Analysis of Annual Report of Starbucks

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An Assignment on
Analysis of Annual Report of Starbucks

Prepared for
Principles of accounting

Submitted to:
Salma Karim
Associated professor
Faculty of Business Studies
University of Dhaka
Submitted by:
Sharaban-E-Alam Tohra

December 13, 2009
Faculty of Business Studies
University of Dhaka

Table of Contents
Company Profile3
Where is the Company & Where is It Going5
Principle Source and uses of Cash7
Amount of Money Collected from the Customers in Last 5 Years8
Return on Assets (ROA)9
Total Asset Turnover10
Return on Equity (ROE)11
Number of Days Inventory Held on Average12
Number of Days to Collect Account Receivable on Average13
Current ratio14
Quick Ratio15
Debt-to-equity Ratio16
Comments on the Financial Health of Starbucks17

Company Profile
Starbucks Corporation was found in 1985 and today it is the world’s leading roaster retailer of specialty coffee. Starbucks purchases and roasts high quality whole bean coffees and sells them along with fresh rich-brewed coffees, Italian style espresso beverages, cold blended beverages, a variety of complimentary food items and a selection of premium teas and coffee-related accessories and equipments, through company-operated retail stores, equity investees and licensees. All channels outside company operated retail stores are collectively known as specialty operations. Starbucks aims to establish itself as one of the most recognized and respected brands in the world. To achieve this goal, the company sells the finest quality coffee and related products. Its mission is to make itself the iconic “third place”, the place after work and home, where to hang out with friends, read a book alone or just relax, all the while enjoying finest whole bean coffees. Starbucks sells this experience of a premium coffee shop, famously known as “The Starbucks Experience”. Starbucks has three operating segments, United States, International and Global Consumer Products Group (CPG). They provided 76%, 20% and 4% of total revenue respectively in the fiscal year ending on September 28, 2008. Starbucks retail stores are typically located in high traffic, high visibility locations. Though shopping malls are perfect for this, Starbucks also operates drive-thru stores to provide the fast-paced consumers who are looking for just a fine quality latte. Currently, the company operates 2,800 drive-thru stores compared to previous fiscal year’s 2,300. To serve its international customer base, the company has a total of 3,134 licensed retail stores as of September 28, 2008. Starbucks’ branded coffee beans and tea was available in approximately 37,000 grocery stores, supermarkets and warehouse club stores as of 2008.The company owns and has applied to register numerous trademarks worldwide. Some of the most popular trademarks are The Starbucks Logo, Frappacino, Seattle’s Best Coffee and Tazo Tea. The company owns numerous copyrights for items like product packaging, promotional materials, and in-store graphics and training materials. Starbucks has employed approximately 176,000 people worldwide. Starbucks believes that its success can be largely attributed to its efficient army of employees who are committed to give the customers the Starbucks Experience. Starbucks gives importance to environmental awareness and encourages others to do same. Under its “Shared Planet” program, Starbucks ensures that the coffee they use is coming from farm, which has no illegal practice. The company introduced disposable cups in all its stores and plans to make recycling available in every store by the end of year 2015. The company’s existing cash and liquid asset investments were 322.3 million USD and 459.7 million USD as of September 2008. Total expenditure for the fiscal 2009 is expected to be approximately 700 million USD. Starbucks has more than 17,000 stores in 49 countries and handles approximately 50...
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