Question

I am looking for the Evaluative tools referred to in here:

Respond to the following question: In your response - be specific about the evaluative tools (at least three must be discussed) and indicate why you have chosen them and how they are useful in evaluating the financial statements of a company. Do not repeat your supporting information for each tool.

Scenario:You are interested in investing in Starbucks (a specialty coffee company). What types of tools should you use to evaluate the company? Please respond to two other posts (only two!) and provide advice as to why you support their reasoning or how you would improve their reasoning.

Answer 1

Tools of evaluating the financial statements of a company

Fund flow analysis
Fund flow analysis deals with detailed sources and the fund's application of business concerns for a specific period. Where does the money come from during the period under review and how are they used. This highlights changes in the financial structure of the company.

Cash flow analysis
Cash flow analysis is based on cash and bank balance. Hence cash transactions are considered in cash flow analysis instead of working capital. There are two types of cash flows. Real cash flow and notional cash flow.

Ratio analysis
Ratio analysis develops a relationship between individual items in a balance sheet or profit and loss account. Ratio analysis is useful not only for business concerns but also for external parties.

Types of tools should be use to evaluate the Starbucks Corporation

Starbucks Corporation has the most recognizable coffee brand in the world. What started as a small coffee shop at Pike Place Market is an international conglomerate with over 28,218 locations as of 2018. Initial investors were pessimistic about the company's long-term prospects for a cup of coffee, "but Starbucks has proven that it has the power and impressive growth.

Even though Starbucks' initial public offering came in 1992, the period after 2010 skyrocketed its prices. The stock started doing a lot of positives for its performance. However, the future also poses some real risks to the Starbucks brand, including global competition, commodity prices, and changing dynamics in the retail market.

Competition

It is possible to compete with all sides of the consumer cyclical restaurant and beverage industry. Starbucks competes with many other low-cost providers, not including hot and cold drink competition from companies such as Coking-Cola and Pepsi, which have always been among the newly emerging brand names. Thus, market-trending products or acquisitions such as the Coca-Cola Costa deal may negatively affect revenue for Starbucks.

Starbucks also has several locations for Barnes & Noble, Best Buy, and Target stores for partnership competition. It is also important to maintain these partnerships and incorporate the competition into these channels. It is also important to keep your brand running through operations through partnerships with other retailers, including Walmart, Target, and online retailers.

Commodity price fluctuations

Starbucks acknowledges that it is vulnerable to commodity prices. The company spends an extraordinary amount on other items such as coffee beans, sugar, milk, and other items. They are not exposed nakedly to commodity fluctuations. The use of Starbucks derivative contracts skyrocketed just in case of a hedge.