Starbucks : Financial Ratios Analysis

Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.

MGG 502 HW #4: Compare & Contrast “Total Product Offer” for Starbucks, Tim Hortons and Dunkin Donuts

Within the coffee industry Starbucks Corporations has grown from a small shop to a leading coffee distributor, proving to have financial strength and determination to continue growth. With the weakening economy the continued success of Starbucks

The succeeding content of this executive summary provides an analysis on Starbucks’ Corporation profit using the company’s most three most recent annual reports. Team B uses “the information contained in the company’s balance sheet and income statement noting that annual reporting period and fiscal year mean year-end numbers. Additionally, included is the company history, audit for the company, stock exchange listing, cash and cash equivalents at the end of its 2 most annual reporting periods. Moreover, total current assets, largest current assets, company’s total assets at the end of its 2 most recent annual reporting years. Furthermore, accounts payable,

As the world’s number one specialty coffee retailer, Starbucks sells coffee drinks, food items, coffee beans, and coffee-related accessories and equipment. In addition, Starbucks sells whole-bean coffees through a specialty sales group and grocery stores. Starbucks has grown beyond coffee into related businesses such as coffee-flavoured ice cream and ready-to-drink coffee beverages. The purpose of this paper is to analyze Starbucks business strategy, customer value proposition, company’s operations and the risks to financial results and reporting in the short term.

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.

2. Starbucks enjoyed strong financial performance in 2011. The company did not explicitly attribute this, but with an 8% rise in same store sales it seems that either the consumer market bounced back, or Starbucks made changes that attracted more consumers. The company feels that it offered better products and a better experience at its stores. The company also credited operating efficiencies and tight control of spending for improved profits. In addition, the company continued its global expansion, which improved the top line, and used the economies of scale it generated as part of its cost control program.

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.

In this report, the performance of Starbucks over the past few years has been analyzed. The financial statements have been obtained from the years of 2003 up to 2007, and have been analyzed using the horizontal analysis, vertical analysis, and the ratio analysis (depending on what exactly is being analyzed).

Moreover, most of the people know the brand Starbucks as the leader of the coffee industry. It is enormously successful and it comes out with no surprise that this will be used as benchmarking against the study of Dunkin’ Donuts.

Organizations develop a myriad of strategies to help direct their company towards reaching its vision and goals. One such level of strategies, business-level strategies, involves determining how an organization is going to position itself and develop a competitive advantage within a market (Hill, Jones, & Schilling, 2014, p. 154). These strategies have implications for an organization’s ranking in an industry, their ability to attract suppliers and consumers, as well as their financial performance as a whole. One way by which an organization can assess the financial ramifications of their business-level strategies is to evaluate financial ratios. Financial ratio analysis allows managers to compare certain values against one another, as well as the values between companies (Crawford, 2012). These ratios evaluate such things as an organization’s profitability, debt, liquidity, and operations. In analyzing these ratios, organizations can see how their business level strategies affect the financial health of the organization over the long term. This paper sets out to evaluate the financial ratios of Starbucks and determine what this says about the ramifications of their past, current and future business-level strategies.

2) Garthwiate, Craig; Busse, Meghan; Brown, Jennifer; Merkley, Greg “Starbucks: A Story of Growth” Harvard Business Publishing, July 2012.

Starbucks can follow some strategies to differentiate their product even more that will lead to vary their menu prices. For example, Starbucks might create “saving menu” by selling some products at a lower prices to attract even more customers. Also, Starbucks might take into consideration the strategies of opening “Starbucks carts” that open in smaller express places that don’t fit for a whole store. Those “Starbucks carts” will attract even more customers because it is easier to get access to. “Starbucks carts” may provide the customers with low cost products to draw larger market base. To be a best cost provider in the market will allow Starbucks to be the most attractive company in the coffee market internationally. Thus, Starbucks will have a competitive advantage over its rivals by fulfilling the needs of a huge customer base in the market, by providing a high quality products and provide products with the best costs.

The market capital of Starbucks is 90.02 billion whereas Dunkin as market capital of 4.47 billion.So we

The coffee industry is continually growing regardless of the increase cost of coffee since January 2009. The price has been rising not because of the price of coffee itself, but because of the supply chain and the current economic situation around the world. In 2012, Starbucks had to raise their prices globally, but especially in the United States and China, due to rising prices of coffee and other ingredients they use to make their signature drinks. Although prices were raised globally due to high demand of the product and the cost of producing it, there is still a strong demand for Starbucks because of their large consumer base. Starbucks main competitors are McDonald’s and Dunkin Donuts. Starbucks knows