Question

Calculate the following financial ratios for fiscal year 2018 only using the "Consolidated Statements of Earn" and "Consolidated Balance Sheets" worksheets in Starbucks 2017 and 2018 Annual Financial Statements : Current Ratio, Cash Ratio, Inventory Turnover, Days Sales in Inventory, Long Term Debt Ratio, Times Interest Earned, Gross Profit Margin, Net Profit Margin, Return on Equity, Return on Assets.

12 Months Ended Oct. 01, 2017 Sep. 30, 2018 Oct. 02, 2016 $ 22,386.8 9,034,3 6,493.3 500.3 1,011.4 1,450.7 153.5 18,643.5 $ 21,315.9 8,509 6,064.3 499.2 980.8 1,408.9 0 17,462.2 391.4 318.2 Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions Net Revenues: Revenues Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring Charges Total operating expenses Income from equity investees Operating income Gain resulting from acquisition of joint venture Gain (Loss) on Disposition of Business Interest income and other, net Interest expense Earnings before income taxes Income Tax Expense (Benefit) Net earnings including noncontrolling interests Net earnings/(loss) attributable to noncontrolling interests Net earnings attributable to Starbucks Earnings Per Share, Basic Earnings Per Share, Diluted Weighted average shares outstanding: Basic Diluted $ 24,719.5 10,174.5 7,193.2 539.3 1,247 1,759 224.4 21,137.4 301.2 3,883.3 1,376.4 499.2 191.4 (170.3) 5,780 1,262 4,518 (0.3) $4,518.3 $ 3.27 $ 3.24 4,134.7 0 4,171.9 0 5.4 93.5 181.8 (92.5) 4,317.5 1,432.6 2,884.9 0.2 $ 2,884.7 $ 1.99 $ 1.97 102.6 (81.3) 4,198.6 1,379.7 2,818.9 1.2 $ 2,817.7 $ 1.91 $ 1.90 1,382.7 1,449.5 1,461.5 1,471.6 1,486.7 1,394.6

Answer 1

Answers :-

current ratio = 2.1981%

Cash ratio = 1.5405 %

Inventory Turn over Ratio = 7.3608 times

Days sales in inventory = 49.587 Days

Long Term debt Ratio = 0.3763 or 37.63%

Time Intrest Earned = 22.80 Times

Gross profit Ratio = 0.5884 or 58.84%

Net Profit ratio = 0.1570 or 15.70%

Return on Equity = 1.1709 %

Return on Asset = 0.2016 or 20.16%

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Explanations :-

a) Calculation of current ratio

current ratio = Current Asset / Current Liabilities

Current asset = $12494.2

Current liabilities = $5684.2

Calculation of current ratio = $12494.2 / $5684.2

current ratio =2.1981%

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b) Calculation of Cash ratio

Cash ratio = Cash & Cash equivalents / Current liabilities

Cash & Cash equivalants = $8756.3

Current liabilities = $5684.2

Cash ratio = $8756.3 / $5684.2

Cash ratio = 1.5405 %

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c) Calculation of Inventory Turn over Ratio

Inventory Turn over Ratio = Cost of Goods sold / Avarage inventory

Cost of good sold = $10174.5

Avarage invenory = (Inventory of current year + Inventory of previous year) / 2

= ($1400.5 + $1364) / 2

   = $2764.5 / 2

   = $1382.25

Inventory Turn over Ratio = $10174.5 / $1382.25

Inventory Turn over Ratio = 7.3608 times

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d) Days sales in inventory = 365 /  Inventory Turn over Ratio

= 365 / 7.3608

Days sales in inventory = 49.587 Days

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e) Calculation of Long-term Debt Ratio

Long Term debt Ratio = Long Term Debt / Total Assets

Total Long Term Debt = $9090.2

Total Asset = $24156.4

Long Term debt Ratio = $9090.2 / $24156.4

Long Term debt Ratio = 0.3763 or 37.63%

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f) Calculation of Time Intrest Earned

Time Intrest Earned ratio = Earnings before intrest and Taxes / Interest expenses

Earnings before intrest and Taxes (Operating profit ) = $3883.3

Interest expenses = $170.3

Time Intrest Earned ratio = $3883.3 / $170.3

Time Intrest Earned = 22.80 Times

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g) Calculation of Gross profit ratio

Gross profit ratio = Gross profit / Net sales

Gross profit = sales - cost of goods sold

   = $24,719.5 - $10,174.5

   = $14545

Net sales    = $24,719.5

Gross profit Ratio = $14,545 / $24,719.5

Gross profit Ratio = 0.5884 or 58.84%

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h)Calculation of Net Profit ratio

Net Profit ratio = Net Profit / Net sales

Net Profit = $3883.3

Net sales =  $24,719.5

Net Profit ratio = $3883.3 / $24,719.5

Net Profit ratio = 0.1570 or 15.70%

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i)Calculation of Return on equity

Return on Equity = Net income / Avarage Equity

Net Income (Net Profit) = $3883.3

Avarage Equity = (Total Equity of Current Year + Total Equity of Previous Year) / 2

   = ($1175.8 + $5457 ) / 2

   = $6632.8 / 2 = $3316.4

Return on Equity = $3883.3 / $3316.4

Return on Equity = 1.1709

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j)Calculation of Return on Asset

Return on Asset = Net income / Avarage Asset

Net Income (Net Profit) = $3883.3

Avarage Asset = (Total Asset of Current Year + Total Asset of Previous Year) / 2

= ($24156.4 + $14365.6) / 2

= $38522 / 2

Avarage Asset = $19261

Return on Asset = $3883.3 / $19261

Return on Asset = 0.2016 or 20.16%