Company Analysis of Starbucks 1

Company Analysis of Starbucks Asia Brown ACC 205 Instructor Christine Covan February 1 ! 201"

Company Analysis of Starbucks 2

Company Analysis of Starbucks Company Overview: Starbucks is a publicly tra#e# company base# in Seattle! $ashin%ton& Starbucks is the lar%est bevera%e house chain with almost 20'(( stores in (1 countries servin% hot an# col# bevera%es! coffee beans! sala# an# san#wiches! sweet pastries! snacks an# crockery such as mu%s an# tumblers& Starbucks) mission is to inspire an# nurture the human spirit * one person! one cup an# one nei%hborhoo# at a time& +heir %oal is to %row coffee un#er the hi%hest stan#ar#s of ,uality usin% ethical sourcin% practices& +he company aims at buil#in% a %reat en#urin% company that strikes a balance between profitability an# social conscience& It works si%nificantly to re#uce environmental footprint throu%h ener%y an# water conservation an# recyclin% processes& +he in#ustry in which Starbucks operates is that of specialist eateries with competitors such as -unkin Bran#s %roup. /c-onal#s corp&. an# 0estle& $hat keeps Starbucks in the %ame are these factors1 Starbucks serves a hi%h ,uality coffee& But apart from coffee there are many items that keep Starbucks %oin%& +he store stacks a small section of foo# items an#

Company Analysis of Starbucks '

plenty of coffee free bevera%es! makin% it more chil#ren frien#ly an# snack seekers& +he interiors are comfortin% whether they are at +okyo or at 2os An%eles& +he interiors are similar& $ith a minimum pricin% of 32&00 an# ma4imum of 320&00 !the store offers bevera%es for all& Starbucks is #ensely sprea# over the %lobe with its outlets all over as compare# to its competitors& 5ori6ontal analysis refers to a proce#ure wherein an analyst compares line items or ratios in a company)s financial statement over a certain perio# of time& It helps the company an# its stakehol#ers to analy6e its performance an# #etect the areas of improvement& 5ori6ontal analysis places the fact very simply so as to enable convenient comparisons& +his in turn helps in #etectin% problem areas an# fin#in% solutions for the same&

The statement providing horizontal analysis is as follows: 7articulars 8evenue ;peratin% income <BI+ 0et income Current assets Current liabilities 7ercenta%e chan%e 7ercenta%e chan%e 2012 10&''9 15&559 1'&"19 11&0=9 10&((9 (&"59 2011 :&2 9 21& 9 25&":9 '1& '9 ' &( 9 1(&( 9

Company Analysis of Starbucks "

+he hori6ontal analysis of Starbucks shows that revenue has increase# over the year but still the operatin% income! net income an# <BI+ has not increase#& ;n the contrary the income has shown a ne%ative tren# an# has #ecline# in the year& The ratio analysis of Starbucks: Current ratio >uick ratio Cash to current liabilities 1&: 1&1 &5' 1&=' &:5 &55

Analysis of the computed ratios: ;ver 2011! the current ratio has increase# in 2012! implyin% a better li,ui#ity position as compare# to the previous year& <ven the ,uick ratio has increase# over the perio#& +hus! the cash an# li,ui#ity position of the firm seems to improve& 5owever the cash to current liabilities has #ecrease# in the sai# perio#& 5owever! this is not a favourable position! because this woul# mean that the imme#iate cash position in contrast to the previous year has #ecline#& +hus the overall li,ui#ity in#e4es reflect that it is unlikely that the company shall face any financial #ifficulties in the near future& +he #irect competitors of Starbucks are1 -unkin Bran#s %roup. /c-onal#s corp&. an# 0estle& 0one of the companies face a li,ui#ity crunch& +he specialty eateries in#ustry works on the mechanism of ,uick cash collection& 5ence the chances of li,ui#ity #ry is almost nil& +he cash position #ecent in all the ,uarters& 5owever other ratios may be unfavourable #ue to company specific situations an# circumstances&

Company Analysis of Starbucks 5

+he company poses a favourable position for buyers to invest in the firm& Strengths: -ominant market lea#er& 5i%h bran# e,uity Soun# financial position Spee#y e4pansion plans 5i%h bran# awareness Weakness: 5i%her prices compare# to competitors 5i%h operatin% cost

Opportunity: <ntry into Asian market 7ro#uct #iversification -eep market access in international countries

Company Analysis of Starbucks (

Co?bran#in% with other foo# pro#ucers& Threats1 <ntry hur#le in %lobal market Increasin% competition 5u%e conflict in worl#wi#e countries over cultural an# political issues& 2abour union problems /inimi6ation of #ifferentiation by imitatin%& Conclusion1 Starbucks thus seems an attractive avenue to invest by the stakehol#ers& -espite entry hur#les an# hi%her costs the company operates with strate%ies @such as co?bran#in%A that help in ma4imi6in% the firm)s opportunities to its full& !"#$#T: The income statement of Starbucks Corporation:

7erio# <n#in% Total Revenue Cost of 8evenue

Sep 30, 2012 Oct 2, 2011 Oct 3, 2010 13,299,500 5!=1'!'00 11,700,400 10,707,400 "!:15!500 "!"1(!500

Company Analysis of Starbucks

Gross Profit

7,4 !,200

!,7 4,900

!,290,900

;peratin% <4penses 8esearch -evelopment Sellin% Beneral an# A#ministrative 0on 8ecurrin% ;thers +otal ;peratin% <4penses ? 5!1":!200 ? 550!'00 ? ? "! ' !000 ? 52'!'00 ? ? "!"5(!200 5'!000 510!"00 ?

Operatin" #nco$e or %oss Income from Continuin% ;perations +otal ;ther IncomeC<4penses 0et <arnin%s Before Interest An# +a4es Interest <4pense Income Before +a4 Income +a4 <4pense /inority Interest 0et Income From Continuin% ;ps 0on?recurrin% <vents -iscontinue# ;perations <4traor#inary Items <ffect ;f Accountin% Chan%es ;ther Items

1,997,400

1,72 ,500

1,419,400

:"!"00 1"(!100 50!'00 2!0:1!=00 1!=""!"00 1!"(:! 00 '2! 00 ''!'00 '2! 00 2!05:!100 1!=11!100 1!"' !000 ( "!"00 5('!100 "==! 00 @:00A @2!'00A @2! 00A 1!5:"!500 1!"1:!"00 1!0:'! 00

? ? ? ?

? ? ? ?

? ? ? ?

&et #nco$e 7referre# Stock An# ;ther A#Dustments

1,3 3, 00 ?

1,245,700 ?

945,!00 ?

Company Analysis of Starbucks = &et #nco$e 'pplica(le To )o$$on S*ares 1,3 3, 00 1,245,700 945,!00

$alance sheet of Starbucks is as follows :

7erio# <n#in% 'ssets Current Assets Cash An# Cash <,uivalents Short +erm Investments 0et 8eceivables Inventory ;ther Current Assets Total )urrent 'ssets 2on% +erm Investments 7roperty 7lant an# <,uipment Boo#will Intan%ible Assets Accumulate# Amorti6ation ;ther Assets -eferre# 2on% +erm Asset Char%es Total 'ssets %ia(ilities Current 2iabilities Accounts 7ayable ShortCCurrent 2on% +erm -ebt ;ther Current 2iabilities Total )urrent %ia(ilities 2on% +erm -ebt ;ther 2iabilities -eferre# 2on% +erm 2iability Char%es /inority Interest 0e%ative Boo#will

Sep 30, 2012

Oct 2, 2011

Oct 3, 2010

1!1==!(00 ="=!"00 2"!(00 1!2"1!500 1:(!500 4,199,!00 5 5!:00 2!(5=!:00 '::!100 ? ? '=5! 00 ? ,219,200

1!1"=!100 :02!(00 (1(!:00 :(5!=00 1(1!500 3,794,900 " :!'00 2!'55!000 '21!(00 ? ? "0:!(00 ? 7,3!0,400

1!1("!000 2=5! 00 (0(!:00 5"'!'00 15(!500 2,75!,400 5''!'00 2!"1(!500 2(2!"00 0!=00 ? '"(!500 ? !,3 5,900

1!(::!(00 ? 510!200 2,209, 00 5":!(00 '"5!'00 ? 5!500 ?

1!(2(!500 ? "":!'00 2,075, 00 5":!500 '" !=00 ? 2!"00 ?

1!'(5!000 ? "1"!100 1,779,100 5":!"00 ' 5!100 ? !(00 ?

Company Analysis of Starbucks :

Total %ia(ilities Stoc+*ol,ers- ./uit0 /isc Stocks ;ptions $arrants 8e#eemable 7referre# Stock 7referre# Stock Common Stock 8etaine# <arnin%s +reasury Stock Capital Surplus ;ther Stockhol#er <,uity Total Stoc+*ol,er ./uit0 &et Tan"i(le 'ssets

3,110,200

2,975,500

2,711,200

? ? ? 00 5!0"(!200 ? ':!"00 22! 00 5,109,000 4,709,900

? ? ? 00 "!2: !"00 ? "0!500 "(!'00 4,3 4,900 4,0!3,300

? ? ? 00 '!" 1!200 ? 1"5!(00 5 !200 3,!74,700 3,341,500

Company Analysis of Starbucks 10

8eferences1 $alther& @2012A& 7rincipals of Accountin% Eol I& San -ie%o! CA1 Bri#%epoint! <#ucation Inc&

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