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Financial Analysis of Starbucks - PowerPoint PPT Presentation


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Financial Analysis of Starbucks. Overview. Industry and Market Commodity Starbucks is only global chain Dominated by single or small chain retailers Global demand Market Elasticity. Overview. Coffee Industry. Overview. Starbucks Strategy High Margin Specialty Products Franchising

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Presentation Transcript
overview
Overview
  • Industry and Market
    • Commodity
    • Starbucks is only global chain
    • Dominated by single or small chain retailers
    • Global demand
    • Market Elasticity
overview3
Overview

Coffee Industry

overview4
Overview
  • Starbucks Strategy
    • High Margin Specialty Products
    • Franchising
    • Global Expansion
historical

Historical

Balance Sheet Proportions

slide9

Liquidity Ratios

Short-termsolvency

  • Current Ratio
  • Quick (Acid Test) Ratio
  • Cash Flow Liquidity Ratio
slide12

Liquidity Ratios (continued)

Efficiency in managing cash

  • Net Trade Cycle
  • Average Collection Period
  • Days Inventory Held
  • Days Payable Outstanding
slide15

Asset Utilization Ratios

Address efficiency of business operations

  • Accounts Receivable Turnover
  • Inventory Turnover
  • Accounts Payable Turnover
  • Fixed Asset Turnover
  • Total Asset Turnover
slide18

Leverage Ratios

Address extent of firm’s financing with debt.

  • Debt Ratio
  • Long-term Debt to Total Capitalization
  • Debt to Equity
slide21

Leverage Ratios (continued)

Address ability to service debt and other long term cash needs

  • Times Interest Earned
  • Cash Interest Coverage
  • Fixed Charge Coverage
  • Cash Flow Adequacy
slide24

Profitability Ratios

Address overall efficiency and performance

  • Gross Profit Margin
  • Operating Profit Margin
  • Net Profit Margin
  • Cash Flow Margin
  • Return on Total Assets (ROA) / Return on Investment (ROI)
  • Return on Equity (ROE)
  • Cash Return on Assets
starbucks summary
Starbucks Summary
  • Based on entrance of strong competitors, such as Java the Hut
  • More pessimistic
  • Sensitivity Analysis:
    • Revision with lower growth, margin, and profit than original forecast
starbucks summary30
Starbucks Summary
  • The effect of competition on strategy and profitability
  • Impact of high/low leverage
  • The value of the ratio analysis