The report analyzes Starbucks Corporation over a four year period from 2009-2012. It finds that Starbucks has experienced consistent increases in revenue, operating income, net income, total assets, and total shareholder equity over this period. Starbucks holds a dominant position in the specialty coffeehouse market with over 11,000 U.S. stores. Competitors like Caribou Coffee, McDonald's, and Dunkin Donuts have significantly fewer stores and lower financial performance compared to Starbucks. The report recommends proceeding with investment in Starbucks based on its market leadership position and continued financial growth.

1. Starbucks Corporation
(Incorporated in State of Washington)
2401 Utah Avenue South, Seattle, Washington, 98134
(206) 447-1575
(Principal executive offices)
Financial Analysis by ABC Corporation
April 23, 2013
Executive Summary:
The time period of focused study and report is four year period for fiscal years 2009 through
2012. The study and its findings were requested by William S. Hettinger, CEO in March 2013
and produced by Deborah Adams on this date.The company for consideration of investment is
Starbucks Corp. The company manufactures and sells coffee and tea as a premier roaster,
marketer and retailer of specialty coffee operating in 60 countries, known as its flagship
Starbucks brand. Under the NASDAQ Global Select Market the company‟s common stock
trades under SBUX symbol. Starbucks was formed in 1985, purchases and roasts high-quality
coffees sold with tea and other beverages along with food items, which are sold through
company-operated stores and licensed stores, grocery and national foodservice accounts. In
addition to its flagship brand the company sells Tazo Tea, Seattle‟s Best Coffee, Starbucks VIA
Ready Brew, Starbucks Refreshers beverages, Evolution Fresh, La Boulange bakery brand and
the Verismo System. Coffee is the second-largest U.S. import and estimated to be worth $11
billion a year in the specialty market. The national Coffee Association estimates that the U.S.
coffee market will reach $29 billion. Starbucks with its model “Third place to work and relax”
has no direct competitors putting them in a „blue ocean‟ strategic competitive advantage.
According to investment banking firm Adams Harkness, Starbucks‟ holds dominant position in
specialty coffeehouse market with approximately 11,000 stores in the U.S., 2012 net income of
$1,383.80b, revenue of $13,299.50b and equity of $5,109.00b. In comparison competitor

2. 2 ABC Corporation – Financial Analysis of Starbucks Corporation
Caribou Coffee (NASDAQ- CBOU) has approximately 415 U.S. stores, which are less than 5%
of Starbucks, 2012 net income of $35.22m, revenue of $326.50m and equity of $101.13m.
Another competitor at the low-end is McDonald‟s (NASDAQ – MCD) which caters to a wider
demographic and brews Seattle‟s Best coffee owned by Starbucks. It has 14,000 U.S. stores,
$5,464.80b net income, revenue $27,567.00b and equity $15,293.60b. The final competitor is
Dunkin Donuts (NASDAQ – DNKN) which is considered to be more of a competitor of
McDonald‟s because of its coffee-to-go model. Dunkin Donuts has 5,000 U.S. stores, $108.31m
net income, revenue $658.18m and equity $346.55m.
Introduction:
The report defines outlines and clarifies financial objectives along with the main points for
comprehensive understanding of the analysis process. Fundamental Analysis was the method of
analysis used. It operates on the premise that a business‟s financial statements along with its
earning potential, past and present movements and future value of securities should be evaluated
by looking at the company‟s competitive advantage, earnings growth, sales revenue growth,
market share, financial reserves and quality of management. All this data is said to be
„fundamental information‟ and the true indicator of estimated future value. Looking at Starbucks
and its competitor‟s financial statements (Income Statement, Balance Sheet, and Cash Flow
Statement, etc.) provides information on debt, value, cash flow and ratios. The Return-On-Equity
(ROE) calculation will provide information that is helpful in analyzing the company‟s true value
compared to its market value.

3. 3 ABC Corporation – Financial Analysis of Starbucks Corporation
Resources:
In collecting data, CNN Money, Google Finance, industry analysis and company fiscal reports
were used and analyzed. The primary financials used were income statements, balance sheet and
cash flow.
Method of Collecting Data:
Data found in Statement of Earnings, Balance Sheets, Cash Flow, and Income Statement in the
company‟s annual reports -10K and NASDQ profiles/reports provideessential insight on net
income, owner‟s equity, net assets, and sales/revenue for calculation of the return on equity.
Significant Financial Events:
The period of up to four fiscal years (2009-2012) were compared and analyzed. During this
period the following is noted from Starbucks Annual Report and NASDAQ:
As of 4/2/2013 NASDAQ opening price - $57.15
52 Week High/Low - $62/$43.04
Best Bid/Ask - $58.07/$58.08
1 Year Target – 61.5
Between Fiscal Year End (Oct 3, 2010 – Sep 30, 2012) – Total net revenues, Operating
Income and Cash dividends declared per share increased respectively
Total Shareholder Equity has increased 2009 – 2012 $3.0B to $5.B
Operating income has increased $548M in 2012 over 2010 $1,419.4M
Detailed Results:
Net earnings per share – basic as of Fiscal Year Ended, Sep 30, 2012 is $1.83m over Oct 3, 2010
$1.27M Earnings per share – diluted during the same time period is $1.79M over $1.24M. ROE

4. 4 ABC Corporation – Financial Analysis of Starbucks Corporation
calculation for fiscal 2012 is 10.4% ($1,383.80B/net income divided by $13,299.50B/revenue).
This is an increase over 2011 10.3% ($1,200.00B/net income divided by $11,700.00B/revenue).
Analysis of Variance:
In comparing 4-year-trend of the company‟s income statement and balance sheets there has been
increase to the following:
Revenue increase
2009 2010 2011 2012
$9.8B $10.7B $11.7B $13.3B
Operating income increase
2009 2010 2011 2012
$772.0M $1.3B $1.5B $1.8B
Net income increase
2009 2010 2011 2012
$390.8M $945.6M $1.2B $1.4B
Total assets increase
2009 2010 2011 2012
$5.6 B $6.4B $7.4B $8.2B

5. 5 ABC Corporation – Financial Analysis of Starbucks Corporation
Total shareholder equity increase
2009 2010 2011 2012
$3.0B $3.7B $4.4B $5.1B
Observations:
There were no problems in collecting and analyzing data as financial reports were readily
available in electronic format on the company‟s website, NASDQ, and Google Finance. It should
also be noted that the Common Share Outstanding has increased from 742.9M in 2009 to
749.3M in 2012. Based on the observations of consistent increase in revenues, operating income,
and equity, compared to the company‟s market share and competitive advantage in the specialty
coffeehouse market it is recommended that we move forward with investment plans. If there are
any questions about the recommendation or figures contained in this report, please address them
to email dadams@baypath.edu.

6. 6 ABC Corporation – Financial Analysis of Starbucks Corporation
References:
(2012). Starbucks Corporation Fiscal 2012 Annual Report.
Caribou Coffee Company, Inc. Google Finance. Retrieved from
http://www.google.com/finance?q=NASDAQ%3ACBOU&fstype=ii&ei=ADx3UaulC6Ho
0QGGmgE
Starbucks Corporation. Google Finance. Retrieved from
http://www.google.com/finance?fstype=ii&q=NASDAQ:SBUX
McDonald's Corporation. Google Finance. Retrieved from
http://www.google.com/finance?fstype=ii&q=nyse:mcd
Dunkin Brands Group Inc. Google Finance. Retrieved from
http://www.google.com/finance?q=NASDAQ%3ADNKN&fstype=ii&ei=lkR3UbCQH9G
L0QHKgAE
(2012). Specialty coffee industry analysis (is starbucks still the king?). Retrieved from
meangreen.hubpages.com/hub/Specialty-coffee-industry-analysis
(2007, March 15). Grinding Out Success Next to Starbucks. Retrieved from
http://money.cnn.com/magazines/business2/business2_archive/2006/10/01/8387114/
(n.d.). SBUX – Starbucks Corp Sports Connection Profile. CNNMoney.com