Starbucks plays a dominant and preeminent role in the coffee brewing business unlike many of its competitors (e.g. Dunkin Donuts, Panera Bread, and McDonald's) whose coffee business is a much smaller segment of their overall product mix. The Starbucks brand is well recognized and pervasive in the United States and Europe. It currently has over 30,000 stores in 75 different countries. It is also aggressively spreading its wings on a global scale into yet to be tapped potential growth opportunities notably in China and India.

Question) Using the FY2019, FY2018, and FY2017 Annual Reports, evaluate Starbuck's most recent financial statements by performing financial ratio analysis consistent with below example:

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Ratio Benchmark Actual Percent Achievement Liquidity Ratios Accounts receivable turnover (Credit sales/ Average receivables) 7 5.56 = $500,000 [($100,000+ $80,000) + 2] 79% (unmet) Inventory turnover (Cost of sales/Average inventory) 8 9.09 $500,000+ [($50,000+ $60,000) + 2] 114% (met) Current ratio (Current assets/Current liabilities) 2 4 = $200,000 $50,000 200% (met) Quick ratio (Cash and receivables/Current liabilities) 3 = ($50,000+ $100,000) $50,000 300% (met) Cash Flow Ratios Cash flow ratio (Cash flow from operations/ Current liabilities) 2.5 2.2 = $110,000+ $50,000 88% (unmet) Free cash flow ratio (Free cash flow/Current liabilities) .5 .6 = $30,000+ $50,000 120% (met) Profitability Ratios Gross margin percent (Gross profit/Net sales) 35% 50% = $500,000 $1,000,000 143% (met) Return on assets (Net income/Average total assets) 22% 25.3% = $100,000+ [($400,000+ $390,000)2] 115% (met) Return on equity (Net income/Average shareholders' equity) 44% Earnings per share (Net income/Weighted- average number of shares outstanding) $2.15 = $2.00 $100,000 + 50,000 60.6% = $100,000+ [($200,000+ $130,000)2] 138% (met) 93% (unmet) Ratio Benchmark Actual Percent Achievement Liquidity Ratios Accounts receivable turnover (Credit sales/ Average receivables) 7 5.56 = $500,000 [($100,000+ $80,000) + 2] 79% (unmet) Inventory turnover (Cost of sales/Average inventory) 8 9.09 $500,000+ [($50,000+ $60,000) + 2] 114% (met) Current ratio (Current assets/Current liabilities) 2 4 = $200,000 $50,000 200% (met) Quick ratio (Cash and receivables/Current liabilities) 3 = ($50,000+ $100,000) $50,000 300% (met) Cash Flow Ratios Cash flow ratio (Cash flow from operations/ Current liabilities) 2.5 2.2 = $110,000+ $50,000 88% (unmet) Free cash flow ratio (Free cash flow/Current liabilities) .5 .6 = $30,000+ $50,000 120% (met) Profitability Ratios Gross margin percent (Gross profit/Net sales) 35% 50% = $500,000 $1,000,000 143% (met) Return on assets (Net income/Average total assets) 22% 25.3% = $100,000+ [($400,000+ $390,000)2] 115% (met) Return on equity (Net income/Average shareholders' equity) 44% Earnings per share (Net income/Weighted- average number of shares outstanding) $2.15 = $2.00 $100,000 + 50,000 60.6% = $100,000+ [($200,000+ $130,000)2] 138% (met) 93% (unmet)