For both Dunkin’ and Starbucks, compute the following profitability ratios for the latest year. Assume a tax rate of 30%.

A. Profit margin for ROA

B. Asset turnover

C. ROA

D. Profit margin for ROCE

E. Capital structure leverage

F. ROCE

The next several questions deal with Starbucks and Dunkin’ Brands. These are two major companies, with many locations selling coffee and snacks. Dunkin’ Brands also owns Baskin-Robbins ice cream stores.
The two companies are structured differently. As of September, 2014, Starbucks owned and operated 59% of the Starbucks locations. The rest were operated under license or franchise agreements. When Starbucks owns a location, they record the sales, cost of sales, and related operating expenses. When a location is operated under a franchise agreement, Starbucks does not record the sales and related operating expenses. Instead, Starbucks records the fees it is entitled to, including a percentage of store revenues, but does not record the costs of coffee and food sold. Dunkin’ Brands owns almost none of the Dunkin’ Donuts and Baskin-Robbins locations. Instead, these locations are franchises. Therefore, its income statement shows fees related to this franchise activity, but does not show the costs of sales or operations of the various locations.
Another difference between the companies is their history. Starbucks was started in 1985, and it has never been acquired by other companies. It has made some minor acquisitions of other companies over its history. Its balance sheet shows some goodwill and some intangible assets related to these acquisitions, but, the balance sheet does not show the value of the Starbucks trademark or of the goodwill of the Starbucks business itself. The brands that make up Dunkin’ Brands have been the subject of more than one acquisition over their history, including an acquisition in 2005. In the process of these transactions, values were assigned to the Dunkin’ and Baskin-Robbins trademarks and to goodwill.

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Table 4.17 Dunkin' Brands Consolidated Statements of Operations (USD $) In thousands, except per share data, unless 12 months ended otherwise specified Revenues: Dec. 28, 2013 Dec. 29, Dec. 31, 2012 2011 Franchise fees and royalty income $453,976 $418,940 $398,474 Rental income 96,082 96,816 92,145 Sales of ice cream products 112,276 94,659 100,068 Sales at company-owned restaurants 24,976 22,922 12,154 Other revenues 26,530 24,844 25.357 Total revenues 713.840 658,181 628,198