Financial Statement Review by aam94847

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									Assignment #2 There are four (4) major accounting statements. Which one is
this? _STARBUCKS – INCOME STATEMENT____.
Analyze this statement. Based on your knowledge of Accounting, pick 4 numbers
that you feel are most important on this statement and report on them.
Number           Number (in $, not thou or      Number (in $, not thou or mill),
(name):          mill), current year            prior year
                 see spreadsheet




Analyze some/any of these numbers is greater detail. Use any analysis technique
you feel is most appropriate.
We feel that the heavy losses in the Internet investment losses, coupled with
the 2.5% growth of profit margin, is very likely responsible for the disparity in
the growth of net earnings (91.63%) compared to the growth of net revenue
(21.65%).
Net revenues grew at a faster rate than cost of goods sold (15.7%) resulting in
higher growth in Operating Income (32.43%).
 Calculate and list any ratio(s) you feel is(are) important:
Ratio                       Calculation                  Answer

                            see spreadsheet



Conclusion: What can you say about this company, based solely upon this
statement? Be as thorough, but as succinct, as you can, demonstrate your
knowledge of accounting that you have learned so far. Reference above numbers.
    Overall Starbucks has seemed to enter its growth stage of its life cycle as
evidenced by its growing sales. Also its expenses have been reduced. When
comparing 2001 to 2000, Starbucks has shown a dramatic improvement over the
year 2000, Profit margin as a percent of sales has increased by over 50%.

We feel that the Co. is improving especially from the stockholders’ perspective.
We observed that EPS has increased responding to a large gain in revenue. We
also feel confident about Starbucks’ future endeavors, based off of the profit
margin gains over last year (57% growth). This is reflected in both the ROA and
Return on Equity, both of which reflected net gains in the past year, (they grew
70% and 74% respectively).




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Assignment #2 There are four (4) major accounting statements. Which one is
this? STARBUCKS BALANCE SHEET.
Analyze this statement. Based on your knowledge of Accounting, pick 4 numbers
that you feel are most important on this statement and report on them.
Number           Number (in $, not thou or      Number (in $, not thou or mill),
(name):          mill), current year            prior year
                 see spreadsheet




Analyze some/any of these numbers is greater detail. Use any analysis technique
you feel is most appropriate.

Starbucks grew 24% in its Assets and 38% in its Liabilities. However, Curr. Liab
increased higher than Current Assets. Starbucks has a good Cash position, with a
growth rate of 60% . PPE had an increase of 22%, indicating the Co. is expanding.
 Calculate and list any ratio(s) you feel is(are) important:
Ratio                      Calculation                  Answer

                            see spreadsheet




Conclusion: What can you say about this company, based solely upon this
statement? Be as thorough, but as succinct, as you can, demonstrate your
knowledge of accounting that you have learned so far. Reference above numbers.

Starbucks is exhibiting a growth period in which it has taken on more liabilities.
Changing the debt to equity structure has helped increase its cash balance.
Starbucks continues to be attractive to investors as shareholder equity continues
to grow (it increased 20%). So in the long term, the debt has helped the company
to grow successfully in the areas of assets (24%), retained earnings, and
stockholders’ equity.

The company has demonstrated efficiency improvements in its Inventory and
Accounts receivable, reducing days inventory on hand and days to collect.




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Assignment #2 There are four (4) major accounting statements. Which one is
this? STARBUCKS CASH FLOW STATEMENT.
Analyze this statement. Based on your knowledge of Accounting, pick 4 numbers
that you feel are most important on this statement and report on them.
Number           Number (in $, not thou or      Number (in $, not thou or mill),
(name):          mill), current year            prior year
                 see spreadsheet




Analyze some/any of these numbers is greater detail. Use any analysis technique
you feel is most appropriate.
Starbucks Cash from Operations is an inflow in all three years; in 2001 compared
to 2000, it grew 43% over the previous year; in 2000 compared to 1999, it grew
40% over the previous year.

Starbucks Cash from Investing is an outflow in all three years; in 2001 compared
to 2000, it grew 15% over the previous year; in 2000 compared to 1999, it grew
12% over the previous year.

Starbucks Cash from Financing is an inflow in all three years, however, at a
declining rate; in 2001 compared to 2000, it declined 75% over the previous year;
in 2000 compared to 1999, it declined 17% over the previous year.

There is no change in the Cash Debt Coverage ratio.
 Calculate and list any ratio(s) you feel is(are) important:
Ratio                       Calculation                 Answer
                            see spreadsheet




Conclusion: What can you say about this company, based solely upon this
statement? Be as thorough, but as succinct, as you can, demonstrate your
knowledge of accounting that you have learned so far. Reference above numbers.
Based on the patterns, it can be concluded that Starbucks is in a growth mode, in
the product life cycle. Cash from Operations is positive, Cash from Investing is
negative (at an increasing rate), Cash from financing, is still positive, although at
a decreasing rate, which indicates that Starbucks is able to finance its growth
through its Operating activities, a sign of a company with a strong cash position.



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