Starbucks Case Study

1. How is Starbucks performing financially? What’s the basis of your analysis and conclusion?

When analyzing a company’s financial information there are many different factors that have to be taken into consideration. There is not one key financial analysis tool that tells how a company is performing. Many companies in the United States have experienced a downturn in business and market activity in the last few years. It appears that Starbucks is no different and this can be seen (Appendix 1) in the many decreases in the years 2008 and 2009. Since the recession in 2008, Starbucks has taken many steps to remain competitive in the coffee market. They dropped staff and tightened their balance sheet. These two actions have helped them maintain acceptable ratios. Their 2011 numbers indicate that Starbucks is gaining momentum. The most indicative is the rise in current ratio and the margin on sales. Additionally, EPS is an analyst tool that is often used to show a company’s well-being with regards with to market activity. EPS can be manipulated by management and therefore may not be the most reliable determinant. Looking at Starbuck’s financials, besides the drop in EPS between 2007 and 2008, EPS has been steadily rising without a drastic change in shares outstanding, which is a steady sign of profitability.

2. Evaluate the adequacy of Starbucks strategic direction, as stated either online or in their Annual Report or 10K, from the perspectives of vision, mission, and objectives.

Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in more than 50 countries. Formed in 1985, Starbucks Corporation’s common stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “SBUX.” We purchase and roast high-quality whole bean coffees that we sell, along with handcrafted coffee and tea beverages and a variety of fresh food items, through company-operated stores. We also sell a variety of coffee and tea...