 Profitability Analysis 13 Stock Investment Analysis 16 Non-Financial Analysis 20 SWOT Analysis 20 PEST Factor Analysis 23 Product Life Cycle Analysis 24 Boston Consulting Group (BCG) Analysis 25 Conclusions and Observations 27 References 29 Executive Summary People love to drink coffee. Coffee shops, independently owned or chains are every corner. Statistics show that people are taking more coffee every day. It is a very profitable business. Nowadays when people think of coffee and its related items, the word “Starbucks” immediately come to mind. Internationally, Starbucks has already become a very famous brand and many are trying to study the secret of its success. In the States, however, another company rivalry is competing with it quite well. Quite often, the Americans are taking preference to this over the Starbucks. The company that is being mentioned is Dunkin’ Donuts. It is without doubt that Dunkin’ Donuts will act as the follower in this industry. Starbucks, on the other hand, is acting the leader. This paper will try to study how the Dunkin’ Donuts are performing by making the benchmarking financial analysis against Starbucks. Financial ratios are prepared and analyzed to evaluate its performance. The study will be focusing on its profitability, liquidity, debt repayment ability...
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...Starbucks Corporation Ethics and Compliance Michelle Anderson, Deida Camacho, Michelle Garcia, Adam Orndorf FIN/370 May 28, 2012 Joseph Potts Ethics and Compliance Starbucks was established in Seattle, Washington, by Jerry Baldwin (English teacher), Zev Siegl (history teacher) and writer Gordon Bowker (Funding Universe, (n.d) Starbucks is famous for its distinctive roasted coffee flavor and its incomparable taste. Starbucks is known worldwide and based on its success more than 17,000 branches in over 55 countries (Starbucks Corporation, 2012). The following paper will review annual report data (2010 and 2011) and will also discuss the SEC filing for this corporation. This paper will also address the role of ethics and compliance for Starbuck financial environment. A description will be given on how financial markets work in the United States. This paper will also discuss the procedures the Starbucks has put in place to ensure ethical behavior and will also identify the process used to ensure that the business complies with the SEC regulations. Based on the 2010 and 2011 reporting, calculation on current ratio, debt ratio, return on equity ratio, and days receivable will be presented. Ratio movement/changes will provide business financial health information based on the two-year period. Business Ethics and Compliance Business ethics and compliance is important to Starbucks. Starbucks believes that conducting business ethically and striving to do right...
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...Starbucks versus Dunkin Donuts – Ratios Analysis | | Starbucks Corporation targets product differentiation strategy, which appeals to coffee lovers. Their customers like the store’s atmosphere, friendly staff and welcoming interior. In addition, Starbuck is having success in the international market. So far, the corporation has opened coffeehouses in over 60 different countries, and customers know they can find Starbucks coffee house in the country they are visiting and buy their favorite coffee. Dunkin Donuts on the other hand is focusing on cost strategy. The company’s mission is to serve a good quality coffee drink and snacks at low cost. They are successful in cutting the costs by standardizing its products, and producing more items instead of buying them from the suppliers. Dunkin Donuts presence is more noticeable in the Northeast of US, but it is constantly growing and trying to expand to the different regions. In regards to the global expansion, the corporation has over 3000 stores in 32 countries. To compare and analyze Starbucks and Dunkin Donuts’ performance, I used 2012 Annual Reports from both companies and computed the necessary ratios. Both corporations performed very well in 2012. However, based on the calculations, Starbucks’ current, quick and debt ratios are much better than Dunkin Donuts. In addition, Starbucks return on assets and times interest earned, asset turnover and inventory turnover ratios have better results than Dunkin Donuts. Therefore...
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...Starbucks: The SEC and Financial Performance Starbucks is a publicly traded company and all publicly traded companies have to meet the legal requirements imposed on them by the Securities and Exchange Acts of 1933 and 1934 (Securities Laws, Rules, Regulation and Information, 2008). These Acts require publicly traded companies, like Starbucks, to give potential investors specific information about any stock offered for sale, such as notices about the registration of shares (Securities Laws, Rules, Regulation and Information, 2008). SEC laws also require companies to be honest and require them to disclose any stock purchased or sold by company executives and to file quarterly 10-Q and annual 10-K reports on the company’s financial results with the SEC (Securities Laws, Rules, Regulation and Information, 2008). Companies must also provide shareholders with annual financial statements and proxy materials and information about annual shareholders’ meetings (The Investor’s Advocate, 2009). These disclosures are meant to assure investors have as much information as possible about their investments and potential investments. Investors can use the information provided in financial statements, for example, to ascertain the financial strength of a company. Financial ratios can be calculated from the information provided by financial statements. Ratios such as the current ratio, debt ratio, return on equity, and day’s receivable can help determine the effectiveness of a company’s...
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... Starbucks is a globally known brand that has brought coffee lovers hundreds of products and services to satisfy their caffeine fix. This company has grown from a small coffee house based in Seattle, to a worldwide corporation who is a superior example of how hard work goes a long way. Because of its size and popularity, Starbucks has become an example to other corporations on how to properly to business ethics and comply with the regulations set into place throughout the world. Not only does this company comply with all the standards set into place, but they also go above and beyond in helping out within the communities they serve at home and abroad in efforts to give back. Starbucks truly is a prime example of an ethically grounded and financially stable organization that has given back to all those who have helped make this a globally recognized brand. Starbucks Business Ethics and Compliance After the fallout of Enron, business ethics and, compliance have become a standard business practice for companies in America. To ensure compliance practices across an organization, companies implement standards of business conduct for its employees and leadership to comply with. Starbucks is no different. According to "Starbucks Business Ethics And Compliance" (2013), Starbucks publishes its Standards of Business Conduct and states its commitment to conducting business ethically and protecting its culture and reputation. The sections of Starbucks’ Standards of Business...
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...with smaller companies find ways to thrive in those giant’s shadows. Competition in the coffee industry is hard to distinguish at times, but Starbucks is a brand name that stands out on its own. Coffee competitors have done a good job of differentiating themselves by using environments and product mix. Coffee is the second largest U.S. import, and specialty coffee is forecasted to be an $11 billion dollar a year industry. In order to strive in this industry, companies must have the appropriate buildings, properties and equipment. Capital Expenditures are the cash that is used to buy, revamp or upgrade these physical assets. Capital expenditures are forecasted using CapEx % of gross profits and are allocated proportionally to each division based on the gross margin. This paper will compare the capital expenditures of Dunkin Brands and the Starbucks Corporation (Fig.1). Direct Competitor Comparison SBUX DNKN Market Cap: 49.50B 4.42B Employees: 160,000 1,104 Qtrly Rev Growth (yoy): 0.11 0.06 Revenue (ttm): 14.02B 667.67M Gross Margin (ttm): 0.57 0.79 EBITDA (ttm): 2.59B 313.12M Operating Margin (ttm): 0.14 0.39 Net Income (ttm): 1.51B 106.11M EPS (ttm): 1.97 0.94 P/E (ttm): 33.59 44.29 PEG (5 yr expected): 1.61 1.72 P/S (ttm): 3.47 6.61 (Fig.1 Yahoo Finance) One of Starbucks biggest competitors is Dunkin Donuts. Dunkin Brands Inc is a franchise leader in restaurants that owns Dunkin’ Donuts and Baskin-Robbins. Many...
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...Pike Place Market in 1971 has flourished into a gourmet coffee empire that is as recognizable worldwide as any of the major food industry giants known today. The current number of Starbucks stores is approximately 18,000, which has been achieved by following a strict recipe that has nothing to do with their coffee beans. Throughout history, Starbucks Corporation has followed a strict recipe of corporate business ethics that has helped build a trusted company for consumers and employees alike. Some areas of focus for Starbucks Corporation are strong ethics and compliance in their financial activities, which set the standards for ethical behavior companywide while complying with SEC regulations. Ethics and Compliance – Jose Baho Abiding by a strict level of ethics and compliance is paramount in the success and longevity of Starbucks Corporation. “Starbucks believes that conducting business ethically and striving to do the right things are vital to the success of the company. Business Ethics and Compliance is a program that supports Our Starbucks Mission and helps protect our culture and our reputation by providing resources that help partners make ethical decisions at work” (Starbucks: Business Ethics and Compliance, 2013). This program is a proactive step that Starbucks has taken to ensure that employees and board members are properly trained on what is expected of them at an ethics behavioral level. These expectations are put into place to help guide...
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...BUSG 1301 Total Current Assets and Liabilities of Starbucks Corporation for past 4 years: Period Ending | Sept. 29, 2012 | Sept. 29, 2011 | Sept. 29, 2010 | Sept. 29, 2009 | Total Current Assets | 4.2B | 3.8B | 2.8B | 2.0B | Total Current Liabilities | 2.2B | 2.1B | 1.8B | 1.6B | As you can see from above chart, the total Current Assets of Starbucks has increased from $2.0 billion in 2009 to $4.2 billion in 2012. Its total Current Liabilities was 1.6 billion in 2009 and 2.2 billion in 2012. Starbucks total Accounts Receivable was $271 million in 2009 which increased to $485.9 million in 2012. This may be due to opening of increased number of stores. The company wrote off $5 million as bad debt in 2009, $3.3 million in 2011 and 5.6 million in 2012. Its Accounts Payable has increased from $267.1 billion in 2009 to 398.1billion in 2012. Although debt as a percent of total capital increased at Starbucks Corporation over the last fiscal year to 22.47%, it is still in-line with the Hotels, Restaurants and Leisure industry's norm. Additionally, even though there are not enough liquid assets to satisfy current obligations, Operating Profits are more than adequate to service the debt. Accounts Receivable are typical for the industry, although worsening, with 12.80 days worth of sales outstanding. Last, Starbucks Corporation is among the most efficient in its industry at managing inventories, with only 67.09 days of its Cost of Goods Sold tied up in inventory. Data Sources: ...
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...Problem Sets: Debt Securities Reporting Abstract Global Environments and Problem Sets: Debt Securities Reporting Debt Security is defined as; any debt instrument having basic terms defined (interest rate, maturity/renewal date, notional amount aka amount borrowed) and can be bought or sold between two parties. Municipal bonds, CDs, corporate bonds, government bonds, collateralized securities (CDOs, CMOs, GNMAs) and zero-coupon securities are all debt securities. The Starbucks Corporation balance sheet and income statements are summarized analyzing the fiscal year end beginning from 2010 until the fiscal year end of 2014. The specified balance sheet provides a listing of the Starbuck Corps. resources (assets), sources of capital (equity and liabilities), future earnings potential of assets, cash flows, receivables and inventories. Accounts Payable/Accrued Liabilities Debt that is owed to vendors for services and/or goods that are used in the corporations day to day to functions which are paid within one business year. Starbucks Corp.’s accounts payable reports a steady somewhat significant increase from 2012 ($398,100) to 2014 ($533,700) almost similar to the increase from 2010 ($282,600) to 2011 ($540,000). Current Liabilities (Long-term debt and other long-term liabilities) The total amount of debts incurred as a result of the normal day to day operations which are to be paid throughout the business year or within one business cycle. Starbucks Corp.’s current...
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...Analysis: Starbucks S. Albright Grand Canyon University: FIN 504 March 5, 2016 Starbucks started back in 1971 in Seattle, Washington. Initially, Jerry Baldwin, Zev Siegl and Gordon Bowker sold only coffee beans and coffee making equipment (coffee .org). It wasn’t until the company was sold to its Director of Retail Operations, Howard Schultz, that Starbucks started selling coffee drinks and soon after, Schultz spread the chain of stores throughout the U.S. taking over many small coffee shops in the process (coffee .org) In the 1990’s Starbucks offered stock options to its employees and went public with an IPO which opened the door for higher earnings and more profitability (coffee.org). This analysis will discuss how a single coffee house in 1971 has grown to more than 22,000 stores in 66 countries in 2016. Starbucks’ goals, market strategies, revenue and financial outlook will be discussed. Strategies and Operating Characteristics According to the Global Responsibility Report (2015), Starbucks vision for the future and what will have the greatest potential for impact include working with farmers for ethically sourced coffee beans, pioneering sustainability economically, socially, and environmentally, and creating career opportunities for young people (2015). Starbucks Newsroom reported on March 18, 2015 that their seven strategies would grow market capital to $100 billion (2015). Revenues are currently at $16.4 billion and the U.S. comp growth averaged 7% (Starbucks Newsroom...
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...Starbucks Financial Accounting for Managers ACC556 May 18, 2015 Financial Tools Liquidity, Solvency, and Profitability The company chosen for the investment analysis is Starbucks Corporation. Starbucks offers some of the world’s finest fresh-roasted whole bean coffees. It was incorporated in Seattle Washington in 1985. Starbucks has continued to advance in the coffee industry over the years; but is classified as an eating place. In 2014 the corporation reported its annual revenue as 16,447,800 (Starbucks Corp, 2014). Starbucks financial health is evaluated using the tools of liquidity, solvency, and profitability. Liquidity refers to the company’s ability to pay short term obligations. There are two ratios that are most commonly used to evaluate this is the current and quick ratios. Starbucks 2014 current ratio is 1.37 and the quick ratio is .81. Next analysis examined for the company is solvency; this refers to the corporation’s capacity to meet its long-term financial commitments. The ratios typically used to evaluate solvency are debt to equity and debt to assets. Starbucks 2014 debt to equity ratio is .39 and the debt to assets ratio is .19. Finally, the profitability ratio was evaluated for Starbucks. Profitability is the assessment of the business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific time period. There are five ratios evaluated for Starbucks in 2014; profit margin, gross margin...
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...Starbucks’ Ethics and Compliance Paper Ethical behavior within a company is very important to its future and success. This type of behavior is not just important for the employees to follow, but for the entire company. In 2001, a failing company called Enron was involved in numerous unethical behaviors. For example, Enron’s Chief Financial Officer temporarily suspended their “code of ethics” not once, but twice in order to partake in personal financial gain. Enron’s actions eventually resulted in bankruptcy and assisted with the creation of a new set of guidelines for companies to follow. The so-called guidelines were called the Sarbanes-Oxley Act (Titman, S., Keown, A.J., & Martin, J.D. 2011). The SOX helped institute a set of rules for companies to follow, one being the creation and compliance of a code of ethics within every company. One company that seems to do a very good job with complying with the guidelines of SOX is Starbucks Corp. They have a strong program set in place to support their mission of making ethical decisions at work. The use of their program “Business Ethics and Compliance” might just be the very reason why their SEC filings show a relatively successful business. Financial Environment In regards to the finance environment, Starbucks plays an active role in ethics and compliance. Not only are their employees offered ways to voice concerns of unethical issues in the work place, but also Starbucks’ partners as well. Starbucks holds a meeting...
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...Courtney Parker c.energizerbunny@gmail.com Courtney Parker c.energizerbunny@gmail.com Abstract Case Analysis and Three year Plan for Starbucks Abstract Case Analysis and Three year Plan for Starbucks Module 7 Final project Case Analysis - Starbucks Module 7 Final project Case Analysis - Starbucks Courtney Parker Strategy Final Project Case Analysis – Starbucks For my case study I have chosen the corporation of Starbucks. The intention of this paper is to introduce the mission and vision statement of Starbucks along with a presentation and review of their code of ethics. These statements and the code of ethics will be compared to and evaluated with the second chapter recommendations and concepts within Strategic Management: Concepts and Cases by Fred R. David. Starbucks does not have a vision statement but rather a mission statement in conjunction with a value statement of sorts. Interestingly, Starbucks mission statement is fairly far removed from coffee, their main source of profit and business venture. It states: “To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” (Starbucks.com, 2013). While the statement is inspiring, as a mission statement it fails when held to the standards put forth by Fred David. Although the mission statement for Starbucks addresses some of these, it only lightly highlights some and completely misses others. According to Strategic Management Concepts and Cases, a mission statement must...
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...understand their risk and profitability as a company. The food industry is very diverse in the United States and Internationally. Company Background and History Starbucks corporation, an American company founded in 1971 in Seattle, WA is a premier roaster marketer and retailer of specialty coffee around the world. Starbucks has about 182,000 employees across 19,767 company operated and licensed stores in 62 countries. Their product mix includes roasted and handcraft high quality premium priced coffees, teas, a variety of fresh food items and other beverages. They also sell a variety of natural food service accounts. Starbucks had a total revenue of $14.89 billion as of September 29th 2013. (Greedy) Starbucks receivables are mainly comprised of receivables for products and equipment sales and royalties from their licenses, as well as from receivables from CPG and foodservice business customers. Their allowances for doubtful accounts is calculated based on historical expense, customer credit risk and applications of specific identification method. As of September 28th 2014 and September 29th 2013, the allowance for doubtful account was $6.7 million and $5.7 million respectively and property, plant, equipment which includes assets under capital lease are carried at cost less accumulated depreciation. Although Starbucks corporation current assets declined from 2013-2014, but then slightly increased from 2014-2015. Cost includes all direct cost necessary to acquire and prepare assets for...
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...A Financial Ratio Quarterly Trend Analysis of Starbucks Corporation Stock Symbol: SBUX Listed on the NASDAQ Exchange Prepared for: In partial fulfillment of the requirements of the course: Section A: Computations The following table summarizes the ratio computations for SBUX. SBUX’s closest competitor, Caribou Coffee Company, Inc (CBOU) used as the industry benchmark. Section B: Financial Trend Comparison Starbucks’ liquidity ratios suggest that they can make their payments as they fall due. The current, quick and net working capital ratios all remained fairly constant throughout the four quarters. The current liabilities to inventory ratio saw a steady decline from the beginning of the year to the end, suggesting that the least liquid current asset, inventory has been more heavily relied upon to cover short term debts as the year progressed. This is also reflected in the cash ratio as it has declined, meaning cash, the most liquid is covering less of the current debt. The operating ratio saw a spike in Q3 followed by a trough the following month, most likely an accounting function as the annual number overall increased from the beginning of the year. The asset management ratios calculated remained constant over the year and suggest that assets are being utilized fairly for the level of sales generated. The inventory turnover saw little variation quarter to quarter with a slight dip in Q3 followed...
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