FIN370 WEEK 2 INDIVIDUAL ASSIGNMENT Company Evaluation Paper Starbucks
FIN370 WEEK 2 INDIVIDUAL ASSIGNMENT Company Evaluation Paper Starbucks fin571
Popular in Department
This 0 page Study Guide was uploaded by an elite notetaker on Wednesday November 11, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 25 views.
Reviews for FIN370 WEEK 2 INDIVIDUAL ASSIGNMENT Company Evaluation Paper Starbucks
Report this Material
What is Karma?
Karma is the currency of StudySoup.
Date Created: 11/11/15
Starbucks The SEC and Financial Performance Starbucks is a publicly traded company and all publicly traded companies have to meet the legal requirements imposed on them by the Securities and Exchange Acts of 1933 and 1934 Securities Laws Rules Regulation and Information 2008 These Acts require publicly traded companies like Starbucks to give potential investors specific information about any stock offered for sale such as notices about the registration of shares Securities Laws Rules Regulation and Information 2008 SEC laws also require companies to be honest and require them to disclose any stock purchased or sold by company executives and to file quarterly 10Q and annual 10K reports on the company s financial results With the SEC Securities Laws Rules Regulation and Information 2008 Companies must also provide shareholders With annual financial statements and proxy materials and information about annual shareholders meetings The Investor s Advocate 2009 These disclosures are meant to assure investors have as much information as possible about their investments and potential investments Investors can use the information provided in financial statements for example to ascertain the financial strength of a company Financial ratios can be calculated from the information provided by financial statements Ratios such as the current ratio debt ratio return on equity and days receivable can help determine the effectiveness of a company s management team by illustrating its financial strengths and weaknesses In 2008 and 2007 respectively Starbuck s current ratio was 80 and 79 Starbucks Corporation Form 10K 2008 The current compares current liabilities to current assets to determine how much of a company s current obligations can be paid for by current assets In effect the current ratio illustrates the liquidity of a company In 2008 and 2007 respectively Starbucks debt ratio was 56 and 57 Starbucks Corporation Form 10K 2008 The debt ratio gives investors a way to measure how much of a company s operations are financed through debt and the higher the debt the less stable a company is financially because it re ects an inability to self fund its operations In 2008 and 2007 respectively Starbucks return on equity was 13 and 29 Starbucks Corporation Form 10K 2008 A company s return on equity indicates how much of a company s profit comes from its shareholders investment Finally in 2008 and 2007 respectively Starbuck s days receivable was 116 and 112 days Starbucks Corporation Form 10K 2008 The days receivable indicates how quickly a company collects payment on its sales The faster a company collects payment the more positive a company s cash ow and profitability are Based on these ratios it seems that Starbucks financial results in 2008 were very similar to those it experienced in 2007 Starbucks however does seem to have some problems given its 2008 financial ratios The company s decline in ROE and the slight increase in its days receivable turnover indicate problems may arise The decline in ROE was rather large as it was nearly a 50 decline from 2007 Because of this change the company was less profitable in 2008 which means that the company may have difficulty in maintaining its earnings While the rise in days receivable may seem small it also indicates that Starbucks ability to obtain cash for its sales has slowed down and this may create future cash ow problems A decrease in cash ow means that the company may lack the cash it needs in the future to make loan payments or meet its regular business expenses Based on all of the ratios however it appears that Starbucks financial position is strong at this time but the increased ROE and days receivable indicate the company should carefully monitor its cash ow References The Investor39s Advocate How the SEC Protects Investors Maintains Market Integrity and Facilitates Capital Formation SEC gov Retrieved December 31 2009 from httpWWWsecgovaboutWhatwedoshtml Securities Laws Rules Regulation and Information 2008 Beam amp Astarita LLC Retrieved December 31 2009 from httpWWWseclaWcomsecruleshtm Starbucks Corporation Form 10K 2008 Retrieved December 31 2009 from httpphxcorporateirnetExternalFile itemUGFVZW5 OSUO9MTEXNZN802thGRJRDOtMXXUeXB lPTMampt l