Starbucks Research Paper

3409 WordsNov 25, 201014 Pages
Company Background There are many competitors in the world of coffee. These companies take the simplicity of a coffee bean and create a complex beverage that people all over the world crave. The leading competitor in this industry is Starbucks Coffee Company. This company thrives on the quality of coffee it serves and its exceptional customer service. Starbucks’ mission statement states: “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. The following six guiding principles will help us measure the appropriateness of our decisions: - Provide a great work environment and treat each other with respect and dignity. - Embrace diversity as an…show more content…
The relationship between revenue and assets provides insight to the company’s profit margin. In 2008, Starbucks had the highest total asset turnover at 1.83, compared with its competitors. At a 1.83 total asset turnover, Starbucks was using $1 of assets to generate $1.83 of revenues. With the highest total asset turnover relative to its competitors, it can be concluded that Starbucks has a lower profit margin on its products compared to its competitors. The third of the major accounting ratios is net profit margin, and it is defined as net income divided by net sales. Diedrich Coffee was unsuccessful in 2008 with a net profit margin being -34%. The company saw slowing improvements in 2009, with a net profit margin of 3%. Starbucks was fairly successful both in 2008 and 2009 with net profit margins of 4% and 6%, respectively. McDonald’s was the most successful in both years with net profit margins of approximately 20%. Although these three companies have different operating activities, the net profit margin ratio expresses each company’s general profitability. The fourth of the major accounting ratios is return on equity, and it is defined as net income divided by stockholders’ equity. The rate of return on owner’s investment was best realized by McDonald’s. McDonald’s was consistent through year’s 2008 and 2009, showing a 32% return on equity. Starbucks was also consistent through year’s 2008 and 2009, but with
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