Starbucks Corporation Analysis

Starbucks Corporation Analysis

Bob Lewis, Karen Mann, Mike Reynolds, Maria Townsend

ACC/561

March 30, 2014

Instructor: Steven Parker

Starbucks Corporation Analysis

Team B conducted a comparative and ratio analysis on Starbucks Corporation to measure its profitability and liquidity. The analysis conducted used Starbucks balance sheets from 2011 and 2012, income statements to understand their financial results, and trends Starbucks had to over time. The analysis showed the company's performance over those two years to include its efficiency, liquidity, profitability, and solvency.

Horizontal Analysis Income Statement Chart

2012 2011 In Dollars As %

Net Sales 13,300,000,000 11,700,000,000 1,600,000,000 13.60%

Cost of Goods Sold 10,710,000,000 9,540,000,000 1,170,000,000 12.30%

Interest Expense 32,700,000 33,300,000 -600000 -18%

Income Taxes 674,400,000 563,100,000 111300000 19.80%

Total Cost, Expenses Interest and Taxes

11,417,100,000

10,136,400,000

1,280,700,000

12.6%

Net sales for Starbucks jumped in the positive direction. A 13.60 percent growth showed the company had a productive 2012. There was a -18 percent difference in the interest expense category. This is a positive sign because it reflected the company became stronger when servicing its debt. Cost of goods sold trended in a not so desirable direction. There was a 12.30 percent increase overall in the amount of COGS for Starbucks in this category, which highlighted the increased amount of money it took to produce its famous goods. Income taxes increased significantly due to the overall increase in revenue in the company; however, this was an expected outcome. Overall, there was a 12.6 percent increase in Total Cost, Expenses Interest and Taxes combined respectively.

Starbucks Corporation Ratio Analysis 2011/2012

Ratio analysis is a commonly used analytical tool for verifying the performance of a firm. Team B reviewed Starbucks 2011 and 2012 balance sheet and income statements from its financial statement to show the calculations of Current Ratio, Quick Ratio, and Return on Assets (ROA), Return on Equity (RAE), Total Debt Ratio, Debt Equity Ratio, Assets Turnover,