The Company Valuation Project (STARBUCKS) Objective:

The Company Valuation Project(STARBUCKS)Objective:The Company Valuation Project emphasizes value-based management as a tool for understanding a company’s value-drivers and the impact on a company’s value due to different potential operating strategies, including improvements in supply chain management. You will be required to use a spreadsheet valuation model to estimate a company’s value and identify required external financing requirements. You are going to make an estimate of the fundamental value of your company and use price projections based on PE ratios and P/Sales ratios. To begin, you will need 5 to 10 years of data for your company. You can obtain this using Thomson Reuters or Bloomberg.Students will form groups of 4 that are determined by their own selection. It is necessary for the students to make a decision on groups by the end of the class following the announcement of the project. Every group will submit only one hard copy valuation report for the chosen company (Excel spreadsheet, write-up Word doc and PPT).Re-read covered material after class plus all related research studies, articles and materials recommended. For a better understanding of the entire material covered in class, study with your group members. Ask each other questions and try to find the answers together. If one of you has a question, the group is responsible to find an answer. If you still have difficulties, please come and see me.Under the heading of II. Financial Analysis2. Find out some key ratios and incorporate them into your report.Summarize briefly how the company has performed financially compared to the industry (include a table explaining where did you find all the industry ratios as determined by the SIC code) as well as the screenshots of the Thomson Reuters or Bloomberg Screens for all the ratios such as:RatiosCompany-Most recent annual ratioIndustry –Most recent annual ratioSource for the Industry ratioAsset Turnover1.731.36 (specify mean or median)T1Banker/CompanyAnalysis/Comparables/KeyFinancialRatios-II-II-II-II-II–II-II-II-II-II–II-II-II-II-II–II-II-II-II-II-a. Under growth rates, how does your company’s sales and EPS growth rates compare with the industry and the S&P 500? Is your company more or less attractive to its competitors? Looking at the graph which should show your company’s results over the last 5 to 10 years, has your company been improving over time?b. How does your company’s P/E, Price/Sales, Price/Book, and Price/Cash ratios compare to the industry? Remember, lower ratios make your company look relatively less expensive. How has your company’s PE changed over time?c. How does your company’s net profit margin compare to the industry and has it been getting better or worse over time?d. How is the debt/equity ratio for your company. Is your company highly leveraged relative to the industry or just average?e. Compare the company’s ROA and ROE relative to the industry. Is your company more or less attractive relative to the industry? Has the ROE been getting better or worse over time.OBS: Creating tables and building charts for this section are very useful. Don’t forget you have to discuss your findings.Formatting:1. An integrated report reads better than separate sections with obviously different authors. The group is meant to work together on all aspects of the assignment; not ‘divide and conquer’.2. Do not rehash what should be common knowledge. For example, do not describe the procedure for estimating the cost of equity; but do explain how you chose your inputs and why your firm has the cost of equity it does.3. Use tables to summarize data and findings. Use legible font (10-12 point for tables and figures).4. The questions above are designed to guide you through the project. Each firm will have additional unique risk and opportunities to explore.5. Reference all data sources, but do not include them in your report.

Growth Rates Revenue growth rate for Star Bucks is positive over period of past 10 years indicatingcontinuous increase in revenue, except for the year 2009 where the revenue growth ratedeclined…

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