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Case Study

Impacts of financial statements analysis on organizational performance: a case of Starbucks Coffee Company.

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Impacts of financial statements analysis on organizational performance: a case of Starbucks Coffee Company.

 

Introduction

The research topic to be considered for the study is the impact of financial statements analysis on organizational performance. According to Sultan (2014), financial statement analysis is a detailed step-by-step process of evaluating an organization’s financial conditions through the determination of its stability, profitability, and visibility. Therefore, the financial statement analysis area forms the backbone of decision-making in an organization. A thorough evaluation of the financial statement analysis area shows an organization’s indicators of liquidity, operational efficiency, and solvency (Nwanyanwu, 2017).  Evidence-based research and studies show that Starbucks Coffee Company has been recording a significant drop in financial performance from 2008 to 2013 (Geereddy, 2013). Further, Lin (2019) explains that despite the current stable liquidity state of Starbucks, its liquidity risks are still associated with return on assets and gross domestic product. The selection of the topic is based on Starbucks ‘ current causes of competitive market advantage loss (Lin, 2019).

Research topic

In the current situation of the global coronavirus pandemic, firms have notably recorded a reduction in overall organizational performance perpetuated by their financial conditions. Therefore, the topic is chosen to portray financial statement analysis as a measure an organization can undertake to correct their organizational performance in times of financial constraints (Ahmed, 2018). The purpose of this research is to add literature on how firms can utilize financial statement analysis to improve organizational performance and to evaluate financial ratios as tools for organizational performance improvement. Through the research winding up, organizations will borrow financial analysis concepts that will enhance their performance. Through the study, the government will formulate policies and frameworks to improve small and medium enterprises. Starbucks Coffee Company will use the research to improve their liquidity ratio concerning return on assets.

Several researchers have tried carrying out comprehensive research on financial statements analysis topics. Ahmed (2018), in his analysis of financial statements on profitability assessment, reveals that asset utilization and regulation have an insignificant relationship with profitability; however, profitability and liquidity have a weak connection. On the same note, Nwanyanwu (2017) utilized financial ratios as a tool to assess the organizational performance and found out that net profit margin, return on asset, return on equity, and earnings per share ratios reflect the profitability of an organization. From the two pieces of literature, there is little information on financial statement analysis as a tool for organizational performance. Therefore, the researcher proposes to carry out a study on the impact of financial statement analysis on organizational performance focusing on Starbucks Coffee Company.

Research Questions

The study’s general objective is to examine the impact of financial statement analysis on organizational performance in the case of Starbucks Coffee Company.

The specific objectives of the study:

  1. To establish the impact of turnover ratios on organizational performance.
  2. To assess the impact of liquidity ratios on organizational performance.
  3. To determine the impact of solvency ratios on organizational performance.
  4. To examine the impact of profitability ratios on organizational performance.

The research questions that the study will seek to address are:

  1. What is the impact of turnover ratios on organizational performance?
  2. What is the impact of liquidity ratios on organizational performance?
  3. What is the impact of solvency ratios on organizational performance?
  4. What is the impact of profitability ratios on organizational performance?

Methodology

The research study will utilize a qualitative research method that takes into account secondary data. Qualitative research understands the research queries in an idealistic approach, therefore based on objective and propagated numeric and arrangements (Kalra et al., 2013). The study will utilize a case study research design and grounded theory data analysis approach, making a comparison of data based on other researchers’ evaluation.

Ethical consideration

The participants in this research will be voluntary; therefore, their consent will be sort before participating in the research study. The participants’ privacy and information will entirely be under the control of the research, and responses will be purely treated for academic purposes. The research will only seek to find out relevant information in regards to the topic, and any other information will not be considered during the research process.

Conclusion

In a nutshell, the topic of impacts of financial statements analysis on organizational performance needs to explore beyond the financial ratios spectrum. Although the financial ratios will provide an insight view of the financial statements, the shareholders’ view will be left unattended. The financial ratios spectrum aids any organization to greater performance heights through its professional evidence decision approach.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Sultan, A. S. (2014). Financial Statements Analysis-Measurement of Performance and Profitability: Applied Study of Baghdad Soft-Drink Industry. Research Journal of Finance and Accounting5(4), 49-56.

Nwanyanwu, L. A. (2017). Assessing Organizational Performance through Financial Ratios: The case of the Agricultural Sector in Nigeria. International Research Journal of Applied Finance8(1), 21-28.

Geereddy, N. (2013). Strategic analysis of Starbucks Corporation. Harvard University.

Lin, L. (2019). Corporate Governance and Liquidity Risk of Starbucks Company.

Ahmed, A. M. (2018). The Impact of Financial Statement Analysis On The Profitability Assessment (Applied Study Of Kirkuk Company For Producing Constructional Materials). Studies and Scientific Researches. Economics Edition, (28). https://doi.org/10.29358/sceco.v0i28.417

Kalra, S., Pathak, V., & Jena, B. (2013). Qualitative research. Perspectives in Clinical Research, 4(3), 192. https://doi.org/10.4103/2229-3485.115389

 

 

 

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