Starbucks Financial Analysis

Overview and Objective Starbucks Corporation (“Starbucks”) is one of the leading American global coffee brewers. They are a coffeehouse chain that has over 20,000 brick and mortar stores located throughout the world. They are known for their high end coffee houses that serve a wide array of coffee flavors and types. They also serve various food items that complement their coffee selection. Part of the Starbucks strategy is to welcome their customers with a relaxing environment, rather than the quick take-out style that most of its competitors prefer. The Starbucks environment is generally warm and inviting, whether it is outside on a patio or inside on a comfortable couch. The Starbucks experience also includes the availability of free Wi-Fi so customers may take advantage of wireless computing while they relax and enjoy Starbucks coffee. We will examine the financial statements for Starbucks Corporation over the four most recent years and assess performance. Our primary focus will be on profitability; however we will also explore other key metrics such as liquidity, solvency, and turnovers among other financial statistics. Also, we will compare Starbucks against a major competitor to contrast various metrics and draw conclusions. Through this comparison, we expect to find differing areas of strength and weakness within the financial material. We believe this company would be interesting to analyze due to the overreaching popularity of the product. Most Americans cannot make it through the day without a cup of coffee in the morning. What is also interesting is to compare how two major players in the coffee marketplace operate financially and which entity demonstrates greater financial strength.

Industry Overview1 Starbucks operates in the “Coffee and Snack Shops” industry. According to an October 2013 IBISWorld Industry Report, the Coffee and Snack Shops industry experienced a major slowdown in 2009 due to a struggling economy and,

References: Financial Statement Analysis and Valuation, Third Edition by Easton, Peter D, et al. 2012 Stock Market Performance by the Numbers, Wyatt Investment Research   On November 12, 2013, the arbitrator ordered Starbucks to pay Kraft $2,227.5 million in damages plus prejudgment interest and attorneys ' fees