Commercial company Essay Example for Free

Commercial company EssaySelect a major industrial or commercial company based in the United States and listed on one of the major stock exchanges in the United States. Each student should select a different company. Avoid selecting an insurance company or a bank, because the financial ratios for these financial businesses are different. Write a seven-to-eight-page double-spaced paper answering and demonstrating with calculations and financial data the following questions.1. What is the name of the company? What is the industry area?Starbucks Corporation is in the Food and Beverage industry2. What are the operating risks of the company?Economic conditions in the US and certain outside(a) markets could adversely advert Starbucks business and financial results. as a retailer Starbucks is dependent upon the customers discretionary spending. Customers may have less money for discretionary purchases as a result of job firinges, foreclosures, bankruptcies, increased fuel and energy co sts, higher interest rates and taxes. Decreases in customer traffic will negatively strike financial performance. Starbucks may not be successful in implementing important strategic initiatives or effectively managing growth, which may have an adverse impact on our business and financial results. there is no assurance that Starbucks will be able to implement strategic initiatives and achieve the results that are within managements expectations.These initiatives are designed to create growth, improve operations and drive long-term shareholder value. Starbucks face intense competition in each of our channels and markets, which could take to the woods to reduced profitability. Starbucks is highly dependent on the financial performance of the Americas operating segment the Americas operating segment contributes 74% of the do kale revenues in fiscal 2013. Starbucks is relying on the success in the European/ Middle East, China/Asia Pacific operating segments to achieve overall growt h targets. Other international operations are also subject to additional inherent risk when conducting business abroad. Of which, includeForex rate fluctuations.Changes or uncertainties in economic, legal, regulatory, social and political conditions in international markets. Restrictive actions of foreign or US governments affecting trade.Enforceability of intellectual and contract rights.Local lawsDisruption in energy supplies.Delays in store fountain beyond the control of management.Increases in the cost of high-quality Arabica coffee beans or other commodities. Disruption in the supply chain, which will impact the ability to deliver Starbucks products. The loss if key personnel or difficulties in recruiting and retaining qualified personnel Adverse public or medical opinions about the health effects of consuming Starbuckss products, as well as reports of incidents involving food-borne illnesses, food tampering or food contamination. Starbucks relies heavily on information techno logy in operations, and any material failure, inadequacy, crack or security failure of that technology could harm Starbucks ability to effectively operate the business. Failure to comply with local laws and regulations.3. What is the financial risk of the company (the debt to total capitalization ratio)?Market Cap 56.69 BNDebt 2.05BNDebt/total cap ratio = 0.036(yahoo.com, 2014)4. Does the company have any pet stock? The company does not have preferred stock. 5. What is the capital structure of the company short-term portion of long-term debt, long-term debt, preferred stock (if any), and market value of common stock issued and outstanding? short-term portion of long-term debt357.7 MillionLong-term debt1,299 MillionPreferred Stock0Market value of common stock56.69 Billion6. What is the companys current actual beta? 0.957. What would the beta of this company be if it had no long-term debt in its capital structure? Unlevered important using Hamada equation = Beta /1+(1-T) x (D/E) Be ta 0.95Marginal Tax Rate, T 32.8%D/E 0.036Unlevered Beta = 0.96 / 1+(1 -0.328)*0.036 =0.9378. What is the companys current marginal tax rate?Income taxes for the fiscal year ended 2012 resulted in an effective tax rate of 32.8% compared to 31.1% for fiscal year 2011. (Starbucks Coffee Company, 2013)9. What is the impairment network multiple of the company?Price to earnings ration. This ratio is used in conjunction with other metrics to give analyst and investors are quick initial impression of whether a company would pull a good investment. (investopedia, 2014) Starbucks P/E ratio is 385.0510. How has the companys stock been performing in the last 5 years? Starbucks share price 282.32% in the last 5 yrs.11. Would you invest in this company? Why or why not?I would invest in Starbucks. SBUX has the highest P/E ratio among its competitors. Their cost of debt is low compared to their cost of equity. That is why they are relying on debt for their expansion. Their dividends per share have been increasing yearly. 18. The last page of your paper should be a Bibliography of the sources you used to prepare this paper.Bibliographyinvestopedia. (2011, feb). Cost of Equity. (investopedia) Retrieved septmeber 2014, from Investopedia www.investopedia.com/terms/c/costofeqquity.asp investopedia. (2014). Definition of Prince Multiple. Retrieved from www.investopedia.com www.investopedia.com/terms/p/princemultiles.asp Starbucks Coffee Company. (2013). Fiscal 2013 Annual Report. Investor Relations. Seattle Starbucks Coffee Company. yahoo.com. (2014, september). chawbacon Finance. (Yahoo.com, Producer) Retrieved september 2014, from Yahoo finance finance.yahoo.com/q/ks?s=SBUX+Key+Statistics