Financial Health of Starbucks Coffee

1
Financial Health of Starbucks Coffee

• Presented By Author

• Coffee House opened in 1971 in a small town in
  Seattle, Washington

• In 1987 Starbucks expanded beyond Seattle

• In 1996 Starbucks went international starting in
  Japan

2
Starbucks Liquid Ratios

• Current Ratio 1748.0 2189.7 .798 times
• Quick Ratio (1748 692.8) 2189.7 .482 times
• Average Collection Period 329.5 (10383 365)
  11.583 days
• Days Inventory Held 692.8 (4645.3 365)
  54.435 days
• Days Payable Outstanding 324.9 (4645.3 365)
  25.528
• Cash Conversion Cycle 11.583 54.435 25.528
  40.49 days

3
Starbucks Activity Ratios

• Accounts Receivable Turnover 10,383 329.5
  31.511 times
• Inventory Turnover 4,645.3 692.8 6.705 times
• Accounts Payable Turnover 4,645.3 324.9
  14.297 times
• Fixed Asset Turnover 10,383 2956.4 3.512
  times
• Total Asset Turnover 10,383 5672.6 1.830
  times

4
Starbucks Leverage Ratios

• Debt Ratio 3,181.7 5,672.6 56
• Long-Term Debt to Total Capitalization 549.6
  (549.6 2,490.9) 18
• Debt to Equity 3,181.7 2,490.9 1.277 times
• Times Interest Earned 503.9 53.4 9.436 times

5
Starbucks Profitability Ratios

• Gross Profit Margin 5,737.7 10,383 55
• Operating Profit Margin 1,258.7 10,383 12
• Net Profit Margin 315.5 10,383 3
• Return on Total Assets (ROA) 315.5 5,672.6
  5.5
• Return on Equity (ROE) 315.5 2,490.9 12.6
• Cash Return on Assets 1,258.7 5,672.6 22

6
Industry Comparison

• Starbucks

• Industry

• Debt/Equity Ratio 0.33
• Current Ratio 0.9
• Quick Ratio 0.6
• Interest Coverage NA
• Leverage Ratio 2.1
• Book Value/Share 3.50

• Debt/Equity Ratio 0.32
• Current Ratio 0.9
• Quick Ratio 0.7
• Interest Coverage 0.0
• Leverage Ratio 1.7
• Book Value/Share 3.65

7
References

• Fraser, L. M., Ormiston, A. (2007).
  Understanding financial statements (8th ed.).
  Upper Saddle River, NJ Pearson/Prentice Hall.
• MSN Money Central (2009). Starbucks Corp Company
  Report. Retrieved July 14, 2010 from
  http//moneycentral.msn.com/companyreport?SymbolU
  S3aSBUX
•  Starbucks Corporation (2009). Financial
  Statements. Retrieved July 14, 2010 from
  http//www.starbucks.com