F20110109 Astrid Balqis Herlinda

Abstract.
This final assignment aims to analyze the financial statements of Starbucks, an American company
founded in 1971 in Seattle, Washington, and established on November 4, 1985, to be listed as a public
company. It is the premier roaster and retailer for specialty coffee worldwide. The corporation employs
approximately 182,000 people in 19,767 company-operated and licensed stores in about 62 countries in
total. Initially focused on the US domestic market; however, in 1996, the company began operations
outside the US, and since then its footprint has spanned the globe.

1. Introduction
Starbucks, an American corporation founded in 1971 in Seattle, Washington, and incorporated on
November 4, 1985, is registered as a public company. It is the premier roaster and retailer for specialty
coffee worldwide. The corporation employs approximately 182,000 people in 19,767 company-
operated and licensed stores in about 62 countries in total. Initially focused on the US domestic market;
however, in 1996, the company began operations outside the US, and since then its footprint has
spanned the globe. The company serves Canada, Australia, China, Japan, UK, etc. Their offerings for
customers include roasted coffee, high quality coffee, tea, various freshly drink. Along with this, the
company sells its coffee and tea products by licensing its trademarks in other channels, which include
grocery stores, licensed stores, etc. Starbucks is so successful in the US and several key international
markets that the main concern they face is how to grow healthy revenues. However, this challenge can
still be overcome as revenue in the fiscal year - September 2019 increased to 7.2%, which is $ 26.5
billion compared to the previous year. 5 billion compared to the previous year.

2. Literature Review
Literature review is the findings of different analyzes related to contemporary research. This report is
primarily a consideration of past analyzes which are further linked to current studies in more reliable
techniques. The following are some reviews of previous analyzes related to recent research studies. A
researcher named Dr.M Ravichandran studies the financial performance of several companies which
can be ranked in the industrial market according to the effectiveness of several financial tools, for
example, researchers research profitability ratios, solvency ratios, and comparative position. According
to researchers on opportunity analysis, every business should provide enough capital to meet its Debts
& obligations, and along with this, the increase in transaction flow throughout the year which is
important because reasonable prices increase the company's profitability. Another study by MS Ganga
considers the evolution of the financial performance of large companies in Asian countries. The
researcher concludes that for all business ratio analysis it is very important to plan and control financial
resources. The in-depth analysis results that focus on research on various techniques to evaluate the
performance of financial organizations during each company quarter of the year. This results in the
finding that organizational executives focus on the gray areas of financial reports which are useful for
planning the future growth and prospects of any company. The researcher investigated ratio analysis,
which fluctuates throughout the year according to sales production. Depending on the variety of sales
and purchases, the ratio increases or decreases. An increase in the ratio level indicates that the company
is in a position of good financial status. In addition, this study also means that existing customers are
satisfied compared to previous year's customer satisfaction, and companies can expect a number of
potential customers due to the convenience of existing customers. Ratio analysis also depends on the
situation of the shareholders of the company's shareholders. Ratio analysis also relies on the increasing
shareholder status of the company's shareholders; That is, prospective and investors who are willing to
flow more capital in the company because of the outstanding financial performance.

3. Data & Methodology

Table 1 FINANCIAL DATA (STARBUCKS COMPANY)

Item / Year 2021 2020 2019 2018

Current Assets 5.653.900 12.494.200 5.283.400 4.760.500
Current Liabilities 6.168.700 5.684.200 4.220.700 4.546.900
Supply 1.529.000 1.400.500 1.364.000 1.378.500
Cash 2.686.600 8.756.300 2,462,300 2.128.800
Receivables 879.200 693.100 870.400 768.800
Total Assets 19.219.600 24.156.400 14.365.600 14.329.500
Total Liabilities 25.450.600 22.980.600 8.908.600 4.546.900
Total Equity (6.232.000) 1.169.500 5,450,100 5.884.000
Selling 26.508.600 24.719.500 22.386.800 21.315.900
Cost of Goods Sold 19.468.900 17.367.700 15.531.500 14.575.400
EBIT 4.797.200 5.950.300 4.410.000 4.279.900
Interest 96.500 191.400 275.300 108.000
Income Limit 3.599.200 4.518.300 2.884.700 2.817.700

Data has been collected from Starbucks for four financial years from 2018-2021. Data is collected from
a secondary source from Yahoo Finance. Data has been collected for various variables taken from the
income statement and balance sheet of Starbucks Company.
Different ratios are used in analyzes such as:
- Liquidity Ratio: this ratio is used to measure an organization's ability to handle its short-term
liabilities with the help of current assets. The ratios that have been calculated to evaluate Starbucks
Company's liquidity position are the current, fast, and cash ratios.
- Activity ratio: helps in determining the efficiency of the company where the organization can utilize
its operating assets which are reflected in the balance sheet and then convert them into sales or cash.
The ratios calculated to evaluate Starbucks activities are inventory, accounts receivable and total asset
turnover.
- Debt Ratios: helps in measuring organizational leverage. This is the debt to asset ratio. It helps to
evaluate the financial resources used by the company in carrying out its operational activities. The
ratios calculated under this particular head are the debt ratio, and the time interest income ratio.
- Profitability Ratio: helps in measuring a company's ability to generate profits by generating more
sales from its business activities and by selling its services in the target market. The ratios calculated to
measure a company's profitability are return on equity, return on total assets, and profit margin.
4. Results and Discussion
Table 2 Starbucks Corporate Liquidity Ratio
Ratio / Year 2021 2020 2019 2018
Current Ratio 0.92 2.20 1.25 1.05
Quick Ratio 0.67 1.95 0.93 0.74
Cash Ratio 0.44 1.54 0,58 0.47
Figure 1 Current Ratio of Starbucks

Current Ratio
2.50
2.00
Current Ratio

1.50
Current Ratio
1.00
0.50
0.00
2021 2020 2019 2018
Year

Figure 2 Quick Ratio of Starbucks

Quick Ratio
2.50

2.00

1.50
Quick Ratio

Quick Ratio
1.00

0.50

0.00
2021 2020 2019 2018
Year
Figure 3 Cash Ratio of Starbucks

Cash Ratio
1.80
1.60
1.40
1.20
Cash Ratio

1.00
Cash Ratio
0.80
0.60
0.40
0.20
0.00
2021 2020 2019 2018
Year

Overall, the company's liquidity position has decreased from 2018 to 2021. The company's current
fiscal year position reflects that the company does not have enough cash and current assets to pay its
current liabilities. The company does not have a strong liquidity position to handle its short term
obligations.

Table 3 Activity Ratio

Ratio / Year 2021 2020 2019 2018

Inventory Turnover 12.73 12.40 11.39 10.57

Receivable
30.15 35.67 25.72 27.73
Turnover
Total Asset
1.38 1.02 1.56 1.49
Turnover

Figure 4 Inventory Turnover of Starbucks

Inventory Turnover
14.00
12.00
10.00
Inventory Turnover
8.00
6.00
4.00
2.00
0.00
2021 2020 2019 2018
Figure 5 Receivable Turnover of Starbucks

Receivable Turnover
40.00
35.00
30.00
25.00 Receivable Turnover
20.00
15.00
10.00
5.00
0.00
2021 2020 2019 2018

Figure 6 Total Assets of Starbucks

Total Assets
1.80
1.60
1.40
1.20
Total Assets
1.00
0.80
0.60
0.40
0.20
0.00
2021 2020 2019 2018

The activity ratio shows a decrease in the company's performance from 2018-2021. The decrease
shows that assets are not used effectively to generate sales. Management needs to revise its business
policies and must use its assets effectively.

Table 1 Debt Ratio of Starbucks

Ratio / Year 2021 2020 2019 2018
Debt Ratio 1.32 0.95 0.62 0.32
Times Interest Earned Ratio 49.71 31.09 16.02 39.63
Figure 7 Debt Ratio of Starbucks

Debt Ratio
2018

2019 Debt Ratio

2020

2021

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40

Figure 8 Times Interest Earned Ratio Starbucks

Times Interest Earned Ratio

2018

2019 Times Interest Earned

Ratio

2020

2021

0 10 20 30 40 50 60

The increased debt ratio from 2018 to 2021 shows that management is using more debt to carry out its
operational activities. In addition, the interest earned ratio over time has shown that management
earned more of its EBIT to interest income in the current fiscal year. It shows a sign of moderate health
for Starbucks management.
Table 5 Starbucks Profitability Ratio
Ratio / Year 2021 2020 2019 2018
Return on Equity -0,58 3.86 0,53 0.48
Return on Assets 0.1873 0.1870 0,2008 0.1966
Profit Margin 13,58% 18,28% 12,89% 13,22%
Figure 9 Return On Equity of Starbucks

5.0
Return On Equity
4.0
3.0
2.0 Return On Equity
1.0
0.0
2021 2020 2019 2018
-1.0

Figure 10 Return on Assets of Starbucks

Return on Assets
0.2050
0.2000
0.1950 Return on Assets

0.1900
0.1850
0.1800
2021 2020 2019 2018

Figure 11 Profit Margin of Starbucks

Profit Margin
20.00%
18.00%
16.00%
14.00%
12.00% Profit Margin
Axis Title 10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2021 2020 2019 2018
ROE is negative in the current fiscal year and it shows a negative sign for investors as they lose more
money on their investment made in the Starbucks Company. ROA is less than 1 in all financial years
and it shows management is not doing well to generate income with the help of its assets. Management
needs to utilize its assets effectively. The company's profit margins have decreased and it shows
management is not making enough sales and has poor control over its overhead costs.

5. Conclusion
From the discussion above, it can be concluded that Starbucks management needs to work harder in
order to survive in the target market. The need for disclosure of management reports, making monetary
choices with respect to maintaining the company in capital planning and related angles and
overestimating the moderation of support hazards and saying that Starbucks needs to implement some
sustainability and growth to see its development and to achieve its growth as well, because here it will
provide some ways to get the growth they need. Presents financial reports to assist economic
administration involving conditions, social and political perspectives in the dynamics of strategies for
interests in destroying environmental change, reducing to conflict, reducing the outflow of ozone
depleting substances and increasing sustaining vitality and social considerations. Here working capital
gives Starbucks the opportunity to organize and guarantee growth, by ensuring that full productivity is
on the range, and they receive the highest returns to make up for the shortfalls they suffer. Working
capital administration seeks to increase corporate profits while at the same time ensuring that
corporations are in the right situation to fulfill their obligations while maintaining their liquidity
perspective. Management needs to buy more current assets and maintain inventory level management
to ensure it has a strong liquidity position to handle its short liabilities. Business management risk can
be cultivated and facilitated through the implementation of regulated maintenance opportunity
management which allows organizations to in change methods with withdrawn confidential disclosures
including tacit submissions with philosophical backing and not paying attention to pressure but also
increasingly abusing the business. clear prospects in progress. improve dynamic procedures through
adjusting money-related systems to link feasible issues to financial decisions and basic value drivers.
Management needs to implement effective policies to make good use of its assets to increase its sales
margins. Management needs to implement a cost-effective strategy that can have good control over
expenses, execution related to money devoted to alternative organization partners, there are also more
valuable ones to create through increasingly guaranteed conditions. These expenses cause a decrease in
margins net profit and shareholder wealth.