Financial Health Analysis of Starbucks



Financial Health Analysis of Starbucks

Introduction

Starbucks Corp. (Starbucks) is best coffee retailer in the world founded in 1985 by Howard Shulzthas. Starbucks has its headquarters situated in Seattle, Washington with its assets of $ 5.5 billion as reported (Yahoo! Finance, 2009). Starbucks shows its presence in 35 countries with 16,000 stores in the world. It has become a way of life for many hard core consumers. (Starbucks “About Us,” 2009 Starbucks was ranked among the top twenty fastest growing American restaurant and food chain despite of critical economic conditions in 2008. (Standard & Poor's, 2009).

Partnership with the food manufacturers helped the Starbucks in its growth outside the industry as well. Flavored liquor, ice cream and bottled Frappuccino have already become the top selling brands of the company in this arena (Starbucks “About Us,” 2009). Despite of low profits in 2008, it kept on investing in its partners, employees and in its stores as well. (Yahoo! Finance, 2009). The company continues to struggle in improving its customer spread, its market value and financial strength.

Discussion

Financial pros and cons

The paper will examine the business structure of Starbucks that will help understanding the strong and weak business aspects of the company. Researchers provided a set of strategy ands business structure that helped Starbucks growing internationally. Starbucks is in its growing phase and for the past ten years it achieved an impressive growth rate in earning per share of 20 percent per year. Starbucks witnessed the fast growth in the revenue in spite of all the economic downturns. Its Return on Assets (ROA) and Return on Equity (ROE) are also observed to be well above the average of the coffee industry in 2006. It has shown an impressive growth rate of expansion and opening stores and success in maintaining such profitability ...