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Financial Ratio Analysis of the Starbucks Coffee Company
Question: What is all the buzz about?
Answer: The goal to have a cup of Starbucks in the hands of every coffee or tea drinker on the planet.
Starbucks is the internationally recognized maker of specialty coffees with a presence of more than 8,000 coffee shops in 30 countries, and the company is setting its sights higher as the latest expansion efforts at home and abroad have resulted in phenomenal sales with consolidated net revenues of $5.3 billion in fiscal 2004 (Starbucks, 2004).
What started as a small whole bean roasting company in 1971 in the historic Seattle Pike Place Market was transformed by the marketing manager Howard Schultz in 1985 with its first Italian-style Starbucks coffee latte.
Today, the "Starbucks Experience" is spreading around the globe as more people discover and embrace the many tastes of the specialty coffees and teas offered by the coffeehouse mogul and chairman Howard Shultz, his management team, and their investors. The Seattle-based coffee giant recently raised its ultimate goal to 30,000 stores world-wide.
Does the goal sound too optimistic? Well, this paper will look at the financial ratios of the company for the last three fiscal years to see how the company has performed in four major financial areas: Liquidity, Activity, Profitability, and Financial Leverage. These four areas contain several ratios that tell the recent story of the ability of the company to meet its financial obligations, get a return on investment, its liquidity, and how much debt the company is carrying.
Descriptions and Interpretations of the Financial Ratios of the Starbucks Corporation for Fiscal Years 2002 through ...