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star bucks-Six years ago in the media, Mr. Howard Schultz the founder of Starbucks came under intense attack

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Question;Questions for Individual Analysis of Starbucks Corp ?;DO NOT EXCEED 5 Pages;Six years ago in the media, Mr. Howard;Schultz the founder of Starbucks came under intense attack and criticism. The stock was down 75% from its high in just;over a year. Economists worried about rising;economic slump, unemployment, loss of consumer confidence, consumer caution;and a sinking housing market. This was;certain to have an impact on people?s willingness to spend money on expensive;lattes and mochas. Wall Street was writing off Starbucks stock for the next;couple of years (or maybe forever) as dead money. Mr. Schultz was furious! To make matters worse McDonalds and Dunkin;Donuts began serving coffee in an effort to capture customers who traditionally;may have gone to Starbucks. Mr. Schultz;launched an aggressive plan to downsize the number of store locations and;concentrate on the core strategy of Starbucks through consolidation. At least during the past two years, these;efforts seemed to have paid off. The question;remains whether Starbucks can continue delivering on their new strategy and can;the stock continue its upward climb.;Mr. Schultz discovers that you (who he;hired in spring of this year) are taking EMBA 224. He decides that before he goes onto CNBC the;next time to face grilling and pointed questions, he would like you to give him;a financial briefing that he can use on CNBC to support the expectations;surrounding the stock and refute economist worries. He wants you to convince him of the future;financial decisions and strategies and their stock price implications. He also wants you to give him an honest;opinion whether the company is financially sound as you will try and convince;him or that there is trouble ahead (which he of course will try and keep to;himself). Try not to get fired by doing;a poor job.;1.;Using data in the most recent Value;Line report and Yahoo Finance (or any other website), please compute the;following (if computable) as part of financial statement analysis;Current ratio;Quick Ratio;Inventory Turnover Ratio;Total Assets Turnover Ratio;Days Sales Outstanding;Gross Profit Margin on Sales Ratio;Net Profit Margin on Sales Ratio;Return On Equity Ratio;Dividend Payout Ratio;Total Debt Ratio;Market to Book Ratio;Price Earnings Ratio;Price to Sales Ratio;2.;Provide a trend analysis on;each of the following measures, and then using those measures as well as those;computed above provide a short commentary on how the company has been doing and;expected to do in the next year: You may want to compare to its competitor and;use the comparative ratios and common size statements for this.;Sales ($);Sales per;share;Earnings per;share;Price;Earnings Ratio;Gross margins;Net Income;Net Profits;Margins;Number of;Stores;ROE;3.;Given the current P/E and Price;to Sales, and projected growth in earnings over the next five years, what do;you expect to stock to grow to by end of 2015 (approximately a year out)? Is the stock fairly valued, undervalued, or overvalued;given PE to Growth measures? What is your benchmark for comparison?;4.;What is the current market;value of the company? Where do you see;the;Company in the life cycle?;5.;What is the cost of capital;WACC? What is the beta? What is the ?normal?;required rate of return using CAPM (use 3% for risk free rate, and 11% for;market return)?;6.;What has been the total percentage;return performance since its IPO in 1992 (and compare to S&P500)? Have investors received more or less than the;required rate of return?;7.;What are the new products or;strategies that will allow Starbucks to expand;Sales and increase earnings and ultimately the stock price? What are the risks that could sink the stock?

 

Paper#47901 | Written in 18-Jul-2015

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