Starbucks Financial Analysis 03-07
The American University in Cairo
Acct 501
Spring 08
Starbucks Financial Analysis
Years 2003-2007
Presented to:
Dr. Adel Ibrahim
Presented by:
Ahmed El-Shorbagy 800-07-0477 Ahmed Tawfik 900-98-5749 Mahmoud El Gindy 800-07-0417 Mohammed Abo Solyman 900-02-1301 Mohammed Hassan 800-07-1982
Table of Contents
Executive Summary 3
Introduction 4
Financial Statement Analysis 5 Consolidated Balance Sheet 5 Consolidated Income Statement 5 Consolidated Cash Flow Statement 5 Consolidated Statement of Changes in Owner’s Equity 5 Profit Margins 6 Gross Margin 6 Net Profit Margin 6 Liquidity Measures 7 Current Ratio/Acid Test (Quick) Ratios 7 Financial Leverage Measures 8 Leverage ratio/ debt ratio/ debt to equity ratio 9 Investment Returns Measures 9 Return on Investment (ROI) 10 Return on Equity (ROE) 10 Management Efficiency Measures 10 Asset Turnover 10 Inventory Turnover 11
Conclusion 13
References 14
Executive Summary
As one of the most recognizable brands worldwide, Starbucks is considered a monumental success story and an investors’ paradise. In this report, through interpreting the financial statements from 2003 on to 2007, we can a clear and concise picture of the biggest American coffee corporation performance.
Our Evaluation and analysis of the company’s performance starts with Gross Margin and Profit Margin both of which shows the company operating on a satisfactory level comparing to the industry. Moving on to Liquidity measures, we notice that the company’s trend is to keep their cash levels at minimum. This can be explained by the explosive expansion of the chain worldwide and is another indicator of Starbucks’ confidence in its future plans.
Our next measures are Financial Leverage ratios. Starbucks relies relatively heavily on debt to finance its ambitious expansions. Solid sales and revenues ensures the company’s capability of fulfilling their
Acct 501
Spring 08
Starbucks Financial Analysis
Years 2003-2007
Presented to:
Dr. Adel Ibrahim
Presented by:
Ahmed El-Shorbagy 800-07-0477 Ahmed Tawfik 900-98-5749 Mahmoud El Gindy 800-07-0417 Mohammed Abo Solyman 900-02-1301 Mohammed Hassan 800-07-1982
Table of Contents
Executive Summary 3
Introduction 4
Financial Statement Analysis 5 Consolidated Balance Sheet 5 Consolidated Income Statement 5 Consolidated Cash Flow Statement 5 Consolidated Statement of Changes in Owner’s Equity 5 Profit Margins 6 Gross Margin 6 Net Profit Margin 6 Liquidity Measures 7 Current Ratio/Acid Test (Quick) Ratios 7 Financial Leverage Measures 8 Leverage ratio/ debt ratio/ debt to equity ratio 9 Investment Returns Measures 9 Return on Investment (ROI) 10 Return on Equity (ROE) 10 Management Efficiency Measures 10 Asset Turnover 10 Inventory Turnover 11
Conclusion 13
References 14
Executive Summary
As one of the most recognizable brands worldwide, Starbucks is considered a monumental success story and an investors’ paradise. In this report, through interpreting the financial statements from 2003 on to 2007, we can a clear and concise picture of the biggest American coffee corporation performance.
Our Evaluation and analysis of the company’s performance starts with Gross Margin and Profit Margin both of which shows the company operating on a satisfactory level comparing to the industry. Moving on to Liquidity measures, we notice that the company’s trend is to keep their cash levels at minimum. This can be explained by the explosive expansion of the chain worldwide and is another indicator of Starbucks’ confidence in its future plans.
Our next measures are Financial Leverage ratios. Starbucks relies relatively heavily on debt to finance its ambitious expansions. Solid sales and revenues ensures the company’s capability of fulfilling their
References: “Annual Reports.” Starbucks. * Marshall, David H, et al. Accounting: What the Numbers Mean Eighth Edition. New York: McGraw-Hill, 2008. “Starbucks.” MSN Money. * Starbucks. Starbucks Corporation. [www.starbucks.com] “Starbucks.” Wikipedia: The Free Encyclopedia. 23 May, 2008. * These are the references used to obtain the financial statements for the years 2003-2007. Due to the massive length of these documents they are not printed in an appendix.