Reference no: EM131988364

Problem

Be sure to show your work for all calculations and CIRCLE ALL FINAL ANSWERS, especially the ratios!

You can access Starbucks annual report for 2016 and other years by following the directions

Using the Financial Statements for Starbucks for 2016 (starting on page 45 in the annual report) compute the following ratios for 2016 and 2015. For 2015 ratios requiring averages you will need to look at the 2015 (or 2014) Annual Report and Financial Statements. You will find the ratio formulas in Chapter 15. You must show your work for these computations! Also, for any computations requiring Net Income, use Net Earnings Attributable to Starbucks. (35 pts)

I. Number of Times Interest Charges Are Earned

J. Profit Margin (you will need to look this one up)

K. Ratio of Sales to Assets

L. Rate Earned on Total Assets

M. Rate Earned on Stockholders' Equity

N. Earnings per Share (EPS) on Common Stock

O. Price-Earnings (P/E) Ratio (For Market Price, use an average of high and low for last quarter of 2016 (you can find this in the annual report in the Management Discussion and Analysis Section)

P. Dividends per Share

Q. Dividend Yield

R. Would you invest in Starbucks? Clearly and thoroughly explain your reasoning. To support your answer, use at least five of the above ratios to justify your answer. You can also use any additional factors, information, or research to justify your response. When identifying the ratios, be sure to do the following:

I. Name each ratio.

II. Indicate the importance of the ratio (what it is intending to measure).

III. Explain why you chose the ratio to justify your decision.