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Question: Discuss About The Headquarters Are Present In Seattle Worked? Answer: Introducation Starbucks was founded in Seattle, Washington in 1971 and is considered as an coffeehouse chain. The company's headquarters are present in Seattle where 3501 people worked as of January, 2015. As of July, 2016 Starbucks is present on 6 continents and is operating in 74 countries as well as territories. It has already entered into its dream major countries such as China, England and Australia. It showed an exponential growth in last 10 years by having 5113 international stores and 11567 stores in United States (Ganguin and Bilardello, 2013). Starbuck's Global Strategies. Starbucks has became the centre of attraction for many countries as it has done an eye catching performance in the last few years and such favorable conditions has helped it a lot to became the major global player. Starbucks started off its 2016 fiscal note on a strong policy as it reported for sales growth in all its reporting segments (Joseph, 2013). It is heading towards the development and future plans in Asian markets. In its very recent Investors conference, Starbucks presents its five year strategic plan to expand revenue by 10 percent, EPS by 15-20 percent and announces its aim of launching approximately 12,000 new stores globally by 2021 along with the delivering of a better version of Starbucks experience all over the world. Considering this, some of the major strategic plans of the company are discussed below: Starbucks is concentrating not only on expanding its business but also in changing its store mix. For example, it is now heading towards opening more drive-thru in the outer edges of urban and suburban areas. Also, it is heading towards opening up express stores which works as walk-thru presently in New York, Seattle and Boston. This strategy is aiming at increasing company's store penetration. (Langohr and Langohr, 2009) Starbucks is targeting on increasing the growth of consumer product goods department, that is, demand of coffee at home. CPG mainly includes k-Cups and packaged coffee. Starbucks is the leader in K-Cups even though the industry as a whole has slowed down from its peak significantly. It partnered with companies like Pepsi in Latin America, Tingyi in China and Anheuser-Busch so as to enter into the market of expansion of ready-to-drink segment which is estimated to grow at approximately 10% year to year in the next five years. (Ong, 2010) The company is looking forward to offer a more better version of coffee experience and targeting 10 Roasteries like siphon, clover, pour-over, etc. The company is targeting at opening approximately 500 Reserve Stores, targeting the middle and upper income group and offering premium Roastery experience but at a lower cost. Also, with this target, the company also expects to eradicate the problems of competition and ubiquity by providing highest quality coffee to its customers. (Rist and Pizzica, 2015) Global Ratings. S P lifts Starbucks global ratings to A from A- on solid operating performance and stability on a financial basis. The company kept on impressing the agency with its outstanding performance and credit protection metrics and that are expected to be continuing on a long term. S P remains confident about Starbucks's performance and expansion strategy, both internationally and domestically(Vance, 2010). The company has also expanded its overseas business through its stores at China with significant growth. The agency is also sure about company's inorganic drive and believes that La Boulange and Teavana acquisitions have widened the exposure of the company to food products, specially in the U. S. markets , where food revenues account for almost 20% of the U. S. revenues. CALCULATION OF RATIOS OF STARBUCKS CORPORATION IMPORTANT INFORMATION (USD $ IN THOUSANDS) 1. CURRENT RATIO PARTICULARS 2016 2015 CURRENT ASSETS 4760500 4352700 CURRENT LIABILITIES 4546900 3653500 CURRENT RATIO ( CURRENT ASSETS/CURRENT LIABILITIES) 1.05 1.19 A reduced current ratio may reveal that the short term obligations are more than previous year. However, in such a case, there is no evident change in current assets. However, the % change in liabilities is more than % change in assets in this case, indicating the reduced paying ability of the company. 2. QUICK RATIO PARTICULARS 2016 2015 CASH CASH EQUIVALENTS 2128800 1530100 SHORT-TERM INVESTMENTS 134400 81300 ACCOUNTS RECEIVABLES (NET) 768800 719000 TOTAL QUICK ASSETS 3032000 2330400 CURRENT LIABILITIES 4546900 3653500 QUICK RATIO (TOTAL QUICK ASSETS/CURRENT LIABILITIES) Though there is a reduced current ratio, there is an increased quick ratio indicating that the liquid assets that can be readily converted to cash to pay short term obligations is more than previous year. 0.67 0.64 3. EBITDA RATIO PARTICULARS 2016 2015 NET EARNINGS ATTRIBUTABLE TO STARBUCKS 2817700 2757400 NET INCOME ATTRIBUTABLE TO NON CONTROLLING INTEREST 1200 1900 INCOME TAX EXPENSE 1379700 1143700 INTEREST EXPENSE 81300 70500 DEPRECIATION AND AMORTIZATION 980800 893900 EBITDA ( EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION) 5260700 4867400 EBITDA RATIO (EBITDA/INTEREST) 64.71 69.04 This ratio is no less than interest coverage ratio. However, it excludes the depreciation and amortization expenses too as these are non-cash items. As per this, the current value has reduced in comparison to previous year. However, it doesn't doubt the paying capability of the company as 64.71 is still a good indication that the company is earning 64.71 times of the interest it is liable to pay. 4. DEBT TO TOTAL CAPITAL RATIO PARTICULARS 2016 2015 CURRENT PORTION OF LONG TERM DEBT 400000 0 LONG-TERM DEBT (EXCLUDING CURRENT PORTION) 3202200 2347500 TOTAL DEBT 3602200 2347500 SHAREHOLDER'S EQUITY 5884000 5818000 TOTAL CAPITAL ( TOTAL DEBT + SHAREHOLDER'S EQUITY) 9486200 8165500 DEBT TO TOTAL CAPITAL RATIO (TOTAL DEBT/TOTAL CAPITAL) 0.38 0.29 The debt to total capital ratio indicates how much the debt forms the part of the total capital of the company. As per this values, the amount of debt has increased this year, the % change of which is more than % change in equity indicating a pressure of more loans or long term obligations on the company. 5. INTEREST COVERAGE RATIO PARTICULARS 2016 2015 NET EARNINGS ATTRIBUTABLE TO STARBUCKS 2817700 2757400 NET INCOME ATTRIBUTABLE TO NON CONTROLLING INTEREST 1200 1900 INCOME TAX EXPENSE 1379700 1143700 INTEREST EXPENSE 81300 70500 EBIT ( EARNINGS BEFORE INTEREST AND TAX) 4279900 3973500 INTEREST COVERAGE RATIO ( EBIT/INTEREST EXPENSE) 52.64 56.36 The current interest coverage ratio of 52.64 indicates that the company is making 52.64 times more of interest money indicating that the company is capable enough to pay its interest expenses. Though, it is less than the previous year but both are more than favourable for the company. 6. GROSS PROFIT MARGIN PARTICULARS 2016 2015 GROSS PROFIT 12804800 11375200 NET REVENUES 21315900 19162700 GROSS PROFIT MARGIN [(GROSS PROFIT/NET REVENUES)*100] 60.07 59.36 There is as such no change in the gross profit margin indicating that the company is being able to maintain that consistency inspite of being such a big global company and operating through out the world indicating strong financial position of it. NOTE : THIS 2016 DATA IS AS ON 2ND OCTOBER,2016 AND 2015 DATA IS AS ON 27TH SEPTEMBER,2015. Analysis While we have already analyzed the changes in key ratios of Starbucks-Corp in 2015, 2016, it is even better to analyze the same ratios on an industry basis. Starbucks falls under coffee shops industry a d more precisely under the 'consumer services' industry where its competitors includez companies like McDonald's Corp, etc. Let us just have an analysis of ratios of Starbucks again on an industry basis (Anon, 2017). The industry's current ratio declined from 1.14 to 1.10 in 2016 where the Starbuck's current ratio showed an deterioration from 1.19 to 1.05, that is, % of fall in current ratio in the company is more than the % fall in the overall industry. However, this fall in current ratio of the industry is not merely because of Starbucks. The other competitors such as Priceline Inc, McDonald Inc, etc shows a major fall in current ratio. Coming to quick ratio cash ratio, while the industry's performance overall showed a slight fall i.e. From 0.57 in 2015 to 0.56 in 2016 and 0.33 in 2015 to 0.32 in 2016, the Starbuck's ratios showed an improvement in both the cases. Though the improvement was of a slightest nature yet it is to be noted that a slight fall in % of the overall Industry is not because of Starbucks. Also, it means that the company is generating enough cash to meet its short term obligations instantly and also maintains an appropriate amount of cash in hand. Coming to Debt to total capital ratio that means whether the company's has enough equity support to have a weight of debts on its head. While the overall industry ratio showed a minimum increase from 0.45 in 2015 to 0.48 in 2016,the Starbucks showed a deterioration by moving from 0.29 in 2015 to 0.38 in 2016 meaning that the company itself had taken more burden of debts in this year. However, it cannot be stated that industry is being majorly affected because of Starbucks as the % of increase in debt capital ratio is more in it's competitor's business i.e. McDonald's Inc that showed an increment from 0.77 in 2015 to 1.09 in 2016. Coming to interest coverage ratio that aims at one factor that the company is earning how much times more than its interest, the overall industry % fell from 10.39 in 2015 to 9.39 in 2016, Starbucks ratio too forms a part of this fall, that is, from 56.36 in 2015 to 52.64 in 2016,as the % fall in Starbucks is more than % fall in overall industry. Also, because of the competitor's ratio shows an improvement in this interest coverage ratio. The overall industry shows a gross profit of 60.3% while the Starbucks alone shows a gross profit of 60.1% which is a good sign of a strong financial company as it somewhere signifies that the major portion of industry's profits is controlled by Starbucks while the other competitors in this industry showed profits too. However, the Starbucks took a better hand over here. While it showed an increment in debts decrement in interest coverage ratio due to increasing burden of interest it still managed to maintain its gross profit ratio consistent in both the years. Conclusion Starbucks have concluded its fiscal 2016 on a solid performance where it is reporting unexpected results in the fourth quarter with revenues and earnings increasing 16% 30.2% respectively, year after year. Its increasing partner investments has been partially balanced by its increasing strong sales and expanded margin. Also, the slowdown of it in Europe, Middle - East and Africa segment is being counter balanced by its high growth sales in U. S. and China/Asia Pacific division. We also observe that the Starbuck's shares are showing an outstanding performance in the broader Zacks categorizing Retail Food Restaurant Industry over the last three months. While the broader market is witnessing 4.7% growth, the stock has experienced nearly 9.3% in the same time period. (Ziegel, n.d.) Starbucks is aiming at becoming the global market player in international market and the situations all over the world seems to be in favor of it. It is setting its goals high of changing people's lives worldwide. Nowadays, the other major global companies are interested in partnering with Starbucks in joint ventures which sounds good for the expansion of the company which targets spreading its roots in the world market strongly; strengthening the goal of the company to became the leading global coffee retailer worldwide. 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