...Financial Ratio Analysis: Starbucks Corporation December 11, 2013 Financial Ratio Analysis: Starbucks Corporation Starbucks Corporation has created a crazed coffee culture around the globe. This paper will act as a financial and stock recommendation based of the financial ratio analysis. Starbucks opened its first location in Seattle’s Pike Place Market in 1971, selling quality ground beans over a small counter in an open-air market. Eleven years later, Howard Schultz joined Starbucks as a director of retail operations and marketing. After a trip to Italy to find new products, Schultz fell in love with the cafe environment he found there. His dream then began to bring that environment to the United States and the brand we know today began to take form. With the backing of local investors, Shultz acquired six Starbucks locations in 1987 (Starbucks) and began building his global empire. At the time of its initial public offering on the stock market in June 1992, Starbucks had grown to 140 outlets and had revenue of $73.5M. They opened that morning at $17 a share, and closed at $21.50. (Starbucks) By September 1992, the share price had risen 70% to over 100 times the earnings per share of the previous year. (Globe) After going public, the company took steps to grow the business, expanding the brand by negotiating partnerships with established companies. * Offering Starbucks coffee on United Airlines fights. * Licensing Stores to Barnes & Noble,...
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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: 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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...Financial Statement Interpretation LeMoura Giddings, Rebecca Tessen, James Scheu FIN 571 May 30, 2016 Professor Arnold Harvey Abstract Learning Team C has chosen three organizations from three different industries. Team C has chosen CVS Health for service, Honda Motor Co., LTD for Manufacturing, and Starbucks Coffee for retail. Team C will calculate and explain the current ratio, quick ratio, net profit margin, asset utilization, and financial leverage. Team C will also discuss the DuPont Method. An analysis of the differences in the industries, the various conventions and how they affect these organizations, ISAB basis for accounting (IFRS) and FASB or GAAP accounting principles, the strategies for working capital for all three organizations, and analyzing the financial ratios and interpreting what they mean for each organization as well as future forecasts. Financial Statement Interpretation Differences in the Industries CVS Health operates in two segments: Pharmacy Services and Pharmacy Retail. While Pharmacy Retail may be what it is most widely known for, it is Pharmacy Services that is the most profitable segment for the health company. The Pharmacy Services division serves primarily employers, the managed care plan for Medicaid, and pharmaceutical contracts. CVS Health, the most integrated pharmacy chain in the United States, includes nearly 8,000 drugstores and over 1,000 clinics. Additionally, CVS Health has expanded their reach in both these fronts...
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...Starbucks | Financial Statement Analysis | Final Project | | Ryan Goguen, Che-Wei Chang, Yu-Ching Lin | 2013/3/11 | [請在此處鍵入文件的摘要。摘要通常是文件內容的簡短綜覽。請在此處鍵入文件的摘要。摘要通常是文件內容的簡短綜覽。] | Starbucks—Background Information Starbucks (“The Company”) began with a single store in 1971 in Seattle’s Pike Place Market, serving whole bean and ground coffee, tea and spices. As of July 1, 2012, the world-renowned coffee shop brand operates nearly 18,000 retail stores in 60 countries. Gordon Bowker, one of three founders, initially named the Company “Peqoud” after the doomed whaleship in Herman Melville’s Moby-Dick. However, the partners rejected the name, and the founders later agreed upon the name “Starbucks” after the chief mate, also in Moby Dick. Today, with millions of customers served daily, Starbucks offers a wide range of products, including coffee, handcrafted beverages, merchandise and fresh food. The company handpicks its coffee from some of the finest coffee farms in Latin America, Africa and Asia. Its beverage menu consists of fresh-brewed coffee, hot and iced espresso beverages, Frappuccino coffee and non-coffee blended beverages, smoothies and Tazo teas. Through the Company’s entertainment division and Hear Music Brand, Starbucks also retail books, music and film. The Company not only prides itself in the quality products but also the physical stores, where the customers could enjoy their drinks with the company with soothing music playing in the background. Each store...
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...Abstract Financial Ratios are the corner stone of any business establishment. They provide pertinent and valuable information on the success and future of the business. Ratios quantify many aspects of a business and help analyze its financial status. Individual ratio can also be compared to industry averages. This paper will discuss how Starbucks compares in the special eateries industry and how new management aspects will fair in the future of the corporation. History Starbucks is at the top of the list when it comes to specialty coffee shops. It was founded in 1971 as a local coffee bean roaster and retailer named Starbucks Coffee, Tea and Spices in Seattle, Washington. The name Starbucks came from a character in the novel Moby Dick. Today it is one of the world’s largest coffeehouse companies. Howard Schultz joined the company in 1982 and was inspired after a trip to Italy to open up an espresso bar and coffeehouse in the U.S. He opened up II Giornale in 1985. In 1987 Schultz then purchased Starbucks and merged with II Giornale and formed Starbucks Corporation. It started with seventeen stores and it has rapidly continued to grow since then. The first international Starbucks was opened in 1996 in Tokyo, Japan. There are now Starbucks chains around the United States and internationally. Financial Analysis According to Starbucks.com and Wikipedia (2007), Starbucks Corporation earned 7.786 billion dollars in 2006 and employed more...
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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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...Content Executive Summary 3 Background 4 Dunkin’ Donuts (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...
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...Assessment of Financial Performance of Starbucks during Fiscal Years 2005 – 2009 Assessment of the financial performance of an organization is very important for both the internal as well as external stakeholders. The management of an organization analyzes its financial performance in order to understand present financial of the company. Additionally, the information obtained from the analysis is used for planning and controlling various business activities of the organization. In order to make right decisions for achieving the organizational goals, the analysis of the financial performance is essential. The external users creditors, debtors, investors, analysts and auditor also analyze the financial performance of an organization in order to understand the trend of the past performance as well as present financial position of the company. On the basis of the profitability and solvency of the company, the stakeholders will determine their position regarding relationship with the company. In this paper, the financial position of Starbucks is analyzed for five financial years between 2005 and 2009. Financial statements of Starbucks are used for analyzing the financial position of the organization for the years 2005, 2006, 2007, 2008, 2008 and 2009. Different ratios will be calculated to explain different aspects of the financial performance such as profitability, investment, liquidity etc. In this paper significant ratios of Starbucks are calculated for consecutive...
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...Starbucks Financial Analysis Table of Contents History 3 Overview 3 Strategy 3 S.W.O.T. 4 Starbucks Ratios 5 Balance Sheet Analysis 5 Profitability Ratios 8 Activity Ratios 9 Investment Returns 9 Comparative Analysis 10 Profitability 10 Management Effectiveness 10 Valuation Measures 10 Share statistics 10 Stock Price History 11 Dividends & Splits 11 Balance Sheet Ratios 11 Conclusion 11 References 12 Electronic Sources 12 Bibliographic Sources 12 Appendix 13 History The first Starbucks affiliate opened in 1971 in Seattle. The company focused on selling roasted gourmet coffee beans and coffee accessories. The name originates from a character in the novel Moby Dick from Herman Melville. In 1982 Howard Schultz joined the foundation-team of Jerry Baldwin, Zev Siegel and Gordon Bowker as the Director of Retail Operations and Marketing. Inspired by his personal experiences of Italy´s coffee tradition, Schultz proposed to change the company´s strategy and create a coffee chain where customers enjoy their coffee and meet friends. His idea was to transform the coffee shop to be a central meeting and socializing point. As Schultz was not able to convince the founders to switch the company into a concept coffee shop he started his own coffee shop, Il Giornale. Due to his success with his own coffee shop and the support of local investors, he was able to acquire Starbucks in 1987 from its founders. Schultz overtook the name and started a progressive...
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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 OVERVIEW Starbucks’s is a dominating retailer around the world that provides great quality of coffee and other related products. In addition, Starbucks also wants its customers to enjoy the Starbucks experience, which will build customers’ loyalties as well. For now, Starbucks’ two primary strategies are expanding the global business to increase its market share in the world and boosting its sales in existing stores. Starbucks’s Company strategy is growth-oriented, which is illustrated by its commitment to deliver the best in class financial and operating results whilst investing in future growth. They have done this by building new stores across the country and expanding into international markets such as Africa, Asia, Middle East, and Europe. This qualifies them as focusing on international investments as well as in the US. This can be seen in their detailed financial data of the third quarter fiscal 2015 earnings report where Starbucks had a 4% increase in global transactions serving an additional 23 million customer just in the third quarter of this year over the past year. They have achieved this by renovating existing stores and deploying new technologies. STARBUCKS INCOME STATEMENT STARBUCKS Balance Sheet 2 Starbucks has a particularly good reputation as a corporate citizen and has earned its reputation by Ethical sourcing. Starbucks wants to pioneer a new approach to ethical sourcing by investing in coffee farmers and their Communities. They...
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...Ethics and Compliance – Starbucks Finance for Business FIN/370 September 23, 2013 Ethics and Compliance – Starbucks – They also have seasonal changes so be sure to mention those wherever they may fit in. Starbuck has an extraordinary ethics and compliance financial environment. Starbucks has implemented several procedures to ensure this ethical behavior is consistent throughout the organization. Financial Markets serve and important role within the United States and Starbucks has integrated the market techniques to further their fortune. In addition, Starbucks complies with SEC regulations. Team A has obtained Starbucks annual report and SEC filings for the past two years. Using financial ratios, such as current, debt, return on equity, and day’s receivable. Team A will determine and the trend for each ratio in conjunction with Starbucks financial health will be analyzed. Ethics and Compliance in Starbucks Financial Environment - Sergio * Assess the role of ethics and compliance in your organization’s financial environment. Procedures to Ensure Ethical Behavior * Describe procedures your organization has in place to ensure ethical behavior. They also have seasonal changes so be sure to mention those wherever they may fit in. * Financial Markets Work in the United States – The financial market is a place where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. Financial markets are typically...
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...FIN 534 FINANCIAL MANAGEMENT Financial Analysis (Starbucks) Lisa Massey Strayer University Due Date: September 14, 2013 Starbucks is a strong competitor in the service sector and a leader in the gourmet coffee industry. With a continued growth rate in store openings and maintaining successful profitability of its operations, Starbucks has demonstrated its ability to sustain a reliable and steady growth. Starbucks’ ability to contend with the vulnerability to current financial threats such as economic recession, higher interest rates, and global competition, is constantly proven by its incomparable brand image, its continual product innovations, and its exceptional customer service. This also proves to be its strongest investment strategy. One strategic way to evaluate the vulnerability of Starbucks to current financial threats is to execute a SWOT Analysis. A SWOT analysis is a situation analysis in which the strengths and weaknesses of an organization, and external opportunities and threats it faces are examined to chart a strategy (Business Dictionary, 2012). SWOT is the acronym for strengths, weaknesses, opportunities, and threats. The purpose of the SWOT analysis is to assess what an organization can and cannot do in addition to evaluating the potential opportunities and any financial and economical threats it may face. Over the years, Starbucks have developed much successful strengths. Here are a few of the most recognizable...
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...2/14/2012 ACC 807 Starbucks Case Financial Ratios How profitable is Starbucks: Starbucks to date is becoming the hallmark of coffee around the nation and even the world. Currently, Starbucks focus is on product growth and expansion across the globe looking to dominate its industry. Keeping its current ratio at and above one, Starbucks does not seem to pose any threat to its short term obligations. Across time Starbucks consistently holds this ratio above one with a good number of 1.83 in 2011. However, the quick ratio incorporating the most liquid assets would say otherwise since it is below one. This ratio across time for Starbucks is very volatile and does not portray any constancy. This is due to the volatility in their short-term investments, as well as an upward trend in accounts payables from 2001 to 2011, 127905 and 540000 respectively. This questions the future financial stability of the company especially with its expansion plans internationally in the future. Starbucks notably possesses a fairly low inventory turnover rate. From 2001 to 2011 they seem to have increased the turnover although not by much (5.56 in 2001 to 6.56 in 2011). In 2010 inventory turnover for Starbucks and Panera Bread (Panera) were 7.38 and 88.81 respectively. One would have to question this difference seeing as though Panera is a competitor. This also brings up real risk when thinking about the increased product line strategy that Starbucks wants to incorporate. Starbucks may want to consider...
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