Financial Analysis Paper

Financial statements provide us financial information regarding a company financial position. However the financial ratio helps us to analyze the financial performance of a company. There are multiple types of financial ratios are used by investors to analyze a company’s financial health. These financial ratios are calculates information from the financial statement of a company's. In addition to these financial ratios allow us to the analysis and compare different companies’ financial information (Aditya, 2016). As there are various types of financial ratios but will be discussing the financial ratios of liquidity, solvency, and profitability of Starbucks. Moreover analysis how each ratio reveals about Starbucks financial performance.
The

The solvency ratio also indicates that if a company’s cash flow is efficient and also the company is meeting its short-term and long-term liabilities (Aditya, 2016). There are different types of solvency ratio, but will be discussing the debt to assets and debt to equity for Starbucks. The debt to assets is calculated by dividing total liabilities by total assets. As Starbucks’ debt to assets for 2016 is 0.56 and for 2015 0.53 this shows that there were 0.6 decreases in the debt to assets from 2015. If a company has a low solvency ratio that indicates the company has a higher probability to default on its debt and other obligations (Aditya, 2016). Starbucks’ debt to equity for 2016 is 1.43 and for 2015 1.13 this shows that there were 0.30 increase in the debt to equity from 2015. Starbucks’ debt to equity industry average for 2016 is 1.42 and Starbucks’s debt to assets for 2016 is 1.43 this demonstrate that Starbucks’ debt to equity 0.01 above the industry

In order to know the profitability ratios of Starbucks’ will calculate the net profit margin (%) and gross profit on sales (%). The net profit margin (%) is calculated by dividing net income by sales (net) which is the total net revenues. Starbucks’ net profit margin for 2016 is 13.2% and for 2015 14.4 this shows that there were 1.2 % decreases in the net profit margin from 2015. When the profitability ratio of a company is not high and does not have enough to cover other costs (Aditya, 2016). Starbucks’ net profit margin industry average for 2016 is 10.5% and Starbucks’s net profit margin 2016 is 13.2 this demonstrate that Starbucks’ net profit margin is 3.15% above the industry average. Starbucks’ gross profit on sales for 2016 is 60.1 % and for 2015 59.4 this shows that there were 0.7 % increase in the gross profit compared to 2015. When the profitability ratio of a company is high that indicates the company has enough to cover their indirect costs, taxes, and interest and depreciation expenses (Aditya, 2016). Starbucks’ gross profit on sales industry average for 2016 is 55.15% and Starbucks’s gross profit on sales 2016 is 60.1% this demonstrate that Starbucks’ gross profit on sales is 4.95 above the industry average. As calculating and analyzing