Managing Financial Resources-Case Study of Starbucks

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Managing Financial Resources-Case Study of Starbucks Financial analysis refers to the process of evaluating the financial viability of a business to determine its profitability and suitability for continued investment. Typically, information obtained from the financial analysis is used to determine whether a business entity is financially stable, liquid or solvent enough to provide returns to the investors and to support corporate objectives (Walgenbach, Norman and Ernest 2003, p. 30). Important aspects of concern for financial analysis include the balance sheet, cash flow statement, and income statement. In addition to the review of these statements, another important area of financial analysis is extrapolation. This involves reviewing company’s past and present performance to estimate future performance. Extrapolation helps companies to predict future trends in their financial performance and take appropriate measures to avoid threats or take advantage of opportunities for improving financial performance. Company Background Starbucks Corporation is an American multinational company whose primary business involves manufacturing and marketing of specialty coffee and tea. The Corporation was founded in 1985 and is headquartered in Seattle (USA). Starbucks has divided its international operations into four segments based on the geographic region: the Americas which includes North and South America; China/Asia Pacific segment/ Europe, Middle East and Africa; and channel development. In each of these market segments, Starbucks uses either company-operated stores or licensed stores. The mix of licensed versus company-operated stores varies widely depending on several

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