Financial Analysis Starbucks Corporation

Financial Analysis


Financial analysis is important during investment decision making. The objective of the investor is to maximize return and minimize the risks. Evaluating the financial performance of a company or project helps to reveal possible returns from the investment (Helfert, 2001). Given the importance of the financial analysis in investment decision making, this report evaluates the viability of the Starbucks Corporation and Settle’s Best Coffee as an investment opportunity by evaluating its financial performance. The financial analysis of the company is carried out for a period between 2007 and 2011. The study gives a comprehensive financial analysis comprising of vertical, horizontal and ratio analysis. To arrive at a decision concerning investing in the Starbuck Company, this report compares the performance of Starbucks and Settle Best Coffee with that of its competitor (McDonalds) and that of the industry. The report commences by evaluating the background to the two companies (Starbucks Corporation and Settle’s Best Coffee).

Background to the Companies

  1. Starbucks Corporation

This is Coffeehouse Chain from America. The company was founded in 1971 and has it’s headquarter in Seattle, Washington U.S. the company has 23, 768 restaurants around the world which include 13, 107 restaurants in U.S.A., 1, 418 in Canada, and 2, 204 in China. Settle Best Coffee is the subsidiary of the Starbucks Corporation. The company serves cold and hot drinks, micro-ground Instant coffee, whole-bean coffee, Caffe-latte, and espresso and it employs 191, 000 people. The company is publicly traded and listed on NASDAQ. On addition to this Starbucks is a component of the S&P 500. Starbucks started to make a profit in the 1980s, and by the end of the year 2014, the company had total assets valued at US$ 10, 752 billion, and total equity valued at US$ 5. 272 billion. The company generated total income amounting to US$ 32. 081 billion in the same year (Thompson & Gamble, 2015).

  1. McDonald’s


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