Essay on Comparing Capital Expenditures

1093 Words Jan 22nd, 2014 5 Pages
Comparing Capital Expenditures
In certain industries there are clear leaders. For example, Wal-Mart is a clear leader in the retail industry and Google is a clear leader in search engines. But 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
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If these impacts were not included, the P/E would be a great deal lower. In reality, the organization’s frontward P/E is 24. The IPO last year raised money that was used to eliminate some long term debt thus creating a positive cash flow (Ward, 2011). Comparatively speaking, the company incurred an interest expense of $33.9 million in Q1 2011 versus $16.7 in Q1 2012. Because many of the Dunking brand retail establishments are franchised, to open a new store the capital requirements are lower. The capital expenditures of Dunkin Brands in 2009 and 2010 were reported at $18 million and $15 million. In 2011, Dunkin Brands incurred a capital expenditure of $18.6 million. The capital expenditure for Dunkin Brands rose to $22 million in 2012. These figures are low with a organization with 17,000 stores across the world and plans to continue expanding.
Expansion into Asian markets is one of the largest contributing factors to the long term growth at the Starbucks Corporation. The Chinese/Asian/Pacific division shows the most potential in regards to growth. The corporations sales have grown by 11%, the number of transactions grew 8%, and the sales per transaction increased by 3% from the previous year. The primary growth markets for the Starbucks Corporation are Asia and the Americas. The corporation’s capital expenditures has increased, with a majority of the capital expenditure related expense going to the China/Asia/Pacific Division. With the