Week 2 _ Integrative Case Study 4

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High Point University *

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535

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Accounting

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Jan 9, 2024

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pdf

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7

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Week 2: Integrative Case Study 1 Week 2: Integrative Case Study 4.1 Starbucks Profitability Ratios Jesse Smithwick ACCT 535 -1 Point University
Week 2: Integrative Case Study 2 Integrative Case Study Part A - Question 1 Analyzing the financial metrics for Starbucks, laid out in the text, one can discern several key insights (Wahlen, 2014). The profit margin for ROA, representing profitability relative to total assets, is 8.9%. Assets turnover, illustrating the efficiency of asset utilization, is 1.74. ROA, indicating the return on assets, stands at 16.83%. Meanwhile, the profit margin for ROCE, a measure of profitability concerning equity, is an impressive 31.55%. Capital structure leverage, denoting the proportion of debt to equity, is 18.46%. ROCE, an indicator of return on equity, is 17.8%. In terms of expenses, the cost of sales as a percentage of operating revenues is 31.53%, store operating expenses account for 28.51%, other operating expenses represent 0.8%, depreciation and amortization expenses are 2.79%, general and administrative expenses are 20.68% and restructuring charges stand at 2.13%. Moreover, income from equity investees contributes 0.31%, interest revenue is 0.79%, and income tax expense is 0.43% of operating revenues. Additionally, the efficiency ratios show that accounts receivable turnover is 31.12, inventory turnover is 4.15, and fixed asset turnover is 4.22. These metrics provide a comprehensive view of the company's financial health, profitability, and efficiency in managing its assets and expenses. See the chart below: Ratio 2012 Profit margin for ROA 8.9% Asset turnover 1.74% ROA 16.83%
Week 2: Integrative Case Study 3 Ratio 2012 Profit margin for ROCE 31.55% Capital structure leverage 18.46% ROCE 17.80% Cost of sales/Operating revenues 31.53% Store operating expenses/Operating revenues 28.51% Other operating expenses/Operating revenues .80% Depreciation and amortization expense/Operating revenues 2.79% General and administrative expense/Operating revenues 20.68% Restructuring charge/Operating revenues 2.13% Income from equity investees/Operating revenues .31% Interest revenue/Operating revenues .79% Income tax expense (excluding tax effects of interest expense)/Operating revenues .43% Accounts receivable turnover 31.12% Inventory turnover 4.15% Fixed asset turnover 4.22%
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