Starbucks

3. The primary assets that Starbucks holds are outlined on the balance sheet. The biggest category of asset is with plant, property and equipment. The notes to

The liabilities for Starbucks have seen an increase in the past two annual reports. In the past two years the accounts payable has increase by almost double each year. In the year 2010 the total of accounts payable was a total of $282.6 million. In the year ending of 2011, the total of accounts payable was a total of $540 million. The total current liabilities at the end of 2010 were a total of $1,779.1billion. The total current liabilities at the end of 2011 were a total of $2,075.8 billion. Starbucks has several current liabilities at hand. The two largest current liabilities are the accrued expenses and other current liabilities. Accrued expenses for year end of 2010 was $836 million where as it was a total of $831.7 million for year end of 2011. The other current liabilities totaled at $660.5 million for year end of 2010 and $704.1 million for the year end of 2011. Gathering information from the balance sheets confirms the total liabilities for the year end of 2010 at $1,779.1 billion. The total cost of Starbucks liabilities for the year end of 2011 was $2,975.5 billion.

The determinants of Starbucks profitability over time are variable costs and fixed costs. “A variable cost is a cost that change in direct proportion to a change in the level of activity (dict). Variable costs for Starbucks would include labor, coffee beans, dairy, and plastic products. A fixed cost is indirect costs of business expenses that remain unchanged (dict). Fixed costs for Starbucks include rent, taxes, and insurance as well as advertising. In the figure below (fig 1) we have Starbucks financial data in millions for the year of 2015. This includes their operating expenses, net revenues, such as company-operated stores, licensed stores, CPG, food service. It also includes their total net revenues and their balance sheet. As we can see “Operating costs dropped in the fiscal year

Starbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed against the results of one of its competitors, Dunkin Donuts, to investigate how the two companies compare to each other. It was noted that Starbucks and Dunkin Donuts do not have corresponding fiscal year ends. The data therefore is not directly comparable since the reports do not reflect the same time period of data but should provide additional insight. The paper will attempt to provide a brief analysis of Starbucks operations in terms of its liquidity, leverage, activity, profitability and growth ratios used by analysts in the industry.

In this assignment, a savvy financial analyst researching companies in which to invest a U.S. publically-traded company that would be a good investment was chosen. After a lengthy search, a company that my family is unduly familiar with, Starbucks, was chosen and in the following pages a financial analysis will be described.

Starbucks’ Total fixed assets increased from $3,200.5 billion in 2013 to $3,519 billion in 2014. This was a 9.95% increase. As a percentage of total assets on the balance sheet, fixed assets increased from 27.79% to 32.73% (Starbucks,

Starbucks today is widely recognized as the megabrand for coffee, and there clearly are no close competitors that have its international recognition and scope. Starbucks has grown to employ over “160,000 people and generates about 13.6 billion dollars annually” (Forbes). Much of Starbuck’s success is attributed to a man with a clear vision and drive: Howard Schultz. Howard Schultz’s passion for delivering quality coffee along with a positive café experience has given him the motivational determination to demonstrate exceptional leadership traits. This paper will give a brief overview of the history of Starbucks, and will then investigate the changes that were made after Schultz stepped in. Furthermore, problems that

Starbucks has recognized that there is much room to grow in the specialty coffee segment, and plans to uses the same strategy of issuing common shares to finance its growth. This can be a very successful form of financing as it allows ownership to remain with the organization. However, the issue that arises is that financial projections must be upheld in order to maintain Starbucks strong financial position and investor confidence. In order for Starbucks to continue its plans for expansion, heavy equity and debt financing will be needed to meet the expected projections and will be imperative in order to secure such financing for the upcoming year 1997 where the anticipated increase in weighted average shares outstanding is 7,769 shares or 10% respectively. This figure is supported with an approximate 44% increase in the value of common stock from 1996 to the anticipated value in 1997.

Starbucks primarily operates and competes in the retail coffee and snacks store industry. The industry itself hit financial drawbacks in 2009 due to the economic crisis and changing consumer ideals. The industry, since then, has continued to grow, and in 2015 the industry was reported as having a revenue of ”$19.163 billion, which was a 16.5% increase from 2014 at $2.068 billion” (Starbucks SWOT Analysis 2016) . This growth would be due to an improving economy, and an increase in consumer confidence. Starbucks currently dominates the industry with a market share of 36.7%, Dunkin Brands with 24.6%, and other competitors taking up the rest.

Starbucks foundation is set on the belief that employees make the company what it is and by doing so Starbucks has created a unique situation where customers, employees all profit due to the decisive leadership of upper management. Howard Schultz and Howard Behar are the spearhead of Starbucks leadership and are therefore the key focus of this part of the paper.

From the overall graph, it demonstrates that Starbucks is recovering now, but it hit badly during the financial crisis from 2008 to2011. Although the average store’s net profit is very positive, the number is clearly fluctuating, especially recently year between 2008 and 2012. As result of the history experience, Starbucks should become stronger to prepare the next economic clash hit the market downside as 2008.

Howard Schultz’s idea with Starbucks in the mid 1980’s was to create a chain of coffeehouses with a product differentiation of specialty “live coffee”, service or customer intimacy with an “experience”, and an atmosphere of a “third place” to add to their work and home alternatives. The original stores sold whole beans and premium-priced coffee beverages by the cup and catered primarily to affluent, well educated, white-collar patrons (skewed female) between the ages of 25 and 44. By 2002, there were over 5,000 stores around the globe. The company spent minimal dollars on advertising to promote a brand concept. Enforced exacting coffee standards by controlling the supply chain as much as possible,

Question 1: What should be the important goals for Siddhartha and Venu Madhav when considering their responses to Starbuck’s entry into India?

As the first part of the financial analysis of Starbucks, we start off with the performance analysis of the company from 2006 to 2015. To serve that purpose we based our work on the analysis of the Income Statement, from which growth rates have been calculated so we only showcase relevant numbers such as sales, cost of goods and services and net profit.

The horizontal analysis in the balance sheet reports that the amount and percentages from 2015 to 2016 increased in all but two assets. The cash and cash equivalents increased by 39%, total currents assets increased by $789.50 or 20%, and property, plant and equipment, net increased from $4,088.30 to $4,533.80, an increment of 11%. This indicates that Starbucks improved its ability to collect from its customers, while also expanding across the