Acc 230 Final Starbucks Financial Analysis Paper

While Starbucks is not hurting for cash, $2.8 billion is big enough to make the executives pause and reassess future

The succeeding content of this executive summary provides an analysis on Starbucks’ Corporation profit using the company’s most three most recent annual reports. Team B uses “the information contained in the company’s balance sheet and income statement noting that annual reporting period and fiscal year mean year-end numbers. Additionally, included is the company history, audit for the company, stock exchange listing, cash and cash equivalents at the end of its 2 most annual reporting periods. Moreover, total current assets, largest current assets, company’s total assets at the end of its 2 most recent annual reporting years. Furthermore, accounts payable,

The determinants of Starbucks profitability over time are variable costs and fixed costs. “A variable cost is a cost that change in direct proportion to a change in the level of activity (dict). Variable costs for Starbucks would include labor, coffee beans, dairy, and plastic products. A fixed cost is indirect costs of business expenses that remain unchanged (dict). Fixed costs for Starbucks include rent, taxes, and insurance as well as advertising. In the figure below (fig 1) we have Starbucks financial data in millions for the year of 2015. This includes their operating expenses, net revenues, such as company-operated stores, licensed stores, CPG, food service. It also includes their total net revenues and their balance sheet. As we can see “Operating costs dropped in the fiscal year

Using these numbers show a ratio of 1.549; this is a fairly low number for a company considering anything under “1” is reason for concern. Starbucks reported their current assets as $2,035.8M and $1,581.0M in 2009. Using these numbers show a ratio of 1.287; this number is also considerably low but does show improvement from 2009 to 2010. Starbucks acknowledges the need for liquidity but comply with federally limits and believes the credit risk to be very minimal (Starbucks Corporation, 2010).

In the inventories section, they are directed at the lower of cost (primarily moving average cost) or market. Starbucks records inventory reserves for obsolete and slow-moving inventory and for estimated shrinkage between physical inventory counts. According to trends, inventory reserves are based on inventory obsolescence, historical experience and application of the specific identification method. As of September 27, 2015 and September 28, 2014, inventory reserves were $33.8 million and $31.2 million, respectively. We see that the carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).

Starbucks is a great company that is constantly growing and looking for other ventures to invest. In fact, they have been able to do so due to their net working capital being very favorable. This is determined by finding the difference between their current assets and current liabilities. All of Starbucks assets that include cash, accounts receivables, and inventories minus both current and long-term liabilities have proven to create a profitable net working capital. They have accomplished this by maintain the appropriate balance between inventories, accounts receivables, cash, and other revenues. Most importantly, they have managed to remain operational after paying off current assets.

Starbucks Corporation is a world coffee company and a house chain with headquarters in Seattle, Washington. This company is the largest in the world with most of its activities dealing with coffee-products making. It has twenty thousand three hundred and sixty six stores in sixty-one countries. Most of the stores are in the United States of America. Starbucks Company trades cold drinks and hot drinks, coffee beans, hot and cold sandwiches, salads, sweet pastries, snacks, and many other items like tumblers and mugs. Through other segmented organizations and music bands, the company deals with marketing books films, and musical genres. Most products dealt with the company are seasonal. It was found in 1971 as a local coffee bean retailer and roaster. Since then, the company has developed into a global entity in the market. This study seeks to evaluate the possibility of Starbucks' Chairperson Howard Schultz of tripling the company's annual sales ($23B) in five years. This will be achieved through a SWOT analysis on the company and the identification of possible strategies he will implement for its realization.

In closing, based on the consolidated balance sheet Starbucks Coffee Company has total current assets as of “ September 30, 2012 is $4,119.6 million, which is a growth of $404.7 million from October 2, 2011 (Starbucks Investor

Starbucks Corporation purchases and roasts high-quality coffees, along with beverages and fresh food items, throughout all company-operated stores. The consolidated financial statements reflect the financial position and operating results of Starbucks Corporation. Ratio Analysis was used to analyze the performance of Starbucks using the financial ratios of liquidity, solvency, and profitability. Calculations and amounts were provided in the excel spreadsheet labeled (Financial Ratios). All data provided were conducted for the balance sheet and income statement accounts over the fiscal years 2015 and 2014. Starbucks Corporations ' fiscal years’ end on the Sunday closest to September 30 (sec.gov).

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).

Starbucks strategies have successfully made them one of the biggest names in the coffee market globally. Starbucks has been able to survive the high competitive market and to differentiate themselves from other coffee shops by producing high quality coffee. Also, Starbucks successfully create a huge numbers of loyal customers worldwide by providing great services and high quality products. Starbucks was able to survive 2008 financial crisis successfully. In 2008, Starbucks net income was -53% that means Starbucks was losing so much many yet, 2009 Starbucks was able to not only stop their losses but also to gain a profit of 24%. However, Starbucks should be worry from the possibility of another financial

In 1971, Starbucks started as a small coffee shop which targeted a specialized market of coffee purists. Howard Schultz, who later owned the company and initiated the high growth period, joined Starbucks’ marketing team in 1982. Main concept of Schultz marketing strategy was too make Starbucks “America’s third place” considering home and work the two other places where Americans spend most of their time. In 1992, Schultz acquired Starbucks and made an initial public offering. Despite Wall Street’s doubts about the IPO, $25 million was raised by Starbucks.

Starbucks’ Total fixed assets increased from $3,200.5 billion in 2013 to $3,519 billion in 2014. This was a 9.95% increase. As a percentage of total assets on the balance sheet, fixed assets increased from 27.79% to 32.73% (Starbucks,

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

The horizontal analysis in the balance sheet reports that the amount and percentages from 2015 to 2016 increased in all but two assets. The cash and cash equivalents increased by 39%, total currents assets increased by $789.50 or 20%, and property, plant and equipment, net increased from $4,088.30 to $4,533.80, an increment of 11%. This indicates that Starbucks improved its ability to collect from its customers, while also expanding across the