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.....K, which is for the year ended October 2, 2016. This was used because many ratios are compared on an annual basis -- a quarterly report would yield different numbers.The first section is the liquidity ratios. These reveal the short-term health of Starbucks. The basic liquidity measure is the current ratio, which is the current assets over current liabilities. Starbucks, at 1.05, is at the industry average, and 1.05 is a generally healthy number. The quick ratio removes inventories. This is valuable in some industries where inventories may end up unsold or sold at a discount. For Starbucks, whose inventories are largely coffee, cups and other things that will be sold, this measure is less useful. Starbucks has a quick ratio of 0.74, which is slightly lower than the industry average of 0.8, but close. The numbers are both below industry average and both worse than last year, but still healthy overall. The only issue here is that these go along with a spike in accounts receivable, indicating that Starbucks' customers are taking longer to pay them, affecting Starbucks' liquidity.
The asset management ratios highlight how well the company turns its assets in revenue. Inventory turnover reflects how...
Starbucks, which generally carries at least a two years' supply of coffee as a hedge against fluctuating commodity prices, has a low inventory turn. At 6.17, this is much lower than the industry average of 21.5, but most industry comparables' inventories are food, much more perishable, which demands a high rate of turnover. No industry average for receivables turn could be found. Starbucks does 27.7 times per year, down from the previous year. Still, this is a very healthy number.
The debt ratios reflect long-term solvency. Starbucks has a moderate debt ratio of 59%, meaning that it carries a reasonable amount of leverage but not an unusual amount. The industry average is 60%. However, an industry average could be found for the debt-to-equity ratio, and that was 9.74. Starbucks has a debt-to-equity ratio of 1.4, which is much lower. This indicates that Starbucks has much lower debt on its books than most firms in the industry, a positive indicator for long-run solvency. Its times interest earned is much better than the industry average, because it has lower debt than the industry norm.
The profitability ratios indicate…
Starbucks Ratio Analysis Ratio analysis is a tool that is beneficial in undertaking quantitative analysis on figures found on financial statements. Ratios provide a common approach for comparing financial strength and performance of two or more companies. Imperatively, ratios can divulge a company’s financial strength or weakness in addition to divulge trends regarding business conditions and profitability (Noreen, Brewer, and Garrison, 2017). The main purpose of this assignment is to perform
Financial Statement Analysis The following is an equity research report on Starbucks. The company competes primarily in the quick service food industry, where it holds the #5 market share in the United States, and #1 in its segment of coffee (QSR Magazine, 2011). The company had revenues last fiscal year (ended 10/2/11) of $11.7 billion and net income of $1.245 billion. The current stock price is $43.91, which gives the company
Financial statement analysis is a tool by which one can examine the publicly-available financial statements to determine the financial condition of a company. The role of the financial statements is to provide information for both internal and external stakeholders, including shareholders and regulators, about a company's finances. Thus, the SEC demands that financial statements are produced in a specific format so that there is easy comparison between companies and across
Starbucks Ratio Analysis The relevance of ratio analysis cannot be overstated in seeking to assess the financial viability of an enterprise. As Porter and Norton (2012) point out, ratio analysis is one of the most important “techniques used by investors, creditors, and analysts in making informed decisions” (p. 698). Starbucks Corporation remains one of America’s foremost coffee marketers and retailers. In addition to sourcing, roasting, as well as selling coffee, the
Financial Research Report Rationale for choosing the company for which to invest Great Leadership Brand Name Growth and Expansion Market Dominance Starbucks Corporation Delivery Service Diversification of Menu Items Significant Growth Profile of the Investor for which Starbucks Corporation May Be a Fit Ratio analysis Current Ratio Quick Ratio Earnings per Share Stock price analysis Stock Valuation Estimated Beta of Starbucks Estimated Expected Return of Starbucks using Capital Asset Pricing Method Current Stock Price of Starbucks FINANCIAL RESEARCH REPORT FINANCIAL RESEARCH REPORT Financial Research Report The company selected and considered as an
However, the company has in general enjoyed success overseas and as a result international sales now account for 27% of operating income (2010 Starbucks Annual Report). The international division remains a key source for growth at Starbucks, in particular the Chinese market, where Starbucks has enjoyed considerable success and now sits at over 500 stores. The company struggled in the mid-2000s due to two main factors. The first was the