Exploring Starbucks' Financial Statements

Overview

Over the past decade, Starbucks coffee shops have become an increasingly familiar part of the urban landscape. Currently, the company operates nearly 6,000 coffee shops in all 50 states, the District of Columbia, and internationally, and at the beginning of 2002 it had roughly 54,000 employees.

We can use the Thomson Analytics tool to obtain a wide variety of financial information for companies such as Starbucks. To find some background information, begin by entering the company's ticker symbol, SBUX, and then selecting "GO." On the opening screen, you will see a lot of useful information, including a summary of what Starbucks does, a chart of its recent stock price, EPS estimates, some recent news stories, and a list of key financial data and ratios.

In researching a company's operating performance, a good place to start is the recent stock price performance. At the top of the Stock Price Chart, click on the section labeled "Interactive Chart". From this point, we are able to obtain a chart of the company's stock price performance relative to the overall market, as measured by the S&P 500, between 1993 and 2003. To obtain a 10-year chart, go to "Time Frame," click on the down arrow, and select 10 years. Then, click on "Draw" and a 10-year price chart should appear.

As you can see, Starbucks has had its ups and downs, but the company's overall performance has been quite strong, and it has beat the overall market handily.

Looking at Starbucks' Financial Statements

We can also find Starbucks' recent financial statements. Near the top of your screen, click on "Financials" and select "Financial Statements." Here you will find the company's balance sheet, income statement, and statement of cash flows for the past five years. You can click on the Microsoft Excel icon and then download these statements to a spreadsheet.

Discussion Questions

1. Looking at the most recent year available, what is the value of Starbucks' total assets? What percentage is fixed assets such as plant and equipment, and what percentage is current assets? How much has the company grown over the years that are shown?

2. Does Starbucks have a lot of long-term debt? What are the chief ways in which Starbucks has financed assets?

3. Looking at the statement of cash flows, what factors can explain the change in the company's cash position over the last couple of years?

4. Looking at the income statement, what are the company's most recent sales and net income? Over the past several years, what has been the sales growth rate? What has been the growth rate in net income?

5. Over the past few years, has there been a strong correlation between stock price performance and reported earnings?

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