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Analyze, Discuss and Justify Whether Stock is a Good Buy

Discussion of key statistics provided by sources like yahoo finance. Also, recommendation regarding the future of this corporation. Is the stock a good buy, average buy or poor buy. Include justification based on your analysis.

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See the attached file.

Discussion of key statistics and analysis is included in file attached.

When we look at the key statistics provided we can see that Starbucks' total assets have gone up and down from year to year. But the company had a steady growth over the last five years and has done pretty well on keeping its receivables at a small amount and not getting in over its head in money owed to the company. Its inventory has been at a pretty safe, steady level.
2011 2010
Current Ratio 1.93 1.51
Quick Ratio 1.42 1.24

It is very important for Starbucks to maintain a good level of liquidity, so it can pay its bills in a timely manner. Liquidity refers to how quickly and easily one can covert it's assets into cash to pay short-term debt. Current liquidity can be calculated by comparing the amount of current assets to the amount of current liabilities. As we can see, Starbucks increased its liquidity from 2010 to 2011. Researchers generally say that a good level of liquidity is equal to two. Thus Starbucks is very close to it. The quick ratio is also known as the acid-test ratio takes into consideration inventory when looking at liquidity. It is very similar to liquidity, but it looks closer at the short term. The ratio takes current assets minus inventory and compares it to current ...

Solution Summary

The solution analyzes, discusses, and justifies whether stock is a good buy.