Answer all these 3 questions for Starbucks company fiscal year 2016-2018
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share data) Fiscal Year Ended Oct 2, Oct 1, Sep 30, 2016 2017 2018 Net revenues: Company-operated stores $16,844.10 $17,650.70 $19,690.30 Licensed stores 2,154.20 2,355.00 2,652.20 Other 2,317.60 2,381.10 2,377.00 Total net revenues 21,315.90 22,386.80 24,719.50 Cost of sales including occupancy costs 8,509.00 9,034.30 10,174.50 Store operating expenses 6,064.30 6,493.30 7,193.20 Other operating expenses 499.2 500.3 539.3 Depreciation and amortization expenses 980.8 1,011.40 1,247.00 General and administrative expenses 1,408.90 1,450.70 1,759.00 Restructuring and impairments 153.5 224.4 Total operating expenses 17,462.20 18,643.50 21,137.40 Income from equity investees 318.2 391.4 301.2 Operating income 4,171.90 4,134.70 3,883.30 Gain resulting from acquisition of joint venture 1,376.40 Net gain resulting from divestiture of certain operations 5.4 93.5 499.2 Interest income and other, net 102.6 181.8 191.4 Interest expense (81.30 (92.50) (170.30) Earnings before income taxes 4,198.60 4,317.50 5,780.00 Income tax expense 1,379.70 1,432.60 1,262.00 Net earnings including noncontrolling interests 2,818.90 2,884.90 4,518.00 Net earnings/[loss] attributable to noncontrolling interests 1.2 0.2 (0.30) Net earnings attributable to Starbucks $2,817.70 $2,884.70 $4,518.30 Earnings per share - basic $1.91 $1.99 $3.27 Earnings per share - diluted $1.90 $1.97 $3.24Weighted average shares outstanding: Basic 1,471.60 1,449.50 1,382.70 Diluted 1,486.70 1,461.50 1,394.60 Net earnings including noncontrolling interests $2,818.90 $2,884.90 $4,518.00 Other comprehensive income/[loss), net of tax: Unrealized holding gains/(losses) on available-for-sale securities 3.5 (9.50) (7.00) Tax (expense)/benefit (1.30) 2.9 1.9 Unrealized gains/[losses) on cash flow hedging instruments (109.60) 53.2 24.4 Tax (expense)/benefit 27.5 (12.60) (6.50) Unrealized gains/[losses) on net investment hedging instruments 20.1 7.8 Tax (expense)/benefit - (7.40) (2.20) Translation adjustment and other 85.5 (38.30) (220.00) Tax (expense)/benefit 19 (2.40) 3.40 Reclassification adjustment for net (gains)/ losses realized in net earnings for available-for-sale securities, hedging instruments, and translation adjustment 78.2 (67.20) 24.7 Tax expense/[benefit) -11.8 14 -1.2 Other comprehensive income/(loss) 91 47.2 -174.7 Comprehensive income including noncontrolling interests 2,909.90 2,837.70 4,343.30 Comprehensive income/(loss) attributable to noncontrolling interests 1.2 0.2 -0.3 Comprehensive income attributable to Starbucks $2,908.70 $2,837.50 $4.343.60STARBUCKS CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share data) Oct 2, Oct 1, Sep 30, 2016 2017 2018 ASSETS Current assets: Cash and cash equivalents $2,128.80 $2,462.30 $ 8,756.30 Short-term investments 134.4 228.6 181.5 Accounts receivable, net 768.8 870.4 693.1 Inventories 1,378.50 1,364.00 1,400.50 Prepaid expenses and other current assets 347.4 358.1 1,462.80 Total current assets 4,757.90 5,283.40 12,494.20 Long-term investments 1,141.70 542.3 267.7 Equity and cost investments 354.5 481.6 334.7 Property, plant and equipment, net 4,533.80 4,919.50 5,929.10 Deferred income taxes, net 885.4 795.4 134.7 Other long-term assets 403.3 362.8 412.2 Other intangible assets 516.3 441.4 1,042.20 Goodwill 1,719.60 1,539.20 3,541.60 TOTAL ASSETS $ 14,312.50 $14,365.60 $24,156.40 LIABILITIES AND EQUITY Current liabilities: Accounts payable $730.60 $782.50 $1,179.30 Accrued liabilities 1,999.10 1,934.50 2,298.40 Insurance reserves 246 215.2 213.7 Stored value card liability and current portion of deferred revenue 1,171.20 1,288.50 1,642.90 Current portion of long-term debt 399.9 349.9 Total current liabilities 4,546.80 4,220.70 5,684.20 Long-term debt 3,185.30 3,932.60 9.090.20 Deferred revenue 1.4 6,775.70 Other long-term liabilities 689.7 750.9 1,430.50Total liabilities 8,421.80 $ 8,908.60 $ 22,980.60 Shareholders' equity: Common stock ($0.001 par value) - authorized, 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively 1.5 1.4 1.3 Additional paid-in capital 41.1 41.1 41.1 Retained earnings 5,949.80 5,563.20 1,457.40 Accumulated other comprehensive loss (108.40) (155.60) (330.30) Total shareholders' equity 5,884.00 5.450.10 1,169.50 Noncontrolling interests 6.7 6.9 6.3 Total equity 5,890.70 5.457.00 1,175.80 TOTAL LIABILITIES AND EQUITY $14,312.50 $14,365.60 $24,156.40STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS [in millions) Oct 2, Oct 1, Sep 30, Fiscal Year Ended 2016 2017 2018 OPERATING ACTIVITIES: Net earnings including noncontrolling interests $2,818.90 $2,884.90 54,518.00 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,030.10 1,067.10 1,305.90 Deferred income taxes, net 265.7 95.1 714.9 Income earned from equity method investees (250.20) (310.20) (242.80) Distributions received from equity method investees 223.3 186.6 226.8 Gain resulting from acquisition of joint venture (1,376.40) Net gain resulting from divestiture of certain retail operations (6.10) (93.50) (499.20) Stock-based compensation 218.1 176 250.3 Goodwill impairments 87.2 37.6 Other 45.1 68.9 89 Cash provided by changes in operating assets and liabilities: Accounts receivable (55.60) (96.80) 131 Inventories 67.5 14 41.2 Accounts payable 46.9 46.4 391.6 Deferred revenue 180.4 130.8 7,109.40 Other operating assets and liabilities 248.8 (4.70) (677.10) Net cash provided by operating activities 4,697.90 4,251.80 11,937.80 INVESTING ACTIVITIES: Purchases of investments (1,585.70) (674.40) (191.90) Sales of investments 680.7 1,054.50 459 Maturities and calls of investments 27.9 149.6 45.3 Acquisitions, net of cash acquired (1,311.30) Additions to property, plant and equipment (1,440.30) (1,519.40) (1,976.40) Net proceeds from the divestiture of certain operations 69.6 85.4 608.2 Other 24.9 54.3 5.6Net cash used by investing activities (2,222.90) (850.00) [2,361.50) FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 1,254.50 750.2 5,584.10 Repayments of long-term debt (400.00) Proceeds from issuance of common stock 160.7 150.8 153.9 Cash dividends paid (1,178.00) (1,450.40) (1,743.40) Repurchase of common stock (1,995.60) (2,042.50) (7,133.50) Minimum tax withholdings on share-based awards (106.00) (82.80) (62.70) Other (8.40) (4.40) (41.20) Net cash used by financing activities (1,872.80) (3,079.10) (3,242.80) Effect of exchange rate changes on cash and cash equivalents (3.50] 10.80 39.50) Net increase in cash and cash equivalents 598.7 333.5 6,294.00 CASH AND CASH EQUIVALENTS: Beginning of period 1,530.10 2,128.80 2,462.30 End of period $2,128.80 $2,462.30 58,756.30 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest, net of capitalized interest $74.70 $96.60 $137.10 Income taxes, net of refunds $ $878.70 $1,389.10 1,176.90Profitability: Accounting Margins Ratio Formula 2016 2017 2018 Unit Gross margin Gross profit/Sales 60.08% 59.64% 58.84% Operating margin Operating profit/Sales 19.57% 18.47% 15.71% Net Profit Margin Net income/Sales 13.22% 12.89% 18.28% Asset Management Ratios: Overall Ratio Formula 2016 2017 2018 Total asset turnover Sales/Total assets 1.49 1.56 1.02 Times Return on assets (ROA) Net income/Total assets 19.69% 20.08% 18.70% Asset Management Ratios: Key Asset Categories Ratio Formula 2016 2017 2018 Fixed asset turnover Sales/Net fixed assets 2.23 2.46 2.12 Times Accounts receivable turnover Sales/Accounts receivable 27.73 25.72 35.67 Times Days sales in A/R Accounts receivable/Sales per day 13.16 14.19 10.23 Times Inventory turnover COGS/Inventory 6.17 6.62 7.26 Times Days cost of sales in inventory Inventories/COGS per day 59.13 55.11 50.24 Times Debt Management Ratios Ratio Formula 2016 2017 2018 Long-term debt to total assets Long-term debt/Total assets 22.26% 27.38% 37.63% Equity multiplier Total assets/Stockholders' equity 2.43 2.63 20.54 TimesLiquidity Ratio Formula 2016 2017 2018 Unit Current Ratio Current Asset/Current Liability 1.05 1.25 2.20 Times Acid Test Ratio (Quick ratio) (Current Asset-Inventories)/Current Liability 0.74 0.93 1.95 Times Cash Ratio Cash/Current Liability 46.82% 58.34% 154.05%% Activity (Efficiency) ratio Accounts receivable turnover Sales/Accounts receivable 27.73 25.72 35.67 Times Average collection period A/R*365/Sales 13.16 14.19 10.23 Day's Inventory Turnover COGS/Inventory 6.17 6.62 7.26 Times Day sales of inventories 365/Inventory Turnover 59.13 55.11 50.24 Day's Fixed Asset Turnover Sales/Net fixed assets 2.23 2.46 2.12 Times Total Asset Turnover Sales/Total assets 1.49 1.56 1.02 Times Equity Turnover Sales/Stockholders' equity 3.62 4.10 21.02 Times Profitability ratio Gross Profit Margin Gross profit/Sales 60.08% 59.64% 58.84% Operating Profit Margin EBIT/Sales 19.57% 18.47% 15.71% Net Profit Margin Net income/Sales 13.22% 12.89% 18.28% Return on Assets Net income/Total assets 19.69% 20.08% 18.70% Return on Equity Net income/Stockholders' equity 47.83% 52.86% 384.27%% Equity Multiplier (EMUL) Total asset/Stockholders' equity 2.43 2.63 20.54 Times Debt (Financial Leverage ratio) Debt ratio Total Liabilities/Total assets 58.84% 62.01% 95.13% Total Debt to Equity ratio Total Liabilities/Stockholders' equity 142.97% 163.25% 1954.47% Times Interest Earned ratio EBIT/1 195.86 46.30 184.04 Times Market Value ratio Price Earnings Ratio Market price per share/Earnings per share Book value per share Common Equity/No. of Common stock Market-to-Book value ratio Market price per share/Book value per shareLiquidity Ratio SBUX DNKN MCD Unit Current Ratio 2.20 1.51 1.36 Times Acid Test Ratio (Quick ratio) 1.95 1.66 1.52 Times Activity (Efficiency) ratio Accounts receivable turnover 35.67 17.40 8.61 Times Inventory Turnover 7.26 N/A 200.38 Times Total Asset Turnover 1.02 0.38 0.64 Times Profitability ratio Gross Profit Margin 58.84 89.75 51.30 Operating Profit Margin 15.71 31.16 41.96 Net Profit Margin 18.28 17.40 28.18 Return on Assets 18.70 6.65 18.06 % Return on Equity 384.25 -32.25 -94.66 Debt (Financial Leverage ratio) Total Debt to Equity ratio 8.03 4.28 4.97 % https://www.macrotrends.net/stocks/charts/DNKN/dunkin-brands/financial-ratios https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/financial-ratiosDuPont Analysis of Return on Equity 2016 2017 2018 NPM 13.22% 12.89% 18.28%% TAT/O 1.49 1.56 1.02 Leverage(EMUL) 2.43 2.63 20.54 ROE 47.83% 52.86% 384.27%% EBIT/Sales 0.195717751 0.184694 0.157095 Sales/Total Assets 1.489320524 1.558362 1.023311 NI/Taxable income 3.206668943 2.076668 3.839154 Taxable income/EBIT 0.210623457 0.335961 0.303067 Total Assets/Equity 2.429677288 2.632509 20.54465 ROE 47.83% 52.86% 384.27% ROA 18.70% Tc 107.23%% i 0.74% Leverage contribute 18.76% ROE 385.32% Internal Growth rate T P Tp[1-d) 1-Tp(1-d) E g= Tp(1-d)/1-Tp(1-d) 1.02 18.28% 38.59% 0.11 0.89 12.98% Sustainable growth rate Tp(1-d) Tp(1+L) 1+ g = Tp(1-d)(1+L)/1-Tp(1+L) 0.11 1954.47% 3.84 2054.47% -83.02% EFN = A*g-p*S*(1+g)*(1-d) $1,501.40Starbucks Corp. (SBUX) Standard & Poor's 500 (S&P Source : https://finance.yahoo.com/qu Date Price(SBUX, t) R(SBUX, t) Price(S&P 500, t) R(S&P 500, t) Jun 1, 1992 0.28 408.14 X Jul 1, 1992 0.33 19.66% 424.21 3.94% Beta JAWN Aug 1, 1992 0.31 -6.57% 414.03 -2.40% Norminal Risk Free Rate Sep 1, 1992 0.38 21.61% 417.80 0.91% Monthly Market Return Oct 1, 1992 0.37 -2.48% 418.68 0.21% Annualize E(Rm) Nov 1, 1992 0.47 27.97% 431.35 3.03% Dec 1, 1992 0.46 -1.99% 435.71 1.01% Jan 1, 1993 0.48 4.05% 438.78 0.70% CAPM (Re) Feb 1, 1993 0.45 -5.84% 443.38 1.05% E(RI) = RF Mar 1, 1993 0.48 4.83% 451.67 1.87% 10 Apr 1, 1993 0.49 1.97% 440.19 -2.54% SUMMARY OUTPUT 11 May 1, 1993 0.60 23.87% 450.19 2.27% 12 Jun 1, 1993 0.61 2.08% 450.53 0.08% Regression Statistics 13 Jul 1, 1993 0.60 -3.06% 448.13 -0.53% Multiple R 0.416964 14 Aug 1, 1993 0.61 2.11% 463.56 3.44% R Square 0.173859 15 Sep 1, 1993 0.69 12.89% 458.93 -1.00% Adjusted R Square 0.171228 16 Oct 1, 1993 0.67 -2.28% 467.83 1.94% Standard Error 0.092233 17 Nov 1, 1993 0.56 -16.82% 461.79 -1.29% Observations 316 18 Dec 1, 1993 0.56 0.00% 466.45 1.01% 19 Jan 1, 1994 0.60 7.87% 481.61 3.25% ANOVA 20 Feb 1, 1994 0.58 -3.13% 467.14 -3.00% df 21 Mar 1, 1994 0.61 4.84% 445.77 -4.57% Regression 22 Apr 1, 1994 0.75 22.05% 450.91 1.15% Residual 314 23 May 1, 1994 0.71 -4.20% 456.50 1.24% Total 315 24 Jun 1, 1994 0.63 -11.40% 444.27 -2.68% 25 Jul 1, 1994 0.73 14.85% 458.26 3.15% Coefficient: 26 Aug 1, 1994 0.71 -2.59% 475.49 3.76% Intercept 0.015016 27 Sep 1, 1994 0.58 -18.36% 462.71 -2.69% R(5& P 500, t) 1.044072 28 Oct 1, 1994 0.68 17.62% 472.35 2.08% 29 Nov 1, 1994 0.67 -1.15% 453.69 -3.95% 30 Dec 1, 1994 0.69 2.56% 459.27 1.23% 31 Jan 1, 1995 0.60 -12.73% 470.42 2.43%1) Briefly summarize the financial performance of the company. 2) Calculate key financial ratios, then make trend analysis and peer-group analysis. 3) Du Pont Identity Analysis, compare ROE with ROA, how much is the leverage effect
