Starbucks : Financial Ratios Analysis

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Starbucks: Financial Ratios Analysis Part 4
Anna Gallagher
American Public University
Property, plant and equipment are the major source of future service potential to companies. The major objectives of property, plant and equipment accounting is to provide information about companies’ stewardship, accounting for the use and deterioration of property, plant and equipment, plan for project costing and budgeting, provide information for tax authorities, and provide rate-making information for regulated industries (Schroeder, Clark & Cathey, 2010). To help determine how effective and efficient companies utilize their property, plant and equipment, the asset utilization ratios are being calculated. Asset utilization ratio is a measure that determines whether the company is efficiently utilizing its assets to generate income or just wasting it (Hartman, 2015).
For the asset utilization ratios analysis of Starbucks, McDonalds, and Dunkin’ Donuts, we are going to calculate fixed asset turnover ratio and total asset turnover ratio. Fixed asset turnover ratio is a tool to measure how companies successfully generate profit through the use of fixed asset investments. It is calculated as net revenues divided by net property, plant and equipment. The higher the rate result the better. Total asset turnover ratio, on the other hand, is another tool to measure that amount of revenues generated for every dollar of owned assets. It is calculated by revenues divided by total assets. Table
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