Sam Coffee Overview

Sam Coffee

Company profile

Sam's Coffee Cmpany is a privately owned coffee business founded in the year 1989 and is based in San Francisco, California. The company generates revenues primarily through the sale of its coffee-based products such as Roasted Coffee and Green Coffee which it targets at various market niches. Over the last five years, Sam Coffee's revenues have experienced a remarkable increase and the 5-year compound annual growth rate has risen by a staggering 15% whereas operating income margin has averaged 20%. Moreover, earning before interest and taxes for the most recent financial year equaled an impressive $10.5 million on revenues of $50 million.

Description of the Appraisal Assignment Standard and Premise of Value

According to the financials given in the background facts, we can easily foresee the future of this company which has huge profits and the profit margin accounts for almost 20% of the revenues. It has an annual growth of 15% which can easily go beyond the inflation rate and discount factor. The overall health of the company seems to be positive and strong. There can be an increase in the debt in future for any expansion program which they would like to pursue. And they can easily get it done because of their sound financial position and future anticipated cash inflows.

The growth factor is very important and it is heading upwards every year which is a positive indicator for its stakeholders. The Capital expenditure ratio is 30% which is quite normal and the operating expenses seems to be justified by the revenues that the company is making. With such steady and consistent growth Sam Coffee has a good future and it can further diversify in the market by entering into new markets and offering new products to its future customers. By this diversification they can expand and that can help the company to grow further and this will turn into further profits for the organization.

Scope of the Report

This report is useful for all its stakeholders. Especially for the shareholders which look towards the profitability of the company because they have invested their money in the company. So that their wealth can be maximized and this can be done by two means, one way is through the increase in the share price and the other gain that they expect is to earn dividend from their investment. Then comes the company management which looks towards the performance of the company because they are the decision makers of the organization and they need to look whether their decisions are being converted to the real numbers that they desire or not. The goals that they have set for the company to achieve are realistic or not. And if there is any deviation then they need to see where the problem lies and then they need to figure it out why it has happened and how they can devise a plan to eradicate those causes. This report can serve the management to set new goals and targets for the organization in the ...