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Starbucks Research Project

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Submitted By cubavera02
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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 by return to prior quarters in Q4. The fixed assets turnover ratio improved in the final quarter by almost 12% as compared to prior quarters in the current year. The total assets ratio experienced a 7% improvement in the same quarter. The asset to equity ratio also remained constant throughout the year.

The firm’s profitability ratios paint a picture of a firm whose sales prices exceed

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