Starbucks Financial Statements Analysis
Essay by vlcns • October 28, 2017 • Research Paper • 994 Words (4 Pages) • 1,408 Views
Financial Statements Analysis
July 28, 2017
PORNPINITSUWAN Valunchanok (12216029)
ACCOUNTING II, SPRING 2017
Professor: UEHARA Yuko
Financial Statements Analysis
Company: Starbucks
Name of CEO:
Howard Schultz
Location of Home Office:
2401 Utah Avenue South Seattle, Washington 98134
Ending Date of Latest Fiscal Year:
September 27, 2016
Main Geographic Area of Activity:
The trend on this day is descending. Investors may sell it right away because the later we sell it, the more they will lose. But due to the previous trend, which seems stable, holding the stock will be another choice for whom with confidence toward Starbucks.
Most Recent Price of the Company’s Stock:
$25.45 on September 23rd
Introduction
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 complementary food item, a selection of premium teas, and beverage-related accessories and equipment, primarily through Company- operated retail stores. Starbucks’s main geographic area of activity is in Asia Pacific and US.
Independent Auditors
- Deloitte & Touche LLP
- They indicated the principles of reporting accurate financial statements, which included providing reasonable assurance toward transactions and careful management from executive officers. Also, they said Starbucks had maintained effective internal control over the Company’s financial reporting.
Dividends per share: Starbucks doesn’t pay any dividend.
The trend on this day is descending. Investors may sell it right away because the later we sell it, the more they will lose. But due to the previous trend, which seems stable, holding the stock will be another choice for whom with confidence toward Starbucks.
Industry situation and company plans
Starbucks is the most successful coffee industry in the world, which changed people’s lifestyle by a cup of coffee. Its marketing strategies created a “third place” for people to relax and enjoy, and that made Starbucks huge profit as well.
Year | Gross profit | Income from Operation | Net income |
2015 | $5,737.7 M | $503.9 M | $315.5 M |
2016 | $5,449.7 M | $562.0 M | $390.8 M |
Regarding to the cost, Starbucks is cutting and closing stores to make more profits. Also, it is going to raise the price of those complicated made and lower the simple ones to meet different people’s financial capabilities. What’s more, the new Starbucks Digital Network (SDN) will be available soon to bring people more comfortable experiences in Starbucks.
INCOME STATEMENT
- Starbucks uses single-step format
From 2015 to 2016, the gross profit of Starbucks slightly decreased, but both income from operation and net income increased.
BALANCE SHEET
Year | Assets = | Liabilities + | Stockholders’ equity |
2015 | $5,672.6 M | $3,181.7 M | $2,490.9 M |
2016 | $5,576.8 M | $2,531.1 M | $3,045.7 M |
From 2015 to 2016, the assets of Starbucks decreased only about $100. However, the proportion of liabilities and stockholders’ equity almost switched during 2016. Liabilities decreased, and stockholders’ equity increased.
STATEMENT OF CASH FLOWS
Net cash provided by operating activities are more than net income in both 2015 ($1,258.7M to $315,5M) and 2016 ($1.389.0 M to $390.8 M). The net cash used by investing activities were decreased from $1,086.6 M to $421.1 M during the year of 2016. As a result, Starbucks are not growing through investing activities. Starbucks’s primary source of financing is insurance from commercial paper. Cash has increased over the past two years.
ACCOUNTING POLICIES
Revenue Recognition: “Consolidated revenues are presented net of intercompany eliminations for wholly owned subsidiaries and investees controlled by the Company and for licensees accounted for under the equity method, based on the Company’s percentage ownership”.
Cash Management: “The Company’s cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment”.
Short-term Investment: “The Company’s short-term and long-term investments consist primarily of investment grade debt securities, equity mutual funds, and equity exchange-traded funds, all of which are classified as available-for-sale or trading”.
Inventories: “The Company records inventory reserves for obsolete and slow-moving items and for estimates shrinkage between physical inventory counts”.
...
...