To begin this analysis of the financial statements of Starbucks Coffee and Dunkin’ Brands
Group, we measured these companies’ Return on Investment and profitability. Return on
Investment metrics are ratios that divide some measure of performance by an average
amount of investment. These ratios evaluate the efficiency of an investment and make
them comparable to other investments. We will use the Return on Equity, Return on Assets,
Return on Net Operating Assets, and Return on Financial Leverage ratios to determine
Starbucks Coffee’s and Dunkin’ Brands Group’s Return on Investment and Profitability.
First, we will look at the primary measurement of profitability, Return on Equity. Return
on Equity, or ROE, is a measure of a company’s net income as a percentage of
shareholders’ equity. ROE assesses a company’s profitability by revealing how much profit
a company returns per dollar invested by stockholders. Starbucks’ ROE for the year of
2012 is 29.08 percent, which dramatically drops in 2013 to .17 percent. Dunkin’s ROE for
the year of 2012 is 19.8 percent, rising to 38.8 percent in 2013. The industry median for
such companies was 10.34 percent in 2012 and 10.08 percent as of the 2013 fiscal year.
According to these percentages, in 2012 Starbucks was returning a profit of 29.08 cents
per dollar invested by stockholders whereas Dunkin’ was returning 19.8 cents on the dollar.
Both companies were well over their industry median of 10.34 cents. These numbers
reflect extremely well on both companies as high profit for interested stakeholders.
Conversely, this is not exactly true in 2013. As Dunkin’ sees an uptick in its return, staying
