Question: Step 1. Circle which ratio is better, either the industry or Starbucks. Step 2. Provide a very brief explanation for which you think is best.
Step 1. Circle which ratio is better, either the industry or Starbucks. Step 2. Provide a very brief explanation for which you think is best.
|
| Industry | Starbucks | Provide a brief explanation for which you think is best. |
| LIQUIDITY |
| ||
| Current ratio (CA/CL) | 1.3 | 1.8 |
|
| Net Working Capital (CA-CL) | 25,000 | 250,000 |
|
| Quick ratio ((CA-Inv.)/CL) | 1.1 | 1.4 |
|
| CAPITAL STRUCTURE |
| ||
| D/E (or TL/TE) | .60 | 1.20 |
|
| D/A (or TL/TA) | .50 | 0.70 |
|
| CD/TD (or Current L/Total L) | .40 | .50 |
|
| PERFORMANCE |
| ||
| Gross Profit Margin % ((Sales-CoGS)/sales) | 25 | 30 |
|
| COGS % Sales (CoGS/Sales) | 75 | 70 |
|
| NP % Sales (NP/Sales) | 11 | 6 |
|
| RR Assets % (NP/TA) | 8 | 5 |
|
| RR Net Worth % (NP/SE)
| 7 | 4 |
|
| SAE % Sales (Selling General & Admin./Sales) | 10 | 12 |
|
| ACTIVITY |
| ||
| Inventory Turnover (COGS/Inv) | 6.5 | 11.5 |
|
| Inventory Days (365/Inventory Turnover) | 56.15 (57) | 31.74 (32) |
|
| AR Turnover (Sales/AR) | 8.5 | 6.5 |
|
| AR Days (365/AR Turnover) | 42.94 (43) | 56.15 (57) |
|
| FA Turnover (Sales/NFA) | 2.5 | 1.7 |
|
| TA Turnover (Sales/TA) | 2.0 | 1.5 |
|
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