APA Research Paper

Starbucks Coffee

Introduction

Starbucks Coffee Company is now among the coffee retailer giants. The company has as many as 10,000 coffee shops in more than thirty countries. Starbucks aims to become the most recognized brand of coffee. In order to achieve long term growth, Starbucks is utilizing effective marketing strategies. Currently, the company is relying on retail expansion along with the product and service innovation to achieve growth and success. In order to implement these strategies, Starbucks has opened new stores in both existing and new markets (Willmott et al, 2010).

The business of gourmet coffee is at its peak. A number of players have entered into this market ranging from multinational chains to road side cafes. Specialty coffee in the United States is the fastest growing business. The credit of Starbucks' success goes to the projection of its stores. The stores of Starbucks coffee offer customers a venue where they can socialize. This strategy increased the customer base of Starbucks. A lot of customers prefer Starbucks as a place to socialize.

Starbucks Coffee Mission Statement

The mission statement of Starbucks is as follows:

"To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time."

In order to accomplish its mission, Starbucks has made different principles that direct all the activities of its employees.

Financial Crisis

The most obvious challenge confronted by Starbucks is the American financial crisis. In 2008, Starbucks closed a number of its stores. In addition, the company also announced to close more stores in the future. Starbucks is still a developing company, but it is facing a lot of challenges as a result of changes in the environment, and a decline in the comparative-store sales. The down-turn in the economy of the United States has become on the most important challenged for Starbucks. The unfavorable market conditions include, but not limited, the U.S. downturn. There are a number of factors that are affecting consumer spending. The increase in interest rate accompanied with a decline in consumer income has influenced the sales of Starbucks. The condition of the United States economy is the most challenging situation for Starbucks. The performance of Starbucks depends on the financial performance of the United States.

Ratios

Profitability Ratios

10/02/2011

10/03/2010

ROA % (Net)

18.17

15.55

ROE % (Net)

31

27.69

ROI % (Operating)

33.39

31.99

EBITDA Margin %

17.99

16.92

Calculated Tax Rate %

34.39

37.92

Revenue per Employee

78,742

76,892

Liquidity Ratios

10/02/2011

10/03/2010

Quick Ratio

1.17

0.98

Current Ratio

1.83

1.55

Net Current Assets % TA

23.36

15.3

Debt Management

10/02/2011

10/03/2010

LT Debt to Equity

0.13

0.15

Total Debt to Equity

0.13

0.15

Asset Management

10/02/2011

10/03/2010

Total Asset Turnover

1.71

1.76

Receivables Turnover

34.05

36.72

Inventory Turnover

6.56

7.38

Accounts Payable Turnover

28.53

38.33

Accrued Expenses Turnover

12.5

12.34

Property Plant & Equip Turnover

4.92

4.25

Cash & Equivalents Turnover

10.15

11.94

Per Share

10/02/2011

10/03/2010

Cash Flow per Share

2.16

2.25

Book Value per Share

5.89

4.95

Comments

Starbuck has shown the increasing trend in all the areas. There is slight decrease in certain aspects but they do not have major impact on the profitability.

1)Company has performed well and they have reported increase in Current Ratio which is favorable for them. Now they have $ 1.83 of Current assets to meet $ 1 of its Current Liability.

2)The position of Quick ratio also improved as compared to past year which shows that Starbuck has more dollars to meet their ...