We will examine the financial performance of Starbucks and Dunkin Donuts.

Obtain Financial Statements and market data (current stock price, number of shares outstanding) for the two companies from its Hoovers data set , company's website, finance.yahoo.com, money.msn.com, SEC.gov, or Edgar (this information is easy to find)

Calculate following ratios and measures for Starbucks and Dunkin Donuts and compare them to the industry ratios. Here are the ratios that you will need to calculate:

• Performance Measures:
• Market Value Added (MVA)
• Market-to-book ratio

• Economic Value Added and Profitability Measures:
• EVA
• Return on Capital (ROC)
• Return on Assets (ROA)
• Return on Equity (ROE)

• Measuring Efficiency - Asset Management or Turnover Measures:
• Assets Turnover
• Fixed Assets Turnover
• Inventory Turnover
• Average days in inventory
• Receivables Turnover
• Average Collection period

• Analyzing the return on Assets
• Profit Margin
• Operating Profit Margin
• The Du Pont System

• Measuring Financial Leverage - Long term Solvency Measures
• Long Term Debt Ratio
• Long Term Debt-Equity Ratio
• Total Debt Ratio
• Times Interest Earned
• Cash Coverage Ratio

• Measuring Liquidity - Short-Term Solvency or Liquidity Measures
• NWC to Total Assets Ratio
• Current Ratio
• Quick Ratio
• Cash Ratio

• Growth measures:
• Payout Ratio
• Sustainable Growth

Very Important:

For each ratio, comment on how it would be viewed relative to the competitor or industry. You cannot just say that a ratio is higher than average or lower than average; you must explain WHAT the ratio means and WHY the value would be viewed either positively or negatively

For example, suppose you calculate the inventory turnover ratio. How would you interpret the ratio? How dos your company compare to the industry averages for this ratio? Is it better to have higher or lower inventory turnover in this industry or does it not matter so much?

You will need to find Cost of Capital for the Starbucks and Dunkin Donuts industry to calculate EVA. This is the link to the data set with different industries' Costs of Capital (WACC):

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm