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Essay / Research Paper Abstract
This 17 page paper is an in-depth financial analysis of Starbucks for the years 2005 – 2008, looking a profitability, efficiency and liquidity. Following the financial analysis the cost of capital is calculated. All calculations are shown. The bibliography cites 5 sources.
Page Count:
17 pages (~225 words per page)
File: TS14_TEstarbucks08.rtf
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Unformatted sample text from the term paper:
as a result the downturn in economic condition, especially in the home nation; the USA. The need to see the firm turnaround saw the return sae the founder; Howard Schultz,
return to the position of CEO and make sweeping changes, closing under performing stores, returning to basics, retraining staff and renewing the image of the company. However, the real area
of interest is in the financial performance of the organization, looking at areas such as profitability, efficiency and liquidity. Ratio analysis can be very valuable; it is able to
provide a good insight into the firm with both horizontal and vertical analysis, this also allows for benchmarking to take place. However, when looking at any ratio, it should not
be assumed that benchmarking can taken place without an examination of how the ratio is calculated, for many of the ratios there may be choices regarding the way that the
figures are calculated, therefore, the different calculations are shown. At first glance Starbucks appears to be doing well; sales have been continually increasing in 2005 sales amounted to $6.369.31,
this increased to $7,786.9 in 2006, $9,411.5 in 2007 and $10,383 in 2008. This is a significant growth level, 2006 had a growth rate of 22.3% on the previous year,
in 2072 20.9%, to 2084 to 10.3%; this gives the last three years average growth rate of 17.7% per annum. It may be argued that this rapid rate of growth
is unsustainable; it maybe overstretching the organization, but it should also be remembered a large amount of growth is taking place through the use of the franchise model, which reduces
the risk on Starbucks themselves, and is also efficient in terms of capital management. However, growth in sales revenue is any one aspect of performance, and revenue does not always
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