fin516 week 2 mini case

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.

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

Debt ratio - The Debt/Equity ratio is a measure of a company 's financial leverage and indicates what proportion of equity and debt the company is using to finance its

3. What is the financial risk of the company (the LT debt to total capitalization ratio)?

* Debt ratio- a ratio that indicates what proportion of debt a company has relative to its assets. The measure gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load.

Our class was assigned a company for financial scrutiny and to obtain financial statements (Balance Sheet, Income Statement, and Cash Flow Statement), from the company’s most recent Annual Report. We are to prepare a written analysis of the organization with the following requirements:

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.

Open-ended questions such as these will generate energy in the class, though the instructor should take care to limit the amount of time spent in this phase of the class, since students will find it easy to offer observations about the firm’s apparent strategy and financial performance. By letting the students assess the problems of this company in a nondirective fashion, the instructor can gauge students’ abilities and build students’ “ownership” of the analysis. The next three questions are a directive approach to problem assessment and could supplement this question or be used in place of it.

When comparing the debt-to-assets ratio of McDonalds and Wendys, you have to divide the firms total liabilities by their total assets. Essentially, the debt-to-assets ratio is the primary indicator of the firms debt management. As the ratio increases or decreases, it indicates the firms changing reliance on borrowed resources. The lower the ratio the more efficient the firm will be able to liquidate its

The debt ratio is determining the total amounts of outstanding loans that a company owes to creditors. This number analyzes the firm's ability to pay these obligations in comparison with its total assets. When this number is high, there are reduced risks of a potential default. For a business, this helps to determine if the company is taking on too much debt. ("Financial Ratios," 2011)

Starbucks bond information on Morningstar displays a quoting market price of $107.73 with a fixed coupon rate of 3.850%, a maturity date of October 1, 2023, and a current yield to maturity of 2.80%. Starbucks bonds mature in 2022 and 2045 with early indications of yields close to 2.80% and 4.17% respectively. Starbucks coupon rate of 3.850% is more than the yield to maturity rate of 2.80% indicating the bond is selling at a premium. Starbucks bond is disbursed semiannually with the bond maturing in 16 years with a payment of $19.25 and a yield to maturity rate of 1.40% resulting in a present value of $1074.79. The present value of $1074.79 is slightly less than the purchasing price of $1077.30 indicating the bond is overvalued, therefore an individual should not purchase Starbucks’ bond at this time. Starbucks capital structure as of June 2015 reveals a comparatively low percentage of debt of 33.1% ($2.9 billion) and a noticeably high equity of 66.9%. These percentages indicate that 67% of Starbucks assets are financed with equity and the remaining 33% is financed with debt. In other words, Starbucks has a healthy proportion of equity capital as opposed to debt capital, which is a very positive indication of effective investment quality.

From the above table, the values show the performance of company and the stability of the company in market. All these company belongs to electrical industry.

Q1. Describe the company selected (using financial and non-financial data) in terms of their history, corporate identity, company structure, capital structure, shareholding, competitive advantage and context in the market place.

Part 1 : Examine and analyze the financial ratios for eight pairs of unidentified companies and match the description of the company with the financial profile derived from the financial ratios.

The greatest threat of them all at this particular moment for Starbucks, or any other company for that matter, is the global economy crisis. In particular the source of the crisis, this lays in its home country the U.S. So if more than ¾ of the companies growth is depended on the U.S. then the