Starbucks Financial Report and Financial Analysis: 2015 to 2019

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 Financial Report and Analysis 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.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • 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.
  • Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
  • 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 2019 at $62.40.  It ended the year with a stock price of $88.66.  This is a growth rate annually of 42.08%.  From an investor’s perspective, this growth rate well exceeds overall market returns.

Starbucks has been consistently paying dividends over the last five years.  Further, their dividend payments have been growing continuously as well.  However, the actual growth rate for dividends has been declining.  In 2016, the growth rate for dividends was 25%.  However, in 2019, this growth rate slowed to 18.25%.  Investors should expect this growth rate declined to continue for your seeable future. 

Starbucks Income Statement Summary

Operating Expenses

For the last two years, Starbucks' operating expenses have been approximately 85% of its sales.  This indicates that the company may have reached optimal optimization in their operating establishments.  From this, if the organization increases its operating expense as compared to sales, then management may not be holding employees to the highest of standards.  In other words, if the operating expenses grow, then this may show that front-line managers may be becoming lax in their jobs and that adequately monitoring employees.

Starbucks Income Statement 2019

Column1 2019 2018 2017 2016 2015
Revenues                    26,508                    24,720                    22,387                    21,316                      19,163
COGS                      8,527                    10,175                      9,034                      8,509                        7,788
Gross Profit                    17,981                    14,545                    13,353                    12,807                      11,375
SG&A                      1,824                      1,759                      1,451                      1,409                        1,197
Depreciation                      1,377                      1,247                      1,011                         981                           894
R & D                            -                         224                         154                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                    21,808                      7,733                      6,994                      6,564                        5,934
EBIT                      4,077                      3,883                      4,135                      4,172                        3,601
Other Income                            -                         191                         181                         103                             43
Interest Expense                         331                         170                           93                           81                             71
EBT                      4,466                      5,780                      4,318                      4,199                        3,903
Taxes                         872                      1,262                      1,433                      1,380                        1,144
Net Income                     3,599                     4,518                     2,885                     2,818                      2,757
Tax Rate 19.5% 21.8% 33.2% 32.9% 29.3%

Starbucks Balance Sheet Summary

Long-Term Debt

A trend is starting to emerge concerning long-term debt.  In the income statement analysis, we identified that the company is continually increasing its interest expense payments annually.  For the balance sheet analysis, we can see that the organization’s long-term debt grew from $2.3 billion in 2015 to $11.2 billion in 2019.  This shift in capital structure shows that the firm is taking advantage of low-interest rates in the market.  However, this also means that the firm is taking on more risk due to the need for principal and interest payments.  If this trend continues, the company may have difficulty with weathering future recessions.

Starbucks Summary Balance Sheet 2019

Column1 2019 2018 2017 2016 2015
Cash                        2,686                    8,756                    2,462                    2,129                    1,530
Short Term Investment                             71                       182                       229                       134                         81
Account Receivable                           879                       693                       870                       769                       719
Inventory                        1,529                    1,401                    1,364                    1,379                    1,306
Other                           488                    1,463                       358                       350                       334
Current Assets                       5,653                12,494                  5,283                  4,761                  3,971
Net PPE                        6,431                    5,929                    4,920                    4,534                    4,088
Goodwill                        3,490                    3,542                    1,539                    1,720                    1,575
Other                           781                       602                    1,024                    1,496                       665
Total Assets                    19,220                24,156                14,366                14,330                12,416
Accounts Payable                        1,189                    1,179                       783                       731                       684
Accrued Expense                           665                    2,298                    1,935                    1,999                    1,755
Accrued Taxes                        1,292                         -                         -                         -                         -
Notes Payable                              -                         -                         -                         -                         -
LT Debt - Current                              -                       350                         -                       400                         -
Other                              -                         -                         -                         -                         -
Total Current Liabilities                        6,169                    5,684                    4,221                    4,547                    3,648
LT Debt                      11,167                    9,090                    3,933                    3,202                    2,348
Other                        1,370                    1,431                       751                       690                       601
Total Liabilities                    25,451                22,981                  8,909                  8,439                  6,597
Common Stock                             41                         42                         43                         43                         43
Treasury                              -                         -                         -                         -                         -
Retained Earnings                      (5,771)                    1,457                    5,563                    5,950                    5,975
Other                         -                         -                         -                         -
Total Equity                     (6,232)                  1,176                  5,457                  5,891                  5,818
Total Equity & Liability                    19,220                24,156                14,366                14,330                12,416

Starbucks Financial Ratio Summary and Analysis

Net Working Capital

The company’s net working capital has been positive for the last five years.  This means that the company has maintained more current assets as compared to current liabilities.  This helps the company avoid the perception of financial difficulties.

As restaurants seek to become more streamlined, financial analysts may see the net working capital ratio dip into the negative for more and more entities.  This is because restaurants and coffee shops receive cash inflows daily.  Because of this, financial professionals working within the companies may seek to utilize reserves in other areas of the business as compared to sitting idly in checking accounts.

Inventory Turnover

Starbucks has been continually improving its inventory turnover over the last five years.  In 2015, its inventory turnover ratio was 14.7.  In the next five years, the firm has steadily improved this ratio to 17.3.  This shows that the firm is holding less inventory as compared to sales.  A possible reason for this change would be that the firm is training managers to better control inventory.

Net Profit Margin

The company’s net profit margin has ranged from 12.9% to 18.3% in the last five years.  As of 2019, their net profit margin was 13.6 percent.  This shows that the company’s net profit margin was within their average range. 

Starbucks Liquidity Ratios 2019

Ratios 2019 2018 2017 2016 2015
Current Ratio                           0.92                    2.20
Cash Ratio                           0.44                    1.54
Quick Ratio                           0.67                    1.95
Net Working Capital                         1,948                  7,372

Starbucks Asset Utilization 2019

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           1.38                    1.02
Fixed Asset Turnover                           4.12                    4.17
Days Sales Outstanding                         12.11                  10.23
Inventory Turnover                         17.34                  17.65
Accounts Receivable Turnover                         30.15                  35.67
Working Capital Turnover                         13.61                    3.35
AP Turnover                         22.29                  20.96
Average Days Inventory                           0.05                    0.05
Average Days Payable                           0.06                    0.06

Starbucks Profitability Ratios 2019

Ratios 2019 2018 2017 2016 2015
Return on Assets 18.73% 18.70%
Return on Equity -57.75% 384.27%
Net Profit Margin 13.58% 18.28%
Gross Profit Margin 67.83% 58.84%
Operating Profit Margin 15.38% 15.71%
Basic Earning Power 21.21% 16.07%
ROCE 31.24% 21.02%
Capital Employed                       13,051                18,472
ROIC 39.16% 22.82%