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Starbucks Corporation

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Principles of Finance

Definition

Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. As a major player in the food and beverage industry, Starbucks employs significant risk management strategies to protect its financial health.

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5 Must Know Facts For Your Next Test

  1. Starbucks uses commodity hedging to manage risks associated with fluctuating coffee bean prices.
  2. The company employs foreign exchange risk management practices due to its global operations.
  3. Starbucks utilizes interest rate swaps to mitigate the risks associated with variable interest rates on its debt.
  4. Operational risks are managed through stringent quality control processes and supply chain diversification.
  5. The financial health of Starbucks is closely monitored using various key performance indicators (KPIs) such as same-store sales growth and profit margins.

Review Questions

  • What type of hedging does Starbucks use to manage the risk of fluctuating coffee bean prices?
  • How does Starbucks manage foreign exchange risk given its global presence?
  • Which financial instrument does Starbucks use to mitigate interest rate risk?

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