Annual Report Analysis|
Catherine YangYang Qiaochu杨翘楚2010201545商学院 工商管理英文实验班|
1. Company’s Overview
Starbucks owns more than17, 000 stores in 55 countries at the fiscal year ended in 2011. During this year, its global revenues reached $11.7 billion, which is an 11% increase compared with 2009. The operation income of Starbucks reached $1.7 billion went up by 22%. What’s more Starbucks stock price also has increased by 43%.
2. Ratio Analysis
In order to have a better horizontal and vertical comparison, I choose the annual report data of Starbucks from 2009 to 2011 and one of its competitors, Caribou Coffee Company’s financial data.
1) Current Ratio
Current Ratio=Current Assets / Current Liabilities
Year| Current Assets| Current Liabilities| Current Ratio| Industry| Caribou Coffee Company| 2011| $3,794.9| $2,075.8| 1.8282| 1.8278| 2.4553|
2010| $2,756.4| $1,779.1| 1.5493| | |
2009| $2,035.8| $1,581.0| 1.2877| | |
Current ratio measures the ability to pay short-term debts and other current liabilities of a company. It also measures a company’s short-term risk. As can be seen from the chart, the current ratio of Starbucks is almost the same as the industry average in 2011, which means that its ability to remain solvent is good. In addition, the best proportion of current assets and current liabilities is 2:1. So both Starbucks and the industry of specialty eateries do well in dealing with the current ratio.
2) Quick Ratio
Quick Ratio = (Current Assets – Inventories) / Current Liabilities Year| Current Assets| Inventories| Current Liabilities| Quick Ratio| Industry| Caribou Coffee Company| 2011| $3,794.9| $965.8 | $2,075.8| 1.3629| 1.4| 1.8| 2010| $2,756.4| $543.3| $1,779.1| 1.2439| | |
2009| $2,035.8| $664.9| $1,581.0| 0.8671| | |
Quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets, regardless of the inventories. As is shown above, the quick ratio of Starbucks is a little bit lower than industry average and lower than Caribou Coffee Company, who ranks the second in this industry and is one of Starbucks’s competitor.
3) Inventory Turnover Ratio
Inventory Turnover Ratio= Sales / Inventories
Year| Sales| Inventories| Inventory Turnover Ratio| Industry| Caribou Coffee Company| 2011| $11,700.4 | $965.8 | 12.1147| 9.6| 11.0|
2010| $10,707.4| $543.3| 19.7081| | |
2009| $9,774.6| $664.9| 14.7009| | |
Inventory turnover ratio measures the number of times inventory is sold in a time period. As can been seen from the chart, inventories turn over 12 times in Starbucks during a year, whose ratio is higher than the industry average and its competitor, representing its well inventory management. Because its revenue takes up 37.11% of the specialty eateries industry and high revenue means more inventories will be sale in a certain period of time. From my perspective, all the food industry should keep a high inventory turnover ratio, because only in this way, can the keep the food fresh and healthy. Another thing is worth paying attention to is the great change in 2010, inventory turnover ratio reaching the highest point. That is because Starbucks remove its strategy from concentrating on expanding as fast as possible to focusing on both expanding and improving qualities, which reshape the brand image and make the customers value the brand again. As a result, from the third quarter of 2009, Starbucks revenue gradually grows constantly.
4) Total Assets Turnover Ratio
Total Assets Turnover Ratio = Sales / Total Assets
Year| Sales| Total Assets| Total Assets Turnover Ratio| Industry| Caribou Coffee Company| 2011| $11,700.4 | $7,360.4| 1.5896| 1.6| 2.7|
2010| $10,707.4| $6,385.9| 1.6767| | |
2009| $9,774.6| $5,576.8| 1.7527| | |
Total assets turnover ratio measures the efficiency of...