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Use the Starbucks Company for this Report.




1. Use the Starbucks Company for this Report.;2. Spread 3 years of financials for the company using Excel. Do actual fiscal year-ends, not estimated.;3. In all calculations, use real numbers from the company?s financials, not reported ratios provided by online and other sources. Do all calculations for the most recent 3 years;available.;4. Collect stock data?price, shares outstanding, insider ownership, insider;transactions, stock repurchase program, options, etc.;5. Calculate financial ratios and compare to industry average. Do the same ratios;required for Case 1. What can you conclude from the ratios? Any warning signs? Anything that stands out?;It should start off with an introduction or overview in which you provide a brief;background of the company, the stock exchange on which it trades, and individual;responsibilities. It should also include #4 and #5 above. Attach the balance sheet and income statement to the report.;Attachment Preview;Case 1.xlsx Download Attachment;Elizabeth Davidson;FINC 5880;Week 1 Case 1;Current ratio = Current assets/Current liabilities;= 198,591/390,211;0.51;Quick ratio = (Current assets Inventories)/Current liabilities;2013;= (198,591-24,628)/390,211;0.45;Both the current and quick ratios are below the industry averages.;Some analysts would be more interested than others. Managers may not be interested at all.;Creditors would want to be sure they can be recover;their capital fast in the event the company goes bankrupt.;Inventory Turnover = Sales / Inventory;Inventory Turnover = $2,766,618 / $24,628;Inventory Turnover = 112.33 times;Industry turn over is 5.8, and the company is 112.33. The company needs to find a way;to move the inventory faster as it is costing them money.;Days Sales Outstanding = Receivables / (Annual Sales/365);Days Sales Outstanding = $37,842 / ($2,766,618/365);Days Sales Outstanding = 4.99;Industry DSO is 27 days and the companies is 4.99. The company needs to take steps;to get closer to the industry standard.;Fixed Assets Turnover = Sales / Fixed Assets;Fixed Assets Turnover = $2,766,618 / $1,035,815;Fixed Assets Turnover = 2.67 times;The company is not as efficient as the industry in this area.;Total Assets Turnover = Sales / Total Assets;Total Assets Turnover = $2,766,618 / $1,452,603;Total Assets Turnover = 1.90times;The industry is 2.5 times while the company is 1.90 times. The firm is below the industry;average due the increase in inventories and accounts receivables.;Debt Ratio = total liabilities / total assets;Debt Ratio = $ 1,303,246/ $1,452,603;Debt Ratio = 0.897 = 89.7%;The company's debt ratio is lower than the industry average, 89.7%, which is pretty bad. They should;try to cut costs as much as possible.;Times-Interest-Earned (TIE) = EBIT / Interest Charges;TIE = $256,775/ $29,118;TIE = 8.18 times;The company is covering interest on their debt..;EBITDA Coverage ratio = (EBITDA+ Lease payments) / (Interest + Lease payments+ Principal Repayments);EBITDA = Net Income + Tax + Interest + Depreciation + Amortization;EBITDA Coverage Ratio = ($388,256)/ ($29,118);EBITDA Coverage Ratio = 13.33 times;This ratio shows the company ability to pays its liabilities or debt. The industry EBIDTA coverage ratio;is 8.5 and the company is 13.33 which is a lot better than the industry. This shows the company can;pays its bills.;Price/Earning Ratio = Price per share / Earning per Share;Earnings per Share = Income / Number of outstanding shares;P/E ratio = $49.37 / ($163,359 / $71,788);P/E ratio = 21.69;P/E ratio Industry Average = 29.67;The price earning ratio is below average. The company is considered a larger risk.;Price/Cash Flow Ratio = Price per Share / Cash Flow per Share;Cash Flow per Share = (Net Income + Depr.) / Shares Outstanding;Price/Cash Flow Ratio = $49.37 / (($163,359+131,481)/$71,788);Price/Cash Flow Ratio = $49.37/ (($294,840)/71,788);Price/Cash Flow Ratio = $49.37/ $4.10709310;Price/Cash Flow Ratio = 12.02066;Price/Cash Flow Ratio industry = 16.97;The Price/Cash Flow Ratio is higher than average, but the company is not considered a;higher risk.;Market/Book Ratio;1st Market/Book ratio = Market Price per Share / Book Value per Share;M/B ratio = $49.37 / $7.91;M/B ratio = 6.24;Market/Book ratio Industry = 6.92;The Market/Book Ratio is below average. The company will be considered a higher risk.;Common Size Analysis For Income Statement;2013;Revenues;Company sales;$2,766,618.00;97.207%;Franchise and other revenues;$79,480.00;2.793%;Total revenues;$2,846,098.00;100.000%;Operating Costs and Expenses;Company restaurants;Cost of sales;$758,377.00;26.646%;Restaurant labor;$892,413.00;31.356%;Restaurant expenses;$655,214.00;23.021%;Company restaurant expenses;$2,306,004.00;81.023%;Depreciation and amortization;$131,481.00;4.620%;General and administrative;$134,538.00;4.727%;Other gains and charges;$17,300.00;0.608%;Total operating costs and expenses;$2,589,323.00;90.978%;Operating income;$256,775.00;9.022%;Interest expense;$29,118.00;1.023%;Other, net;($2,658.00);-0.093%;Income before provision income taxes;$230,315.00;8.092%;Provision for income taxes;$66,956.00;2.353%;Net income;$163,359.00;5.740%;2013;2012;$2,748,462.00;$72,260.00;$2,820,722.00;97.44%;2.56%;100.00%;$769,729.00;$891,910.00;$649,830.00;$2,311,469.00;$125,054.00;$143,388.00;$8,974.00;$2,588,885.00;$231,837.00;$26,800.00;($3,772.00);$208,809.00;$57,577.00;$151,232.00;27.29%;31.62%;23.04%;81.95%;4.43%;5.08%;0.32%;91.78%;8.22%;0.95%;-0.13%;7.40%;2.04%;5.36%;2012;$59,367.00;$37,842.00;$24,628.00;$71,824.00;$4,930.00;$$198,591.00;4.09%;2.61%;1.70%;4.94%;0.34%;0.00%;13.67%;$59,103.00;$43,387.00;$25,360.00;$66,359.00;$1,055.00;$2,918.00;$198,182.00;4.11%;3.01%;1.76%;4.61%;0.07%;0.20%;13.77%;$147,581.00;$1,435,426.00;$580,115.00;$20,588.00;$2,183,710.00;$(1,147,895.00);$1,035,815.00;10.16%;98.82%;39.94%;1.42%;150.33%;-79.02%;71.31%;$152,382.00;$1,399,905.00;$556,304.00;$11,211.00;$2,119,802.00;$(1,076,238.00);$1,043,564.00;10.59%;97.26%;38.65%;0.78%;147.27%;-74.77%;72.50%;$142,103.00;$24,064.00;$52,030.00;$218,197.00;$1,452,603.00;9.78%;1.66%;3.58%;15.02%;100.00%;$125,604.00;$20,231.00;$51,827.00;$197,662.00;$1,439,408.00;8.73%;1.41%;3.60%;13.73%;100.00%;$27,596.00;$93,326.00;$268,444.00;$845.00;$390,211.00;$780,121.00;$132,914.00;1.90%;6.42%;18.48%;0.06%;26.86%;53.71%;9.15%;$27,334.00;$100,531.00;$273,884.00;$$401,749.00;$587,890.00;$139,896.00;1.90%;6.98%;19.03%;0.00%;27.91%;40.84%;9.72%;$17,625.00;$477,420.00;$2,217,623.00;$2,712,668.00;1.21%;32.87%;152.67%;$17,625.00;$466,781.00;$2,112,858.00;$2,597,264.00;1.22%;32.43%;146.79%;180.44%;$(2,287,391.00);$309,873.00;$1,439,408.00;21.53%;100.00%;$(2,563,311.00);$149,357.00;$1,452,603.00;10.28%;100.00%;Extended Du Pont Equation = ROE =;= (Net Income / Sales) x (Sales / Total Assets) x (Total Assets / Common Equity);= (163359/2766618) X (2766618/1452603) X (1452603/149357);1.094;Strengths: The company's fixed assets turnover was above average. But if the company's assets;were older than other companies in its industry this could be the reason for the higher ratio. The;company's profit margin is also above average, and its debt ratio has been reduced by a lot, so it is;now below the industry average. The improved profit margin could be an indication that the firm has;kept operating costs and interest expenses down. The interest expense is lower because the;companys debt ratio has been reduced, which has improved the companys TIE ratio. It is now above;average.;Weaknesses: The company's current asset ratio is low and most of its asset management ratios are;bad. Most of its profitability ratios are low, and its market value ratios are low too.;Potential problems and limitations;1 Sometimes hard to tell if a ratio is good or bad.;2 Difficult to tell whether company is, on balance, in a strong or weak position.;3 Different operating and accounting practices distort comparisons.;4 Inflation has badly distorted many firms balance sheets, so a ratio analysis for one firm over time, or a;comparative analysis of firms of different ages, must be interpreted with judgment.;5 Average performance is not necessarily good.;Qualitative factors that analysts should consider when evaluating a companys likely future;financial performance.;The factors are as follows;1. Are all the eggs in one basket? With one buyer, supplier or product?;2. To what extend the company is facing the competition in the market.;3. Is the company in a field that requires much research and development and are they willing to invest?;4. Is there business coming from outside the US to diversy the market;ASSETS;Current Assets;Cash and cash equivalents;Accounts receivable;Inventories;Prepaid expenses and other;Income taxes receivable;Deferred income taxes;Total current assets;Property and Equipment;Land;Buildings and leasehold improvements;Furniture and equipment;Construction-in-progress;Less accumulated depreciation and amortization;Net property and equipment;Other Assets;Goodwill;Deferred income taxes;Other;Total other assets;Total assets;LIABILITIES AND SHAREHOLDERS EQUITY;Current Liabilities;Current installments of long-term debt;Accounts payable;Accrued liabilities;Deferred income taxes;Total current liabilities;Long-term debt, less current installments;Other liabilities;Commitments and Contingencies (Notes 9 and 14);Shareholders Equity;Common stock250,000,000 authorized shares, $.10 par value, 176,246,649 shares;issued and 67,444,099 shares outstanding at June 26, 2013 and 176,246,649 shares;issued and 74,342,115 shares outstanding at June 27, 2012;Additional paid-in capital;Retained earnings;Less treasury stock, at cost (108,802,550 shares at June 26, 2013 and 101,904,534;shares at June 27, 2012);Total shareholders equity;Total liabilities and shareholders equity;2013;2012;$59,367.00;$37,842.00;$24,628.00;$71,824.00;$4,930.00;$$198,591.00;$59,103.00;$43,387.00;$25,360.00;$66,359.00;$1,055.00;$2,918.00;$198,182.00;$147,581.00;$1,435,426.00;$580,115.00;$20,588.00;$2,183,710.00;$(1,147,895.00);$1,035,815.00;$152,382.00;$1,399,905.00;$556,304.00;$11,211.00;$2,119,802.00;$(1,076,238.00);$1,043,564.00;$142,103.00;$24,064.00;$52,030.00;$218,197.00;$1,452,603.00;$125,604.00;$20,231.00;$51,827.00;$197,662.00;$1,439,408.00;$27,596.00;$93,326.00;$268,444.00;$845.00;$390,211.00;$780,121.00;$132,914.00;$27,334.00;$100,531.00;$273,884.00;$$401,749.00;$587,890.00;$139,896.00;$17,625.00;$477,420.00;$2,217,623.00;$2,712,668.00;$17,625.00;$466,781.00;$2,112,858.00;$2,597,264.00;$(2,563,311.00);$149,357.00;$1,452,603.00;$(2,287,391.00);$309,873.00;$1,439,408.00;Revenues;Company sales;Franchise and other revenues;Total revenues;Operating Costs and Expenses;Company restaurants;Cost of sales;Restaurant labor;Restaurant expenses;Company restaurant expenses;Depreciation and amortization;General and administrative;Other gains and charges;Total operating costs and expenses;Operating income;Interest expense;Other, net;Income before provision for income taxes;Provision for income taxes;Net income;Basic net income per share;Diluted net income per share;Basic weighted average shares outstanding;Diluted weighted average shares outstanding;Dividends per share;2013;2012;$2,766,618.00;$79,480.00;$2,846,098.00;$2,748,462.00;$72,260.00;$2,820,722.00;$758,377.00;$892,413.00;$655,214.00;$2,306,004.00;$131,481.00;$134,538.00;$17,300.00;$2,589,323.00;$256,775.00;$29,118.00;($2,658.00);$230,315.00;$66,956.00;$163,359.00;$2.28;$2.20;$71,788.00;$74,158.00;$0.80;$769,729.00;$891,910.00;$649,830.00;$2,311,469.00;$125,054.00;$143,388.00;$8,974.00;$2,588,885.00;$231,837.00;$26,800.00;($3,772.00);$208,809.00;$57,577.00;$151,232.00;$1.93;$1.87;$78,559.00;$80,664.00;$0.64


Paper#22457 | Written in 18-Jul-2015

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