Finance the Company That I Am Writing

Finance

The company that I am writing about is Starbucks. The information will come from the 2012 Annual Report, which reflects the year ended September 30, 2012.

The total assets of Starbucks are $8.219 billion. This is important because the total assets reflect the size of the company. Total assets are often considered in terms of trend (i.e. is the company growing?). The total assets at the end of the previous reporting period were $7.360 billion. Thus, in the 2012 fiscal year, Starbucks saw its total assets increase by 11.6%.

On the balance sheet, Starbucks is showing a cash and cash equivalents figure of $1.186 billion. This is around the same as the company has the year before. It is likely the amount of cash that the company needs to operate its business plus some flexibility cash as well.

The level of accounts payable reflects the amount of money in bills the company must pay for the next year and this is $398.1 million. At the end of the last fiscal year, this was $540 million, so Starbucks has reduced its accounts payable by 26.2% in the past year.

Revenue are recorded on the income statement. For the last year, revenues at Starbucks were $13.299 billion. In the 2011 fiscal year, revenues were $11.7 billion. In the 2010 fiscal year, revenues were $10.707 billion. Thus, there has been a trend of positively increasing revenues for Starbucks for at least the past three years. The increase in FY2012 was 13.7%, and for the year previous the increase was 9.3% in percentage terms. The change in dollar terms for FY2012 was $1.599 billion. In FY 2011, the change in dollar terms was $993 million dollars.

Back to the balance sheet, the current assets on the latest annual report for Starbucks were $4.199 billion. At the end of the previous reporting period, the current assets were at $3.794 billion. This represents an increase of 10.7%.

All of this information is important to potential investors for a few reasons. Potential investors are interested the financial health of the company. The information presented here reflects some of the measures that are important in determining the health of the company. It is important to know the value of the company, but just as important it is important understand things like its bills (accounts payable) in relation to things like current assets and cash position.. This tells the investor about whether or not Starbucks looks like it is going to pay its bills this year. If the company looks like it might be headed towards insolvency, this is something that would raise a red flag for the investor. So for investors, it is of utmost importance to study the financial statements in order to see how healthy the company's finances are.