Starbucks Financial Report and Financial Analysis: 2016 to 2020

Starbucks Financial Report and Financial Analysis started with an in-depth review of Starbucks' 10k Annual report, specifically, Starbucks' income statement and balance sheet. 

Next Paul Borosky, MBA., summarized their financial information and input it into a proprietary financial model, which shows their income statement and balance sheet trends as well as calculations for Starbucks' financial ratios, and financial ratio trends covering 5 years.

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Starbucks 2020 Financial Report by Paul Borosky, MBA.
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Each Public Company Financial Report will include:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
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  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
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  • Each section includes an “in other words” segment.  This is were the researcher uses plain English to explain finance concepts.

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Starbucks Summary

Starbucks stock price started in December 2019 at $85.03.  In the next several months, ending in late January, the company stock price would peak at $91.91.  In the next several months, due to Covid 19, its stock price would plummet, reaching a low in late March 2020 of $55.54.  From this point, the company stock price would continually climb, ending November 2020 at approximately $98.  The modest decrease in stock price due to Covid and its subsequent impressive rebound shows that investors have significant confidence in the company's ability to weather the current pandemic.

Starbucks Income Statement Summary

Cost of Goods Sold.

Starbucks' cost of goods ended 2016 at $8.5 billion.  This was 39.9% of revenues.  In the next three years, the organization's cost of goods sold would increase to $10.1 billion ending 2018.  As compared to revenues, the cost of goods sold would increase to 41.2%.  Fortunately, in the next two years, the organization's cost of goods sold would decline, ending 2020 at 32.7% of revenues.

Operating expenses.

Starbucks' operating expenses ended 2016 at $17.4 billion.  As compared to sales, this would be 81.9%.  In the next three years, the organization's operating expenses would increase to $22.7 billion in 2019.  This would be 85.7% of sales.  However, in 2020, the organization's operating expenses slightly declined to $22.2 billion or 94.7% of sales.

Starbucks 2020 Summary Income Statement

Column1

2020

2019 2018 2017

2016

Revenues

                   23,518

                   26,508                    24,720                    22,387

                     21,316

COGS

                     7,694

                     8,527                    10,175                      9,034

                       8,509

Gross Profit

                   15,824

                   17,981                    14,545                    13,353

                     12,807

 
SG&A

                     1,679

                     1,824                      1,759                      1,451

                       1,409

Depreciation

                     1,431

                     1,377                      1,247                      1,011

                          981

R & D                            -

                           -

                        224                         154

                            -

Other                            -                            -                            -                            -                             -
Operating Expenses

                   22,278

                   22,728                    21,137                    18,643

                     17,462

EBIT

                     1,561

                     4,077                      3,883                      4,135

                       4,172

Other Income                            -                            -

                        191

                        181

                          103

Interest Expense

                        437

                        331                         170                           93

                            81

EBT

                     1,164

                     4,466                      5,780                      4,318

                       4,199

Taxes

                        239

                        872                      1,262                      1,433

                       1,380

Net Income

                       928

                    3,599                     4,518                     2,885

                     2,818

Starbucks Balance Sheet Summary

Short-term Investments.

Starbucks' short-term investments ended 2016 at $134 million.  In the next year, the companies short-term investments would increase significantly to $229 million.  However, the firm would then reduce its short-term investment position in the next two years ending 2019 at $71 million, only to rebound again in 2020 to $281 million. 

Property, Plant & Equipment.

Starbucks property, plant, and equipment ended 2016 at $4.5 billion.  In the next four years, the company would continually increase its property, plant, and equipment ending 2019 at $6.4 billion.  However, the firm would moderately decrease its property, plant, and equipment in 2020, ending the year at $6.2 billion. 

Accounts Payable.

Starbucks Accounts Payable ended 2016 at $731 million.  In the next four years, the organization substantially increased its Accounts Payable ending 2019 at 1.1 billion dollars.  Fortunately, the company would moderately improve their Accounts Payable ending 2020 at $997 million.

Starbucks 2020 Summary Balance Sheet

Column1

2020

2019 2018 2017

2016

Cash

                       4,350

                   2,686                    8,756                    2,462

                   2,129

Short Term Investment

                          281

                        71                       182                       229

                      134

Account Receivable

                          883

                      879                       693                       870

                      769

Inventory

                       1,151

                   1,529                    1,401                    1,364

                   1,379

Other
Current Assets

                      7,806

                 5,653                12,494                  5,283

                 4,761

Net PPE

                       6,241

                   6,431                    5,929                    4,920

                   4,534

Goodwill

                       3,597

                   3,490                    3,542                    1,539

                   1,720

Other
Total Assets

                   29,374

               19,220                24,156                14,366

               14,330

Accounts Payable

                          997

                   1,189                    1,179                       783

                      731

Accrued Expense

                       1,856

                   2,418                    2,298                    1,935

                   1,999

Accrued Taxes

                            98

                   1,292                       103                         -

                        -

Notes Payable

                          438

                        -                         -                         -

                        -

LT Debt - Current

                       1,249

                        -                       350                         -

                      400

Other                              -                         -                         -                         -                         -
Total Current Liabilities

                       7,346

                   6,169                    5,684                    4,221

                   4,547

LT Debt

                     14,659

                 11,167                    9,090                    3,933

                   3,202

Other
Total Liabilities

                   37,173

               25,451                22,981                  8,909

                 8,439

Common Stock

                          373

                        41                         42                         43

                        43

Treasury                         -                         -                         -                         -
Retained Earnings

                     (7,815)

                 (5,771)                    1,457                    5,563

                   5,950

Other                         -                         -                         -
Total Equity

                    (7,805)

                (6,232)                  1,176                  5,457

                 5,891

Total Equity & Liability

                   29,374

               19,220                24,156                14,366

               14,330

Starbucks Financial Ratio Summary and Analysis

Cash Ratio.

Starbucks cash ratio ended 2016 at .47.  In the next two years, the organization's cash ratio would increase substantially to 1.54 in 2018.  In 2019, the company's cash ratio would fall to .44 only to rebound in 2020 to .59.

Fixed Asset Turnover.

Starbucks fixed asset turnover ended in 2016 at 4.7.  In the next five years, the company would substantially decrease their fixed asset turnover ending 2020 at 3.77. 

Inventory Turnover.

Starbucks inventory turnover in 2016 was 15.4.  In the next four years, the organization continually increased its inventory turnover ending 2020 at 20.4.

Return on Equity.

Starbucks' return on equity ended in 2016 at 47.8%.  In the next two years, the organization's return on equity would skyrocket to 384% in 2018.  However, in the next two years, the company's return on equity would fall to a negative.  In 2020, the company's return on equity would be -11.89%.

Net Profit Margin.

Starbucks' net profit margin ended in 2016 at 13.2%.  In the next year, the organization's net profit margin would fall to 12.8%.  In 2018, the company's net profit margin would climb up to 18.2%.  However, in the next two years, the organization's net profit margin would fall substantially, ending 2020 at 3.95%. 

 

Starbucks 2020 Liquidity Ratios

Ratios

2020

2019 2018 2017

2016

Current Ratio

                          1.06

                   0.92

Cash Ratio

                          0.59

                   0.44

Quick Ratio

                          0.91

                   0.67

Net Working Capital

                        3,433

                    195

Starbucks 2020 Asset Utilization

Ratios

2020

2019 2018 2017

2016

Total Asset Turnover

                          0.80

                   1.38

Fixed Asset Turnover

                          3.77

                   4.12

Days Sales Outstanding

                        13.70

                 12.11

Inventory Turnover

                        20.43

                 17.34

Accounts Receivable Turnover

                        26.63

                 30.15

Working Capital Turnover

                          6.85

               135.80

AP Turnover

                        23.59

                 22.29

Average Days Inventory

                        54.60

                 65.45

Average Days Payable

                        47.30

                 50.90

Cash Conversion Cycle

                        21.01

                 26.66

Starbucks 2020 Profitability Ratios

Ratios

2020

2019 2018 2017

2016

Return on Assets

3.16%

18.73%

Return on Equity

-11.89%

-57.75%

Net Profit Margin

3.95%

13.58%

Gross Profit Margin

67.28%

67.83%

Operating Profit Margin

6.64%

15.38%

Basic Earning Power

5.31%

21.21%

ROCE

7.09%

31.24%

Capital Employed

                      22,028

               13,051

ROIC

12.82%

49.52%

Starbucks 2020 Long-term Debt

Ratios

2020

2019 2018 2017

2016

Debt Ratio

49.90%

58.10%

Debt/Equity

-187.82%

-179.18%

Times Interest Earned

                          3.57

                 12.32