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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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Financial Analysis of Starbucks


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    Presentation Transcript
    1. Financial Analysisof Starbucks

    2. Overview • Industry and Market • Commodity • Starbucks is only global chain • Dominated by single or small chain retailers • Global demand • Market Elasticity

    3. Overview Coffee Industry

    4. Overview • Starbucks Strategy • High Margin Specialty Products • Franchising • Global Expansion

    5. 3 Years Summary Ratios

    6. Historical Balance Sheet Proportions

    7. 5 Year Projection

    8. Ratios by categories

    9. Liquidity Ratios Short-termsolvency • Current Ratio • Quick (Acid Test) Ratio • Cash Flow Liquidity Ratio

    10. Liquidity Ratios

    11. Liquidity Ratios

    12. Liquidity Ratios (continued) Efficiency in managing cash • Net Trade Cycle • Average Collection Period • Days Inventory Held • Days Payable Outstanding

    13. Liquidity Ratios (continued)

    14. Liquidity Ratios (continued)

    15. Asset Utilization Ratios Address efficiency of business operations • Accounts Receivable Turnover • Inventory Turnover • Accounts Payable Turnover • Fixed Asset Turnover • Total Asset Turnover

    16. Asset Utilization Ratios

    17. Asset Utilization Ratios

    18. Leverage Ratios Address extent of firm’s financing with debt. • Debt Ratio • Long-term Debt to Total Capitalization • Debt to Equity

    19. Leverage Ratios

    20. Leverage Ratios

    21. 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

    22. Leverage Ratios (continued)

    23. Leverage Ratios (continued)

    24. 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

    25. Profitability Ratios

    26. Profitability Ratios

    27. Trend Analysis

    28. Trend Analysis

    29. 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

    30. Starbucks Summary • The effect of competition on strategy and profitability • Impact of high/low leverage • The value of the ratio analysis