CB$21002023/24$ Semester B

Case Study$-$Individual Report $(10\%$ Assessment Weighting$)$

Starbucks Corporation

Instructions:

Please download the financial report of Starbucks Corporation for the year ended October $1,$

$2023($FY$2023),$ from the $$Files$$ folder in Canvas.

Based on Starbucks Corportation financial statements, answer the following questions:

Question $1(40$ marks$)$

Calculate the following for the year ended October $1,2023,($Fiscal Year $2023)$ and October $2,$

$2022($Fiscal Year $2022).$ Please round your answers to $2$ decimal places. $($Note: The company$$s

accounting period ends on the Sunday closest to September $30,$ therefore, the year ends are not

exactly the same.$)$

A$.$

i$)$ Profit margin

ii$)$ Return on Assets $($The total assets on Oct $32021$ was $$31,392\mathrm{.}6$ million$)$

iii$)$ Earnings per share $($EPS$)$

iv$)$ Price$-$earnings ratio

$($Additional information: The stock price of the company was $$90\mathrm{.}63$ and $$83\mathrm{.}38$ for the year

ended October $1,2023,$ and October $2,2022,$ respectively$)$

B$.$

i$)$ Receivables turnover ratio

ii$)$ Average collection period

iii$)$ Current ratio

iv$)$ Acid ratio

v$)$ Times interest earned ratio

vi$)$ Debt to equity ratio

$($Additional information: The balance of receivables on October $3,2021$ was $$940$ million.$)$

Hints:

$1.$ When considering the net income$/$earnings of the company, you should use the $$Net

income$/$earnings $($loss$)$ including noncontrolling interest$,$ instead of $$Net

income$/$earnings $($loss$)$ attributable to Starbucks$$

$2.$ When considering the stockholders$$ equity$/$deficit of the company, you should use

$$Total equity$/$deficit$,$ instead of $$Total shareholders$$ equity$/$deficit$$

$3.$ The shares outstanding of common stock and beginning balance of total stockholders$$

equity as at October $32021$ could be found at Consolidated Statements of Equity. Do

not use the weighted average shares outstanding.

$4.$ Assume all sales as $$credit sales$$

$2$

Question $2(60$ marks$)$

A$.$ Based on the calculation in part $1$A$,$ notably the profit margin increased from the year ended

October $2,2022($FY$2022),$ to October $1,2023($FY$2023).$

i$)$ What does the increase in profit margin imply, and what are the possible reasons for the

increase? $(5+20$ marks$)$

ii$)$ If you were an equity investor, would you invest in Starbucks Corporation? Support your

answer with calculation in part $1$A$,$ analysis in part $2$Ai and$/$or additional research. $(5$ marks$)$

B$.$

i$)$ Based on the calculation in part $1$B$,$ comment on the liquidity and solvency risks exposure

of the company using the Acid test ratio and Debt to equty raito respectively. Also, identify the

reasons that could have led to the improvement for the Acid test ratio from the year ended

October $2,2022($FY$2022)$ to October $1,2023($FY$2023)?(5+5+15$ marks$)$

ii$)$ If you are the owner$/$CEO of a major supplier which sells coffee beans to Starbucks, would

you continue to supply the coffee beans? Support your answer with calculation in part $1$B and

analysis in part $2$Bi and$/$or additional research. $(5$ marks$)$

$($Hints: You may find additional information regarding the company$$s operation in item $7$

Management Discussion and Analysis of the annual report. You may also search for additional

information from credible news sources and include them in your answer.

There are no model answers or golden ratios for financial statement analysis. Marks will be

given to all reasonable answers.$)$