Conduct a three factor DuPont analysis for Starbucks and Cheesecake Factoryfor 2017 and 2018 end-of-fiscal-year results. Use the information from financial statements provided in the section of the 2018 annual report titled: Item 8. Financial Statements and Supplementary Data. Use your analysis to provide a brief (one to two paragraph) discussion of the change ROE from 2017 to 2018 for each firm and a comparison of the two firms in 2017.

ROE = (Net Profit/Sales)x(Sales/Assets)x(Assets/Equity)

(My attempted answer)

SBUX (MM) CAKE (000)

Year 2018 2017 2018 2017

Net Profit 4,343.6 2,837.5 99,035.0 157,392.0

Sales 24,719.5 22,386.8 2,332,331.0 2,260,502.0

Total Assets 24,156.4 14,365.6 1,314,133.0 1,333,060.0

Equity 1,175.8 5,457.0 571,059.0 613,530.0

ROE = (Net Profit/Sales)x(Sales/Assets)x(Assets/Equity)

(1) Net Profit / Sales 0.17572 0.12675 0.04246 0.06963

(2) Sales/Assets 1.02331 1.55836 1.77481 1.69572

(3) Assets/Equity 20.54465 2.63251 2.30122 2.17277

ROE 3.69417 0.51997 0.17342 0.25654

ROE YOY% Variance 610% -32%

Answer rating: 100% (QA)

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