Starbucks Financial Statements Analysis

1.
Starbucks is a globally well-known brand of specialty coffee over 60 countries. Founded in 1985, Starbucks has high reputation for selling high quality coffee as well as tea and other beverages and fresh food through a well decorated and elegant in-store environment. The main initiative for Starbucks is to “maintain Starbucks standing as one of the most recognized and respected brands in the world.” Aiming to achieve this goal, the globally disciplined expansion and continuous new coffee and categories are two main methods.
2.
As the CEO mentioned in letters to shareholders, “First, we will remain committed to our coffee core. Second, we will exercise relevant, timely, and courageous innovation.” The most significant internal strengthen of Starbucks is the attention focused on core business-high quality and premium handcrafted coffee. In order to achieve this, Starbucks’s company-operated store in U.S. is about 61%. The internal weakness is also obvious, which is the price. Starbucks’s price is apparently higher than other competitors, which could easily lose customer in times of economic hardship.
“In the China and Asia Pacific region in 2012, we once, again posted strong annual returns, including 11 consecutive quarters of double-digit comparable store sales growth.” The global expansion strategy of Starbucks enables Starbucks to compete in a worldwide stage and leverages the revenue with a huge potential, which is a considerable external opportunity. The major threat is from Starbucks’s competitors, McDonald’s and Dunkin Donuts. They are both offering low ends coffee and challenging Starbucks based on their large scale of sale.
3.
In Starbucks case, the auditing firm offered unqualified opinion, which means” states that the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity, in conformity with generally accepted accounting principles.”
4.
The net sale of 2012 was strong and achieved $6,630.5 million compared to $5,882.4 million in 2011 and $5,231.2 million in 2010. The selling, general and administrative expenses also increased modestly from $1,457.6 million to $1,596.2 million. Due to the strong in sale, the operating income rose to $782.1 million from $630 million in 2011. Moreover, the interest expense, net reduced from $5.6 million to $2.9 million as a consequence of reducing short term borrowing in order to achieve a more conservative capital structure. The net income achieved $488.3 million in 2012, compared to past two years was a great success due to the outperforming sale. Therefore, the basic net income per share ended with $4.06 per share and $4.03 diluted net income per share which was impressive.

5.
The cash reduced slightly from $311.2 million in 2011 to $288.3 million in 2012. The short term investments turned to zero at 2012 compared to $174.8 million in 2011 as a way to slow down the domestic expansion. Besides, the long–term debt remained identical in the past year. The merchandise increased from $803.1 million to $867.4 million during 2012. Meanwhile the property, land and plant increased greatly from