Research and Financial Analysis Assignment Analyzing Starbucks’ Equity Structure and Financial Position Using either Starbucks’ most current Form 10-K or the company’s annual report, answer the following questions and prepare a professionally written financial analysis report and, forward opinion on Starbucks from the perspective of a portfolio manager.
Base your opinions and recommendation on the fact that you are the portfolio manager. Your client already owns 15,000 shares of Starbucks’ common stock. Furthermore, the client has the funds to buy an additional 10,000 shares of Starbucks’ common stock without materially altering their portfolio’s financial risk profile and objectives. Make sure to write your recommendation based on your financial analysis to support why you recommend either, buying selling or, holding the common stock of Starbucks. To obtain the Form 10-K, use the EDGAR system, or the company’s website. The company’s annual report is available on its website. EDGAR is also found online. Not being able to access and use the most recent financial reports is not an excuse for not completing the requirements of this assignment. Required a. What is the book value of Starbucks’ stockholders’ equity that is shown on the company’s balance sheet? What is its book value per share? b. What is the par value of Starbucks’ common stock? c. Does Starbucks have any treasury stock? If so, how many shares of treasury stock does the company hold? d. Compute the company’s earnings per share (EPS) e. Compute the company’s P/E ratio based on a stock closing price between 10/29/18 and 12/3/18. f. What was Starbucks’ debt to assets ratio? g. Calculate depreciation costs as a percentage of sales for Starbucks. h. Calculate property, plant, and equipment as a percentage of total assets for Starbucks. i. What cost flow method did Starbucks use to account for inventory? j. Compute the company’s inventory turnover ratio and average days to sell inventory for the fiscal year ended on your financial statements. k. What was Starbucks’ debt to assets ratio for the fiscal year ended of your financial statements? l. Calculate depreciation costs as a percentage of sales for Starbucks. m. Calculate property, plant, and equipment as a percentage of total assets for Starbucks. n. Compute the company’s inventory turnover ratio and average days to sell inventory for the fiscal year end on your financial statements. o. What was Starbucks’ debt to assets ratio for the fiscal year ended of your financial statements? p. For the 2017 year ended on your Starbucks’ financial statements, which was larger – Starbucks’ net income or its cash flows from operating activities? By what amount did they differ? Page 1 of 2q. Based only on the information in the statement of cash flows, does Starbucks appear to be growing the capacity to grow its business? Explain and support your answer. r. What was Starbucks’ return on assets ratio for the fiscal year ended of your financial statements? s. What was Starbucks’ return on equity ratio? t. Discuss Starbucks’ use of financial leverage. Make sure to define financial leverage before starting your discussion. u. Why does the stock of a company such as Starbucks have a market value higher than its book value? v. Write a no less than 500-word, 12 font, single space summary, in your own words, describing your takeaways from this assignment and your forward impression of Starbucks’ operations and earnings growth potential. Additional Requirements for Completing this Assignment. 1. All final papers are to be professionally typewritten using Microsoft Word or similar application. Use excel where appropriate. 2. All final papers are to include a cover page that includes among other information, the first and last names of each team member. 3. Use size 11 letter font. 4. Show supporting calculations to support all ratios cited or used. 5. Additionally, where possible, support your answers with quantitative support and/or references to the financial statements. 6. Number and show all ratios used and their calculations. 7. Clearly identify each question you answer. 8. DO NOT REWRITE OR COPY THE QUESTIONS IN THE PAPER YOU SUBMIT. Just show the question’s corresponding letter, i.e., question a, b, c, etc. You can find the rubric and other important links in BlackBoard.
