1. ANNUAL REPORT ANALYSIS PROJECT
Starbucks, Dunkin' Brands and Panera Bread
Intermediate
Financial
Accoun1ng
1
University
of
Dallas,
Spring
2015
By:
A.
Alsakran,
F.
Masoudy,
M.
Almohammed
and
F.
Alharbi
1

2. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
1. Introduction:
Purpose
of
The
Analysis:
Financial
analysis
is
the
most
common
method
and
technique
used
to
evaluate
the
financial
performance
and
financial
condi1on
of
a
company.
Different
types
or
ra1os
provide
financial
informa1on
from
different
aspects.
It
involves
selec1on,
evalua1on
and
interpreta1on
of
financial
informa1on
to
provide
meaningful
informa1on.
Recommenda7on:
On
the
basis
of
the
given
ra1o
analysis
it
is
recommended
that
one
should
invest
in
Starbuck’s
Corpora1on
as
it
is
more
secure
and
offers
a
fair
return
to
its
investors.
Overview
of
The
Presenta7on
Structure:
In
this
presenta1on
we
will
analyze
the
financial
ra1os
of
the
3
most
pres1gious
companies
in
the
food
industry
namely:
Panera
Bread,
Dunkin’s
Brands
and
Starbuck’s
Corpora1on.
Then
on
the
basis
of
this
analysis
we
will
present
a
recommenda1on
about
which
company
is
more
worthy
of
investment.
Finally
the
presenta1on
will
end
up
with
the
summary
and
conclusion.
2

3. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
2. Overview:
2-­‐1.
INDUSTRY:
Largest
Companies
Within
The
Industry:
Panera
Bread,
McDonald's,
Subway,
Starbucks,
Dunkin’s
Brands
and
Starbuck’s
are
the
largest
companies
in
the
food
industry.
Starbuck’s
Corpora1on
holds
36.7%
of
the
market
share,
Dunkin’s
Brands
holds
24.6%
and
the
remaining
38.7%
is
shared
by
other
companies.
Geographical
Presence
in
The
Industry:
Panera
Bread
holds
a
strong
posi1on
in
the
industry
with
opera1ons
in
more
than
36
countries
in
the
world.
Dunkin’s
Brands
is
currently
opera1ng
in
more
than
30
countries
with
about
40
years
of
experience.
Starbuck’s
Corpora1on
is
opera1ng
in
more
than
65
countries.
Economic
Factor:
The
companies
have
global
existence
and
their
opera1ons
in
different
countries
are
affected
by
the
poli1cal
and
economic
situa1on
of
these
countries.
The
increased
compe11on
in
the
industry
has
saturated
the
market
and
offered
variety
of
products
to
the
customers.
Yet
from
the
financial
analysis
this
can
be
viewed
that
overall
the
industry
is
growing
and
each
company’s
profit
is
increasing
each
year.
3

4. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
2. Overview:
2-­‐1.
BUSINESS
STRATEGY
FOR
EACH
COMPANY:
Panera
Bread:
• Panera
Bread
was
established
in
1981
as
Au
Bon
Pain.
The
company
spread
out
along
the
east
cost
and
interna1onally
through
1990’s.
Later
on,
the
name
was
changed
to
Panera
Bread
in
1997.
Today,
Panera
is
a
specialized
bakery-­‐café
that
caters
baked
goods,
sandwiches,
soups
and
salads.
Panera
has
been
steadily
growing
throughout
the
years
with
a
strong
financial
and
opera1ng
performance.
• According
to
Shaich,
CEO
and
founder
of
Panera,
in
his
interview
with
Business
Insider,
“Panera
in
its
core
comes
from
a
view
that
compe11ve
advantage
is
everything.”
Panera
believes
in
fresh
and
healthy
ingredients
that
are
delivered
to
stores
on
a
daily
basis.
Also,
they
provide
a
home
style
atmosphere
to
ensure
that
their
customers
are
comfortable
whether
they
dine-­‐in
or
taking
their
orders
to-­‐go.
• The
company
focuses
on
a
long
term
marking
strategy;
therefore,
it
is
expected
for
Panera
to
con1nue
delivering
its
goods
consistently.
4
Panera
Bread
Company.
(2014,
April
22).
2013
Annual
Report
to
Stockholders.
Retrieved
16
April
2015

5. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
2. Overview:
2-­‐1.
BUSINESS
STRATEGY
FOR
EACH
COMPANY:
Dunkin'
Brands:
• Dunkin'
Brands
is
the
one
of
the
largest
coffee
and
donuts
chain
opera1ng
in
almost
all
big
countries
of
the
world.
The
annual
sales
revenue
of
the
company
has
been
flourished
tremendously
over
the
past
five
years
making
it
a
leading
coffee
and
donuts
seller
in
the
interna1onal
market.
• The
company
has
repot
a
annual
revenue
of
748.71
million
in
2014
which
is
almost
5%
greater
than
the
reported
sales
revenue
of
2013.
• Dunkin
donuts
was
also
one
of
the
akrac1ve
company
from
investment
point
of
view
having
income
available
for
common
share
holders
of
$176.36
million
which
provides
an
basic
earning
per
share
of
1.67
which
is
greater
than
the
past
year
EPS
of
1.38.
• Dunkin
donuts
has
been
using
product
differen1a1on
strategy
providing
high
quality
donuts
through
processing
from
hi-­‐tech
machines.
• There
has
also
been
product
differen1a1on
strategy
used
by
the
company
by
making
the
best
donuts
in
market.
• The
overall
company
perspec1ve
for
next
5
years
looks
quiet
favorable
because
there
has
been
an
increase
in
overall
sales
and
profits
from
last
5
years.
The
EPS
is
also
rising
which
is
makes
the
Dunkin
Donut
a
good
company
that
investors
can
invest
in.
5
Business
Strategy.
(n.d.).
Starbucks
and
Dunkin
Donuts.
Retrieved
16
April
2015

6. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
2. Overview:
2-­‐1.
BUSINESS
STRATEGY
FOR
EACH
COMPANY:
Starbucks
Corpora7on:
• Starbucks
Corpora1on
is
an
interna1onal
coffee
and
coffeehouse
chain
based
in
Seakle,
Washington.
It
was
founded
in
1971
by
Jerry
Baldwin,
Zev
Siegl
and
Gordon
Bowker.
• Starbucks
is
the
largest
coffeehouse
company
in
the
world,
with
17,009
stores
in
50
countries,
including
over
11,000
in
the
United.
Their
product
mix
includes
roasted
and
handcraoed
high
quality
and
premium
premium
priced
coffees,
tea,
a
variety
of
fresh
food
items
and
other
beverages.
• Starbucks
is
to
effec1vely
leverage
their
cornerstone
product
differen1a1on
and
also
offering
a
premium
product
mix
of
high
quality.
Starbuck’s
brand
is
built
on
selling
the
finest
quality
coffee.
• Starbucks
employs
a
broad
differen1a1on
strategy.
This
strategy
is
concentrated
on
a
broader
segment
of
the
total
market.
Starbucks
serves
a
market
that
is
defined
by
coffee
drinkers.
6
Starbucks
Corpora1on.
(2014,
December
4).
Starbucks
Details
Five-­‐Year
Plan
to
Accelerate
Profitable
Growth
at
Investor
Conference
|
Starbucks
Newsroom.
Retrieved
16
April
2015

7. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
Ra1o
Result
Compared
to
Industry
Defini1on
Interpreta1on
Area
Interpreta1on
Dec.
30,
2014
Dec.
31,
2013
Stock'
adjusted
price
$174.89
$176.69
I.
Liquidity
1.
Current
ra1o
1.15
1.00
1.20
The
ability
to
pay
short-­‐term
debt
It
looks
like
Panera
is
trying
to
improve
it's
current
ra1o
and
is
able
to
pay
short-­‐term
debt
just
by
using
it's
current
assets.
Panera
looks
in
a
good
shape
regarding
its
liquidity.
Panera
can
sa1sfy
its
financial
obliga1ons
without
having
a
financial
distress.
2.
Quick
test
0.86
0.69
0.80
The
ability
to
pay
short-­‐term
debt
immediately
and
without
wai1ng
for
inventory
to
be
sold
Panera
can
pay
most
of
its
debt
quickly.
3.
Current
cash
debt
coverage
1.02
1.20
N/A
The
ability
to
pay
off
the
company’s
current
liabili1es
using
a
give
year
opera1ons
It
is
clear
that
Panera's
liabili1es
has
increased
within
the
last
two
years.
However,
it
s1ll
can
pay
out
its
liabili1es
just
by
using
its
opera1on
income.
II.
Ac7vity
4.
Accounts
receivable
turnover
26.45
27.92
15.90
Measures
liquidity
of
receivables
Panera
is
working
in
reducing
its
receivable
turnover.
Form
almost
28
in
2013
to
26.5
in
2014
Panera
has
a
very
good
cash
conversion
cycle.
It
manages
its
cash
by
reducing
the
net
working
capital
which
means
Panera
is
able
to
pursue
new
opportuni1es.
5.
Inventory
turnover
29.95
30.06
N/A
Measures
liquidity
of
inventory
Panera
turns
over
its
inventory
once
every
month.
That
is
good
since
it
deals
with
food
that
has
short
expira1on
dates.
6.
Asset
turnover
1.97
1.95
1.50
Measures
how
efficiently
assets
are
used
to
generate
sales
Panera
generates
almost
$2
for
each
dollar
in
assets.
Panera
Bread:
7

8. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
III.
Profitability
7.
Profit
margin
on
sales
7.09%
8.23%
6.92%
Measures
net
income
generated
by
sales
Panera
has
a
beker
profit
margin
comparing
to
the
industry
margin
Even
though
Panera
has
a
high
profitability
ra1os,
it
does
not
prefer
to
distribute
dividends.
Panera
aims
to
use
its
retain
earnings
to
keep
up
its
con1nuous
growth.
8.
Return
on
assets
13.94%
16.02%
10.50%
Measures
overall
profitability
of
assets
The
company
generates
more
return
from
its
assets
than
do
the
industry
9.
Return
on
common
stock
equity
24.97%
25.78%
N/A
Measures
profitability
of
owners'
investment
Panera's
owners
are
genera1ng
roughly
25%
profits
for
their
investment
which
is
a
very
good
return
rate.
10.
Earning
per
share
$6.67
$6.85
N/A
Measures
net
income
per
share
11.
Price-­‐earning
ra1o
$26.22
$25.79
$33.90
Measures
the
ra1on
of
the
stock
market
price
to
earning
per
share
In
the
year
ended
on
31
Dec.
2014,
it
takes
an
investment
of
$26.22
to
generate
one
dollar
in
earnings
12.
Payout
ra1o
0.00%
0.00%
33.00%
The
propor1on
of
earnings
that
is
paid
out
as
dividends
Panera
has
never
paid
dividends
which
might
make
the
investor
reluctant
to
invest
in
this
company.
However,
this
investment
might
be
akrac1ve
for
future
value.
IV.
Coverage
13.
Debt
to
assets
0.47
0.41
N/A
Measures
total
assets
provided
by
creditors
Although
the
percentage
has
increased,
Panera
uses
more
equity
for
opera1ons
Panera
can
easily
pay
its
yearly
financial
obliga1ons
because
it
does
not
rely
en1rely
on
debts
to
finance
its
opera1ons.
14.
Times
interest
earned
151.28
294.17
10.20
Measures
ability
to
pay
interest
as
they
due
Panera
has
a
very
high
capacity
to
pay
interests
as
they
due
15.
Cash
debt
coverage
0.59
0.75
N/A
Measures
the
ability
to
repay
its
total
liabili1es
using
a
given
year
opera1on
cash
flows
The
company
can
pay
most
of
its
liabili1es
using
its
opera1ng
cash
flows
16.
Book
value
per
share
27.39
24.45
N/A
Measures
the
amount
each
share
would
receive
if
the
company
were
liquidated
at
the
amounts
recorded
on
the
balance
sheet
Since
the
book
value
of
the
equity
has
increased
in
2014,
each
share
would
be
compensated
at
almost
16%
of
its
market
price
if
the
company
were
liquidated.
17.
Free
cash
flow
$110,862,000
$153,961,000
N/A
Measures
the
amount
of
discre1onary
cash
flow
Panera
has
enough
free
cash
that
can
be
u1lized
in
new
opportuni1es
which
in
return
would
enhance
stockholder's
equity.
8

9. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
Ra1o
Result
Compared
to
Industry
Defini1on
Interpreta1on
Area
Interpreta1on
Dec.
30,
2014
Dec.
31,
2013
Stock'
adjusted
price
$42.40
$46.98
I.
Liquidity
1.
Current
ra1o
1.24
1.34
1.20
The
ability
to
pay
short-­‐term
debt
Dunkin
Donuts
from
its
current
ra1o
is
able
to
pay
short-­‐term
debt
just
by
using
it's
current
assets.
The
liquidity
posi1on
of
Dunkin
Donuts
is
beker
as
compared
to
industry
and
the
company
has
sufficient
current
assets
available
to
fulfill
its
current
liabili1es
in
the
case
of
liquida1on.
The
good
liquidity
posi1on
of
the
Dunkin
Donuts
is
one
of
its
key
strengths
and
help
in
avoiding
general
problems
in
the
1mes
of
recession.
2.
Quick
test
0.88
0.98
0.80
The
ability
to
pay
short-­‐term
debt
immediately
and
without
wai1ng
for
inventory
to
be
sold
Dunkin
Donuts
can
pay
most
of
its
debt
quickly
also
they
don’t
have
inventory
to
deduct
3.
Current
cash
debt
coverage
0.57
0.41
N/A
The
ability
to
pay
off
the
company’s
current
liabili1es
using
a
give
year
opera1ons
It
is
clear
that
Dunkin
Donuts
liabili1es
has
decreased
within
the
last
two
years.
However,
it
s1ll
can
pay
out
its
liabili1es
just
by
using
its
opera1on
income.
II.
Ac7vity
4.
Accounts
receivable
turnover
5.22
6.84
15.90
Measures
liquidity
of
receivables
Dunkin
Donuts
is
working
in
reducing
its
receivable
turnover.
Ac1vity
ra1os
despite
of
having
good
accounts
receivable
turnover
does
not
represent
very
good
performance
of
the
organiza1on
as
the
asset
turnover
ra1o
is
significantly
less
than
the
industry
average.
This
means
that
the
Dunkin
Donut
is
understanding
and
not
fully
u1lizing
its
asset's
capacity.
This
could
be
due
to
strict
policies
for
receivable
credit
payback
as
the
accounts
receivable
turnover
is
significantly
beker
than
the
industry
average.
5.
Inventory
turnover
0.00
0.00
N/A
Measures
liquidity
of
inventory
Dunkin
Donuts
has
No
Inventory
6.
Asset
turnover
0.23
0.22
1.50
Measures
how
efficiently
assets
are
used
to
generate
sales
Dunkin
donuts
receives
23
cents
for
every
$1
on
assets
Dunkin'
Brands:
9

10. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
III.
Profitability
7.
Profit
margin
on
sales
23.55%
20.58%
6.92%
Measures
net
income
generated
by
sales
Dunkin
donuts
has
a
very
high
profit
margin
comparing
to
the
industry
margin.
The
profitability
ra1os
of
Dunkin
Donuts
are
significantly
beker
than
the
industry
averages
which
means
the
company
has
compe11ve
advantage
over
sales
and
cos1ng
as
compared
to
the
industry.
Return
on
assets
is,
however,
lower
than
the
industry
averages
which
means
that
the
company
is
not
fully
u1lizing
its
assets
and
has
the
capacity
to
generate
much
higher
profits
using
its
available
assets.
The
high
payout
ra1o
is
jus1fied
with
the
fact
that
the
company
is
not
u1lizing
the
capacity
of
current
assets
and
therefore
does
not
need
to
find
more
ventures
or
opportuni1es
before
fully
u1lizing
its
current
asset's
capacity.
8.
Return
on
assets
5.50%
4.55%
10.50%
Measures
overall
profitability
of
assets
The
company
generates
Less
return
from
its
assets
than
do
the
industry.
9.
Return
on
common
stock
equity
45.49%
38.79%
N/A
Measures
profitability
of
owners'
investment
Dunkin
Donuts
owners
are
genera1ng
More
profits
in
2014
than
2013
for
their
investment
which
is
a
very
high
return
rate.
10.
Earning
per
share
$1.67
$1.38
N/A
Measures
net
income
per
share
11.
Price-­‐earning
ra1o
$25.39
$34.04
$33.90
Measures
the
ra1on
of
the
stock
market
price
to
earning
per
share
In
the
year
ended
on
31
Dec.
2014,
it
takes
an
investment
of
$25.39
to
generate
one
dollar
in
earnings
which
is
less
than
last
year
and
less
than
the
industry.
12.
Payout
ra1o
54.87%
55.14%
33.00%
The
propor1on
of
earnings
that
is
paid
out
as
dividends
Dunkin
Donuts
has
paid
high
rate
of
dividends
which
make
the
company
akracted
by
the
investors.
IV.
Coverage
13.
Debt
to
assets
0.88
0.87
N/A
Measures
total
assets
provided
by
creditors
the
percentage
has
increased,
and
it's
high
comparing
to
the
industry.
Coverage
ra1os
of
Dunkin
Donuts
depicts
good
performance
of
the
company
in
the
recent
financial
year
as
the
free
cash
flows
and
the
interest
cover
ra1o
improved
despite
of
the
slight
decrease
in
book
value
of
the
company's
shares.
The
improving
ra1os
therefore
depict
that
Dunkin
Donuts
has
good
coverage
posi1on
despite
of
having
high
debt
to
assets
ra1o.
Cash
debt
coverage
however
raises
ques1ons
over
the
Dunkin
Donut's
performance
which
means
that
the
company
does
not
generate
sufficient
cash
from
its
opera1ons
despite
of
having
good
profit
margins.
14.
Times
interest
earned
4.98
3.80
10.20
Measures
ability
to
pay
interest
as
they
due
Dunkin
donuts
has
a
good
capacity
to
pay
interests
as
they
due.
15.
Cash
debt
coverage
0.07
0.05
N/A
Measures
the
ability
to
repay
its
total
liabili1es
using
a
given
year
opera1on
cash
flows
The
company
cant
pay
most
of
its
liabili1es
using
its
opera1ng
cash
flows
so
its
risky.
16.
Book
value
per
share
3.49
3.82
N/A
Measures
the
amount
each
share
would
receive
if
the
company
were
liquidated
at
the
amounts
recorded
on
the
balance
sheet
Since
the
book
value
of
the
equity
has
decreased
in
2014,
and
there
is
a
huge
gap
between
the
book
value
and
the
market
value.
17.
Free
cash
flow
$175,685
$110,700
N/A
Measures
the
amount
of
discre1onary
cash
flow
Dunkin
Donuts
has
enough
free
cash
that
can
be
u1lized
in
new
opportuni1es
which
in
return
would
enhance
stockholder's
equity.
10

11. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
Ra1o
Result
Compared
to
Industry
Defini1on
Interpreta1on
Area
Interpreta1on
Dec.
30,
2014
Dec.
31,
2013
Stock'
adjusted
price
$42.40
$46.98
I.
Liquidity
1.
Current
ra1o
1.37
1.02
1.20
The
ability
to
pay
short-­‐
term
debt
Starbuks
is
capable
of
paying
off
its
short
terms
liabili1es
Starbucks
does
not
a
very
good
liquidity
posi1on.
Overall,
the
key
liquidity
measurements
indicate
that
the
company
is
in
a
posi1on
in
which
financial
difficul1es
could
develop
in
the
future.
However,
investors
may
accept
this
because
the
company
is
growing
and
using
the
cash
for
growth
reasons.
2.
Quick
test
1.01
0.81
0.80
The
ability
to
pay
short-­‐
term
debt
immediately
and
without
wai1ng
for
inventory
to
be
sold
Starbucks
can
pay
most
of
its
debt
very
quickly.
3.
Current
cash
debt
coverage
0.14
0.77
N/A
The
ability
to
pay
off
the
company’s
current
liabili1es
using
a
give
year
opera1ons
Starbucks
liabili1es
have
increased
significantly
for
the
last
two
years.
However,
it
s1ll
can
pay
out
its
liabili1es
just
by
using
its
opera1on
income.
II.
Ac7vity
4.
Accounts
receivable
turnover
27.59
28.39
15.90
Measures
liquidity
of
receivables
Starbucks'
receivable
turnover
decreased
slightly
from
2013
to
2014
Starbucks
is
doing
well
in
terms
of
ac1vity
ra1os.
Starbucks
collects
its
A/R
twice
every
month
while
the
average
in
the
industry
is
once
a
month,
so
it's
way
beker
than
compe1tors.
For
the
inventory
turnover
and
asset
turnover,
other
companies
have
achieved
higher
ra1os.
5.
Inventory
turnover
6.29
5.74
N/A
Measures
liquidity
of
inventory
Starbucks'
inventory
is
sold
once
every
two
month.
6.
Asset
turnover
1.53
1.29
1.50
Measures
how
efficiently
assets
are
used
to
generate
sales
Starbucks
generates
almost
$1.5
for
each
dollar
in
assets.
Starbucks
Corpora7on:
11

12. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
3. Financial Ratio Calculations and Analysis:
III.
Profitability
7.
Profit
margin
on
sales
12.57%
0.06%
6.92%
Measures
net
income
generated
by
sales
in
2014,
Starbucks
has
a
very
good
a
profit
margin.
In
2013
it
was
very
bad
because
of
the
low
net
earning
the
same
year.
Starbucks
profitability
is
in
general
way
beker
than
most
of
other
companies
in
the
same
industry.
It
has
very
good
Profit,
return
on
assets,
and
pay
out
ra1o.
The
reason
of
low
ra1os
in
2013
is
because
of
the
low
earing
the
company
had
in
the
that
year
8.
Return
on
assets
19.23%
0.08%
10.50%
Measures
overall
profitability
of
assets
Starbucks
generates
in
assets
more
than
the
industry
average
by
almost
9%
in
2014.
However,
in
2013
it
was
very
low
because
of
the
low
earnings.
9.
Return
on
common
stock
equity
39.21%
0.20%
N/A
Measures
profitability
of
owners'
investment
Panera's
owners
are
genera1ng
roughly
25%
profits
for
their
investment
which
is
a
very
good
return
rate.
10.
Earning
per
share
$2.75
$0.01
N/A
Measures
net
income
per
share
11.
Price-­‐
earning
ra1o
$27.16
$7,566.00
$33.90
Measures
the
ra1on
of
the
stock
market
price
to
earning
per
share
In
the
year
ended
on
31
Dec.
2014,
it
takes
an
investment
of
$27.16to
generate
one
dollar
in
earnings
12.
Payout
ra1o
37.87%
7577.11%
33.00%
The
propor1on
of
earnings
that
is
paid
out
as
dividends
in
2014,
Starbucks
has
paid
%37.87
as
dividend,
which
is
a
good
percentage
for
investors
IV.
Coverage
13.
Debt
to
assets
0.51
0.61
N/A
Measures
total
assets
provided
by
creditors
half
of
the
company's
assets
is
being
financed
with
debt
Starbucks
has
a
very
good
coverage
ra1os
compared
to
other
companies
in
the
same
industry.
The
fact
that
half
of
the
company
assets
is
financed
is
because
the
growth,
which
is
reasonable
in
a
case
like
this.
Starbucks
can
easily
pay
the
interest
as
they
due,
the
average
of
TIE
for
the
last
2
years
is
30
while
the
industry
average
is
only
10.
14.
Times
interest
earned
49.29
8.18
10.20
Measures
ability
to
pay
interest
as
they
due
Starbucks
has
a
very
high
capacity
to
pay
interests
as
they
due
15.
Cash
debt
coverage
0.14
0.77
N/A
Measures
the
ability
to
repay
its
total
liabili1es
using
a
given
year
opera1on
cash
flows
in
2013
the
company
can
pay
most
of
its
liabili1es
using
its
opera1ng
cash
flows,
however,
in
2014
the
can
not.
16.
Book
value
per
share
14.37
15.39
N/A
Measures
the
amount
each
share
would
receive
if
the
company
were
liquidated
at
the
amounts
recorded
on
the
balance
sheet
Each
share
would
be
compensated
at
almost
%14.4
of
its
market
price
if
the
company
were
liquidated.
17.
Free
cash
flow
$(553)
$1,147
N/A
Measures
the
amount
of
discre1onary
cash
flow
Starbucks
does
not
have
enough
free
cash
that
can
be
u1lized
in
new
opportuni1es.
12

13. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
4. A Comparison of The Companies By Area:
1.
Liquidity:
Aoer
comparing
the
three
companies,
we
can
conclude
that
Panera
has
the
best
liquidity
ra1os,
then
Starbucks
and
the
last
is
Dunkin
Donuts.
The
the
reason
that
Starbucks
is
does
not
have
a
high
liquidity
is
because
of
their
expanding
and
using
cash
for
growth.
2. Ac7vity:
Based
on
all
the
three
companies
ac1vi1es,
it
seems
that
Panera
has
a
good
ability
to
get
new
chances
as
long
as
they
are
working
on
the
franchise
ideas
to
expand
their
business.
Comparing
to
Starbucks,
which
assembles
its
account
receivables
twice
monthly
and
its
compe1tors
collect
them
every
month.
3.
Profitability:
Comparing
the
profitability
to
these
three
company,
we
see
that
Starbucks
has
beker
profitability
than
Panera
and
Dunkin
donuts
that’s
because
Panera
does
not
distribute
dividends
and
there
profitability
is
lower
than
Starbucks.
Also,
Dunkin
Donuts
has
lower
profitability
ra1o
even
though
they
distribute
dividends
but
on
the
other
hand,
they
are
not
fully
u1lizing
its
assets.
4.
Coverage:
Aoer
comparing
all
companies
coverage
ra1os,
it
seems
that
all
companies
can
meet
their
financial
obliga1ons
without
having
financial
distress.
Even
though
Starbucks
doesn't
have
free
cash
flow,
it
fulfilled
its
obliga1ons
toward
lenders.
Although
Panera
keeps
a
high
book
value
among
the
other
companies
and
a
high
TIE,
it
s1ll
does
not
pay
dividends
which
might
discourage
investors
from
inves1ng
in
it.
13

14. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
5. Investment Recommendation:
Recommenda7ons:
Based
on
the
given
ra1o
analysis,
we
will
prefer
to
invest
our
money
in
Starbuck’s
Corpora1on
for
the
following
reasons:
•
It
possesses
a
high
market
share.
•
Although
the
company
doesn’t
have
the
best
current
cash
debt
coverage
ra1o
yet
Its
liquidity
ra1os
are
sa1sfactory.
•
The
ac1vi1es
ra1os
are
also
improving
each
year.
•
It
has
the
highest
return
on
asset
and
price
earnings
ra1o.
•
Panera
Bread
has
the
highest
earning
per
share,
book
value
per
share
and
free
cash
flows
but
its
payout
ra1o
is
zero
for
2
years
while
the
payout
ra1o
of
Starbuck’s
Corpora1on
is
very
good.
•
Its
free
cash
flows
are
nega1ve
this
year
because
in
the
previous
year
it
paid
a
huge
amount
of
dividend
to
its
shareholders.
The
company
possesses
a
great
poten1al
for
improvement
in
the
future.
•
The
company
has
a
low
debt
to
asset
ra1o
which
means
low
risk.
•
The
profitability
ra1os
are
also
favorable
for
investors.
14

15. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
6. Summary and Conclusion:
Summary:
The
purpose
of
the
presenta1on
was
to
do
strategic
financial
analysis
of
the
three
most
successful
companies
in
the
food
industry
namely;
Panera
Bread,
Dunkin’s
Brands
and
Starbuck’s
Corpora1on
and
to
iden1fy
the
best
one
for
the
purpose
of
investment
on
the
basis
of
this
analysis.
It
con1nued
by
explaining
business
strategy
for
each
company
and
followed
by
a
comprehensive
ra1o
analysis
for
each
company.
Then
on
the
basis
of
analysis
it
was
recommended
that
the
money
should
be
invested
in
Starbuck’s
Corpora1on.
Conclusion:
As
a
result
of
the
analysis,
it
is
concluded
that
among
the
three
companies
the
performance
of
Panera
Bread
is
the
best
but
it
is
not
paying
any
dividend
to
its
investors
for
2
years
which
makes
it
unfavorable
for
investors.
Although
the
performance
of
Starbuck’s
Corpora1on
is
not
as
good
as
it
was
in
the
past,
but
it
holds
a
huge
market
share
and
has
a
great
poten1al
to
grow.
On
the
basis
of
analysis,
it
is
recommended
that
Starbuck’s
Corpora1on
is
the
best
op1on
available
for
investment.
15

16. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
7. End-of-Presentation:
Project
Component
Slides
Number
Introduc1on
2
Overview
3
Financial
Ra1o
Calcula1ons
and
Analysis
7
Investment
Recommenda1on
13
Summary
and
Conclusion
14
References
16
16

17. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
References (1):
Berman,
K.,
&
Joe
Knight ;
with
John
Case.
(2013).
Financial
Intelligence,
Revised
Edi2on:
A
Manager’s
Guide
to
Knowing
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the
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Starbucks
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April
2015,
from
hkps://sites.google.com/site/
starbucksanddunkindonuts/business-­‐strategy
Carlberg,
C.
G.
(2010).
Business
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MicrosoD
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Indianapolis,
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Brands
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2015,
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2015,
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2015,
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17

18. ACCT
5325
–
ANNUAL
REPORT
ANALYSIS
PROJECT
References (2):
Our
History.
(n.d.).
Retrieved
6
April
2015,
from
hkps://www.panerabread.com/en-­‐us/company/about-­‐panera/our-­‐history.html
Panera
Bread
Company.
(2014a,
April
22).
2013
Annual
Report
to
Stockholders.
Retrieved
16
April
2015,
from
hkps://
www.panerabread.com/content/dam/panerabread/documents/financial/2013/ar-­‐2013.pdf
Panera
Bread
Is
On
The
Right
Track
To
Future
Growth.
(n.d.).
Retrieved
6
April
2015,
from
hkp://www.gurufocus.com/news/267651/
panera-­‐bread-­‐is-­‐on-­‐the-­‐right-­‐track-­‐to-­‐future-­‐growth
Ross,
S.
A.,
Westerfield,
R.
W.,
&
Jordan,
B.
D.
(2012).
Fundamentals
of
Corporate
Finance
Standard
Edi2on
(10th
ed.).
New
York,
NY:
McGraw
Hill
Higher
Educa1on.
Starbucks
Corpora1on.
(2014b,
December
4).
Starbucks
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Plan
to
Accelerate
Profitable
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Starbucks
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April
2015,
from
hkps://news.starbucks.com/news/live-­‐blog-­‐starbucks-­‐path-­‐for-­‐growth-­‐outlined-­‐
at-­‐2014-­‐biennial-­‐investor-­‐day
U.S.
Securi1es
and
Exchange
Commission.
(2013).
Panera
Bread.
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2015,
from
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ac1on=view
U.S.
Securi1es
and
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(2014c).
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Brands.
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April
2015,
from
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edgar?ac1on=getcompany
U.S.
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and
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(2014d).
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April
2015,
from
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ac1on=view
U.S.
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and
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(2014e).
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16
April
2015,
from
hkp://www.sec.gov/cgi-­‐bin/viewer?
ac1on=view
Yahoo
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Business
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Stock
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April
2015,
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18