Case Study – Starbucks

In this topic, apply the next two steps of the nine-step assessment process to develop a 500-word analysis of your chosen company: 1.Future External Financing Needs 2.Access to Target Sources of External Finance

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It is important that you provide the following key pieces of information into your case study.

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PLEASE READ PAGE 3, 4 and 5 of the HARVARD BUSINESS REVIEW – ASSESSING A COMPANIES FUTURE FINANCIAL HEALTH

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Below are some explanations that should support the requirements.

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1. Provide all the key ratios that are relevant to your business.  (Hint:  Providing only a couple is not sufficient).  You need to be able to provide Liquidity Ratios, Debt Ratios, Inventory and Accounts Receivable ratios (if applicable), Return on Assets, Return on Equity,
   What do the ratios tell you about the company?  Are there any risks associated with the ratios?Â
2. How does the industry ratios compare to the ratios of your company?
3. What risks does your company potentially face?  The ratios will tell you MANY significant pieces of information to help you understand risk and exposure.
4. How will you fund your investment in assets?  Equity or Debt.  Please support your decision by backing it up based on the companies Capitalization structure.  Please provide your companies capitalization structure as a basis AND what the POTENTIAL NEW Capital Structure will be for your company.
5. If you plan to use debt, please not only provide the DEBT ratios but you MUST provide an explanation of the ratios a lender/underwriter will look at closely in loaning your company money / underwriting new bonds.  If you are at risk, what could you do to improve the ratio.
6. If your company will use equity, provide the proper ratios that will be impacted by utilizing Retained Earnings.  If they NEED to issue new stock, what impact will this have on the Stock Price.  Is the change a good or a bad thing.

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