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' 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
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
|R & D||-||224||154||-||-|
Starbucks Balance Sheet Summary
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
|Short Term Investment||71||182||229||134||81|
|LT Debt - Current||-||350||-||400||-|
|Total Current Liabilities||6,169||5,684||4,221||4,547||3,648|
|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.
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
|Net Working Capital||1,948||7,372|
Starbucks Asset Utilization 2019
|Total Asset Turnover||1.38||1.02|
|Fixed Asset Turnover||4.12||4.17|
|Days Sales Outstanding||12.11||10.23|
|Accounts Receivable Turnover||30.15||35.67|
|Working Capital Turnover||13.61||3.35|
|Average Days Inventory||0.05||0.05|
|Average Days Payable||0.06||0.06|
Starbucks Profitability Ratios 2019
|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%|