Acc 230 Final Starbucks Financial Analysis Paper
1115 words 5 pagesStarbucks Financial Analysis
Axia College of University of Phoenix
Starbucks Financial Analysis Starbucks Coffee originated in 1971 as a coffee and tea café opening in a small neighborhood of Seattle, Washington (Starbucks Corporation, 2010). Starbucks continued its service for Seattle residents for a decade when the new director of retail operations and marketing, Howard Shultz, decided to make some beneficial changes to the company. After two years of employment Howard Shultz decided to expand Starbucks outside of the Seattle area. In 1987 Starbucks was entering in the coffee market and the few numbers of Starbucks were now becoming a corporation (Starbucks Corporation, 2010). Fast forwarding to current times, Starbucks is …show more content…
The financial strengths of Starbucks Corporation is being tested against its limits with the decline in premium coffee sales while Starbucks continues to push to stay on top of competition. Compared to competition in the coffee market Starbucks is displaying a higher debt to equity ratio of 0.15 compared to the industry at 0.13. Starbucks Corporation and the coffee industry competition remain similar at a 1.5 current ratio for Starbucks and a 1.5 current ratio for the industry (MSN Money Market, 2010). The quick ratio within the coffee industry currently sits at 1.3 while Starbucks Corporation holds strong at a 1.2 quick ratio (MSN Money Central, 2010). Starbucks Corporation depicts a leverage ratio in comparison to the competition showing a 1.7 leverage ratio for both Starbucks and the industry (MSN Money Central, 2010). Starbucks Corporation is also remaining steady with a lower than industry book value to share ratio of 4.95 compared to 6.33 (MSN Money Central, 2010).
Industry Comparison An industry analysis can provide Starbucks with a view on the competitive advantages the company has over companies with similar products. Through the analysis, Starbucks can develop an effective strategic plan. The benefits of the industry analysis include knowing “the underlying forces at work in the industry; the overall attractiveness of the industry, and the critical factors that determine the company’s success within the