Starbucks Financial Ratios and Financial Statements Analysis and Review
In "Starbucks 2018 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” that was written by, Paul Borosky, MBA., doctoral candidate, and owner of Quality Business Plan and Finance Homework Help, the author summarized Starbucks 2019 10k, Starbucks 2018, 10k annual report, Starbucks 2017 10k annual report, and Starbucks 2016 10k annual reports as the basis for information gathering. After all of Starbucks' 10k annual statements were collected, which included Starbucks Income Statements and Starbucks Balance Sheets, he then used proprietary financial templates to calculate different financial ratios such as Starbucks ROE, ROA, and debt ratio.
Starbucks 2015 to 2018 Income Statement Summarized
|Summary Income Statement Starbucks 2014 - 2018|
|R & D||224||154||-||-||-|
Starbucks 2018 Revenues Analysis:
Revenue Growth: In the last five years, Starbucks revenues have grown by approximately 10.8% annually. Further, the organizations cost of goods sold grew by approximately 10.4% on an annual basis. This indicates that the company is able to pass on their increased raw material costs to the customers. This shows that the firm may have a loyal following and they are willing to pay more money for products offered.
|Revenues and Growth|
Starbucks 2018 SG&A Analysis:
SG&A: Starbuck’s SG&A percentage, as compared to revenues, has increased from 6% in 2014 to 7.1% in 2018. This shows that the firm is spending more money on overhead and advertising to generate less sales.
|SG&A as % of Revenues|
|Income Statement 2018|
Starbucks 2018 Operating Expenses Analysis:
Operating expenses: Starbucks operating expenses has stayed relatively consistent at approximately 31% of sales over the last five years. This indicates that the company’s management team is doing a relatively decent job in controlling costs.
|% of Sales.||31.3%||31.2%||30.8%||31.0%||31.0%|
Starbucks 2015 to 2018 Balance Sheet Summarized
|Startbucks Summary Balance Sheet|
|Short Term Investment||182||229||134||81||135|
|LT Debt - Current||350||-||400||-||-|
|Total Current Liabilities||5,684||4,221||4,547||3,648||3,039|
|Total Equity & Liability||24,156||14,366||14,330||12,416||10,753|
Starbucks 2018 Cash Analysis:
Cash: Starbuck’s cash position had jumped from 2.4 billion to $8.7 billion in the last two years. The substantial cash position indicates that the firm may not be utilizing their current assets in an optimal fashion.
|Cash as a % of Sales|
|% of Sales||35.4%||11.0%||10.0%||8.0%||10.4%|
|% of Total Assets||36.2%||17.1%||14.9%||12.3%||15.9%|
Starbucks 2018 Accounts Receivable Analysis:
Accounts Receivable: The organization’s Accounts Receivable had fallen from $870 million in 2017 to $693 million in 2018. The reduction in Accounts Receivable may indicate that the company is tightening their credit policies with their franchisees and retail outlets.
|Accounts Receivable as a % of Sales|
|% of Sales||2.8%||3.9%||3.6%||3.8%||3.8%|
Accounts Payable: Starbucks accounts payable has increased from $783 million to $1.1 billion in the last two years. This means that the firm is taking longer to pay their invoices to suppliers.
|Accounts Payable as a % of Sales|
|% of Sales||4.8%||3.5%||3.4%||3.6%||3.2%|
Starbucks 2018 Financial Ratios
|Starbucks Liquidity Ratios|
|Total Asset Turnover||1.02||1.56||1.49||1.54||1.53|
|Fixed Asset Turnover||4.17||4.55||4.70||4.69||4.67|
|Days Sales Outstanding||10.23||14.19||13.16||13.70||14.00|
|Return on Assets||18.70%||20.08%||19.66%||22.21%||19.23%|
|Return on Equity||384.27%||52.86%||47.83%||47.39%||39.21%|
|Net Profit Margin||18.28%||12.89%||13.22%||14.39%||12.57%|
Starbucks Current Ratio Analysis:
Current Ratio: Starbucks current ratio is at approximately 2.2. This means that the company has enough short-term assets to cover their short-term liabilities.
Starbucks 2018 Cash Ratio Analysis:
Cash Ratio: The company’s cash ratio has grown from .56 to 1.5 for the last five years. Most of the growth has come from new debt issuance.
Starbucks 2018 Fixed Asset Turnover Analysis:
Fixed Asset Turnover: In 2017, Starbucks had a fixed asset turnover of 4.55. In the following year, 2018, this line item declined to 4.17. This indicates that the organization is not using their assets as optimally as they have in the past.
Starbucks 2018 Total Asset Turnover Analysis:
Total Asset Turnover: Starbucks total asset turnover has decline from 1.53 in 2014 to 1.02 in 2018. This indicates that the company may not be optimally utilizing all assets in the organization.
Starbucks 2018 Return of Assets Analysis:
Return on Assets: Starbucks return on assets has declined from 22.2% in 2015 to 18.7% in 2018. This shows that the company is not utilizing their assets as highly as they have in the past.
Starbucks 2018 Return of Equity Analysis:
Return on Equity: The company’s return on equity has skyrocketed from 52.8% in 2017 to 384.2% in 2018. A main reason for this increase is the significant accumulation of debt in the last two years.
Starbucks 2018 Profit Margin Analysis:
Net Profit Margin: Starbucks profit margin has increased from 12.5% in 2014 to 18.2% in 2018. This indicates that the company is increasing their profitability. However, due to the substantial amount of debt taken on recently, this number may decline in the future.