ACC 345 Business Valuation Template
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Apr 3, 2024
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Milestone Project One
Faith VanManen
Southern New Hampshire University
ACC 345: Financial Statement Analysis/Business Valuation
Pamela Card
[Date—January, 11 2024]
Milestone One: Introduction
3
Links
3
History and Overview
3
Summary
5
Milestone One References
5
Milestone Two: Financial Analysis
5
Balance Sheet Analysis
5
Income Statement and Cash Flow Analysis
6
Normalization Adjustments Analysis
7
Summary
8
Milestone Two References
8
Milestone Three: Economic Outlook
8
Microeconomic Industry Analysis
8
General Macroeconomic Analysis
10
Summary
11
Milestone Three References
11
Project
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11
Assumptions and Rationale
11
Analysis
12
Project References
12
Valuation Team Report
12
Milestone One: Introduction
Links
1.
Provide the most recent SEC Form 10-K Filing link for the company.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000829224/
f46ecb43-3db3-4e70-9959-103e92951d49.pdf
1.
Provide the most recent SEC Proxy Filing link for the company.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0000829224/34ea8484-4524-4c30-
b37c-bef24c6cface.pdf
History and Overview
1.
Provide a brief company history overview based on external research of the company. Consider the following questions to guide your response:
A.
How long has the company been in business?
B.
Who was the original founder of the company?
C.
What significant changes to company leadership have occurred? D.
How has the company changed since its beginning? Consider expansion of locations or products/services, etc.
Starbucks first began in the heart of Seattle’s historic Pike Place Market. When they opened in 1971, they offered a fresh cup of coffee from roasted coffee beans, teas and many different spices around the globe. The original founders were three men by the names of Gordon Bowker, Jerry Baldwin, and Zev Siegi. Starbucks really began to experience growth when after joining Starbucks in 1982, Howard Schultz, a New Yorker returned from his trip in Milan where he had experienced
the authentic Italian coffeehouse. He knew right then he wanted to recreated the experience at Starbucks. His goal was to re-create a third place for people to come that wasn’t work or home in order to experience a delicious beverage in a comfortable atmosphere. He quickly moved up to CEO of Starbucks and began to create the well-known coffee company we know today. Starbucks has changed in many ways since they first opened in 1971, Starbucks has grown from 15,000 stores to almost 30,000. It also offered educational opportunities for their employees through the Starbucks College Achievement Plan. It has also hired thousands of military veterans as well as spouses and refugees over the years in an effort to show diversity and inclusion. 1.
Identify all of the company’s major locations for their facilities and/or other properties.
Tenerife, Spain. Paris, France, Seattle, Washington. Valletta., Malta. Bangkok, Thailand. Hanoi, Vietnam. Bali, Indonesia. Yangzhou, China. Tianjin City, China. Tokyo, Japan. Kawagoe, Japan. Alajuela, Costa Rica. Grand Turk, Turks & Caicos. Guadalajara, Mexico. Toronto, Canada. Mexico City, Mexico. Chicago, Ill. Washington, D.C.
1.
Identify all of the customers recognized by the company.
Find this information in the annual Form 10-K filing, in Part 1, Item 1: Business.
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Starbucks recognizes that most of its customers belong to the upper economic segment. It targets customers between the age of 22-50 age group, both male and female. (Starbucks., 2023).
1.
List all of the names of the executive management team of the company.
Find this information in the annual Form 10-K filing, in Part 3, Item 10: Directors, Executive Officers and Corporate Governance or in the Annual Proxy filing, under “Executive Officers,” or “Officers Compensation.” You may copy and paste a chart into this section from the annual Form 10-K filing. Be sure to add your own explanation of the information in the chart along with an attribution and a citation in the References section at the bottom of this template (Starbucks., 2023).
Laxman Narasimhan, age 56 Chief Executive Officer. He was elected in 2022, prior to Starbucks, He worked as a CFO of Reckitt Benckiser Group PLC which was a nutrition company from 2019 to 2022 (Starbucks., 2023).
Michael Conway, age 57 works as the group president, International and Channel Development. He joined Starbucks in 2013 and was named group president, International and Channel Development in 2021. He is also responsible for growing Starbucks retail and opportunities in over 80 markets across the Globe.
(Starbucks., 2023).
Sara Kelly, age 44 and executive vice president and chief partner officer for Starbucks joined in 2001 where she jumped at the growing opportunities for her career. Her focus is on supporting partners in their global markets. (Starbucks., 2023).
Brad Lerman, age 67 is executive vice president and general counsel. He joined Starbucks in 2023. He plays an important role as he leads the Company’s legal and Corporate Affairs department
(Starbucks., 2023) Prior to Starbucks he worked as the chief litigation officer for Pfizer. Rachael Ruggeri, age 54 joined Starbucks in 2001 as a member of the accounting team and was placed in an execute vice president and chief financial officer in 2021. She handles the global finances for Starbucks as well as developing financial plans to encourage and promote long-term growth. (Starbucks., 2023).
1.
Identify all of the competition recognized by the company.
Find this information in the annual Form 10-K filing, in Part 1, Item 1: Business.
Dunkin’ Donuts, McDonald’s, Maxwell House and Folgers. (Starbucks., 2023).
1.
Identify all of the major shareholders of the company.
Find this information in the Annual Proxy filing, under “Beneficial Ownership.”
The Vanguard Group, INC. BlackRock fund advisors
SSgA Funds Management Inc. Capital Research & Management Corp. 1.
Describe business risks recognized by the company.
Find this information in the annual Form 10-K filing, in Part 1, Item 1A: Risk Factors. Item 1A in the annual Form 10-K will be lengthy. Do your best to summarize the risks the company has identified.
1.
Success depends substantial on the value of their brands. Failure to preserve this could be devastating financially. 2.
They may fail to be successful in their approach to promotional and advertising plans. This could set them up for failure. 3.
Any variety of incidents involving food or beer age-borne illness, tampering, adulteration, contamination or mislabeling could hard the business.
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4.
Evolving consumer preferences and taste may change over a period of time which would effect the business. 1.
Explain how the company is committed to Environmental, Social and Governance (ESG) efforts and sustainability.
Find this information in the annual Form 10-K filing, in Part 1, Item 1: Business or in Part 2, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations. If your company does not provide this information in its SEC filings, you will need to do external research to determine your company’s commitment to ESG efforts and sustainability. Be sure to add your own explanation of the information you researched. Include appropriate attributions in your explanation and a citation in the References section at the bottom of this template.
Starbucks is committed to the Environment, Social and Governance efforts in the way they support refugees, veterans & military spouses, as well as being recognized as one of the DEI best place to work for disability inclusion. They also scored 100% on the Disability Equality Index. (Starbucks., 2023).
Starbucks also supports many nonprofit organizations through their giving match program. All active Starbucks full and part-time partners can request up to $1,000 in matching funds per fiscal year, using any combination of volunteer hours and financial donations to qualified nonprofit organizations. They also awarded over
$3.2 million to nearly 90 nonprofits across 42 markets. They currently have the goal to invest $30 million by 2030 in a new Global Community Impact Grants Portfolio. (SimpliLearn, 2022)
1.
Describe the company’s Leadership in Energy and Environmental Design (LEED) status. Consider the following questions to guide your response:
A.
Is the company currently LEED certified?
B.
If the company is not currently LEED certificated, is it working towards becoming LEED certified?
Review the Form 10-K filing to see if your company is LEED certified or if it discusses its certifications. If your company does not provide this information in its SEC Filings, you will need to do external research to determine your company’s LEED status. Be sure to add your own explanation of the information you researched. Include appropriate attributions in your explanation and a citation in the References section at the bottom of this template.
In 2005, Starbucks opened its first LEED-certified store in Hillsboro, Oregon. After that, over 1,600 other Starbucks store have achieved LEED certification. There is now at least one certified LEED store in each state (Baker, M. 2021)
Summary
1.
Summarize your findings for the valuation team. Include the following details in your response:
A.
Explain what you learned as you researched the company.
B.
Identify the key points the valuation team needs to be aware of.
Starbucks was founded in 1971, they have strived to create a third-place for their customers. A safe, welcoming environment where people can enjoy a refreshing beverage and a delicious pastry. In doing so, they are devoted to environmental efforts and taking care of the planet in whatever way possible. Starbucks currently has 1,600 LEED-certified stores as well as many efforts and plans in place to add more. They also support veterans and military spouse, and have become one of the best companies for disabled workers to find a job. Starbucks plans to expand their store footprint to 55,000 by the year 2030. They will continue to expand in fast growing markets internationally such as India, Southeast Asia and Latin America. 1.
Create at least one effective visualization that supports key points. Include the following detail in your response:
A.
Appropriate labels for the visualization(s).
Create an effective visualization(s) based on your research to support your summary report. Examples of ideas for your visualization(s) include creating a timeline of the company history, creating a map of the company’s locations,
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creating a chart of major shareholders showing ownership and broken down by percentages, etc. Milestone One References
Starbucks. (2023). Our Founders
. Archive.starbucks.com. https://archive.starbucks.com/
record/our-founders
Starbucks. (2023). Our Company
. Starbucks Coffee Company; Starbucks Coffee Company. https://www.starbucks.com/about-us/
Starbucks. (2022). Howard Schultz
. Starbucks Stories. https://stories.starbucks.com/
leadership/howard-schultz/
Starbucks
. (n.d.). Stories.starbucks.com. https://stories.starbucks.com/stories/2019/20-
starbucks-stores-to-visit-in-2020/
Baker, M. (2019, July 1). Starbucks achieves 50 LEED-certified stores across 50 states | U.S. Green Building Council
. Www.usgbc.org. https://www.usgbc.org/articles/
starbucks-achieves-50-leedcertified-stores-across-50-states
Starbucks. (2022). our ENVIRONMENTAL & SOCIAL IMPACT report S T A R B U C K S 2 0 2 2 our ENVIRONMENTAL & SOCIAL IMPACT report
. https://
stories.starbucks.com/uploads/2023/06/Starbucks-2022-Global-Environmental-
and-Social-Impact-Report.pdf
SimpliLearn. (2022, September 23). Exploring Starbucks Marketing Strategy: the Success Secret | Simplilearn
. Simplilearn.com. https://www.simplilearn.com/
tutorials/marketing-case-studies-tutorial/starbucks-marketing-
strategy#:~:text=Being%20a%20premium%20coffee%20brand
What’s next? Starbucks unveils long-term growth strategy for a limitless future
. (2023). Starbucks Stories. https://stories.starbucks.com/stories/2023/whats-next-
starbucks-unveils-long-term-growth-strategy-for-a-limitless-future/#
Payton Soicher. (2018, November 15). What Type of Starbucks Customer Are You?
Medium; Towards Data Science. https://towardsdatascience.com/what-type-
of-starbucks-customer-are-you-72f70e45f65
Milestone Two: Financial Analysis
Balance Sheet Analysis
1.
Explain the findings regarding the company’s asset accounts for the previous five years. Include the following details in your response:
In 2020, our cash and cash equivalents increased from 2,686.6 to 4350.90. After the pandemic it jumped to 6,455.70 but then experienced a fall in 2022 to 2,818.40 and 3,551.50 in 2023. Along with cash, there was a slight increase in accounts receivable from 2019 of 879.20 to 883.40. In 2021 the accounts receivable began increasing to 940.00 in 2021, 2,176.60 in 2022, and 1,896.40 in 2023.
Our inventories had minimal changes from 2019 to 2020 of 1,529.40 to 1,551.44. In 2021, it increased to 1,603.90 and 2022 2,176.60. In 2023 inventory decreased down to 1,806.40. During fiscal 2020, Starbucks wrote off $50 million of inventory that was expiring or expected to expire due to COVID-19 store closures. There were no significant
write offs during the fiscal year ending in 2021. In 2022 there was an increase in sales as well as stores re-opening after the pandemic. This explains the increase in inventory. Goodwill slightly increased in 2019 from 3,490.8 to 3,597.2 in 2020. In 2021, it increased to 3,677.3 and by 2022 it had fallen to 3,283.50. In 2023, it was steady at 3,218.5 with minimal changes from 2022. The accounts receivable balance increased from 2019 to 2020 and is largely attributed from equity investees primarily related to product sales and royalty revenues (Starbucks, 2020).
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Inventories had a small increase in 2020. Product and distribution costs in general increased primarily due to a drop in Sales form COVID-19 and its impacts on Starbucks. This meant inventory write-offs and product waste which was partially offset by supply chain efficiencies (Starbucks., 2020). We start to see a small increase from years 2021, 2022 and 2023. This is all based on their receivables being mostly generated from product and equipment sales and royalties from their licensees. Overall there was not a significant deterioration of the accounts receivable portfolio through the past five years that would have caused a increased in their allowance for credit losses. (Starbucks., 2023) Cash and Cash Equivalents saw an increase from 2019 to 2020. Per SEC filings for Starbucks, cash that was provided by operating activist was $1.6 million for fiscal 2020, compared to 5.0 billion for fiscal 2019. This change was due to temporary retail store closures resulting from the pandemic. Cash used in investing actives totaled $1.7 billion for fiscal 2020, compared to $1.0 billion for fiscal 2019. This change was due to lapping proceeds from the divestiture of operations that are related to their retail businesses internationally and the purchase of investments in 2020. This was partially offset by higher proceeds from the issuance of long-term debt. From 2021 to 2022 and 2023 there is a noticeable dip in cash and cash equivalents for Starbucks. During 2022 and 2023, they repurchased 1.9 million and 31.1 million shares of common stock for $191.3 million and $3.5 billion. On top of that, during the first quarter of 2023 the Board of Directors approved a quarterly cash dividend to the shareholders of $0.53 per share (Starbucks., 2023).
Inventories have shown minimal changes in the last five years with a range of 1,529.40 in 2019 to 1,806.40 in 2023. For goodwill, Starbucks evaluates it for impairment annually. They would be leery of events that would affect goodwill such as material deterioration in performance or a significant number of store closings (Starbucks., 2020). There was little to no change in goodwill from 2019 to 2020. This was due to no goodwill impairment during fiscal year 2020. In fiscal 2019 and 2018 there was $10.5 million and $37.6 million reported for impairment (Starbucks., 2020). No goodwill impairment was record during fiscal 2023, 2022 or 2021 (Starbucks., 2023). 1.
Explain the findings regarding the company’s liability accounts for the previous five years. Include the following details in your response:
There were few changes in Accounts payable account ranging from 2019 to $1,189.70, 2020 to $997.90, 2021 to $1,211.60, 2022 to $1,441.40 and 2023 to $1,544.30 The biggest change we saw was an increase in current liabilities from 2019 of $1,269.00 to 2020 $2,498.70 In 2019, Long term debt and lease obligations for Starbucks was 11,167.00. It doubled in 2020 to 22,231.30 and leveled out in 2021 to 21,354.90, 2022 to 20,635.10, 2023 to 21,472.40. In March 27, 2020, the Government enacted the
Coronavirus Aid, Relief and Economic Security Act which enabled employer payroll tax credits for wages paid to employees who were unable to work and to defer payroll tax payments for a limited time. These tax credits through the CARES act were no longer applicable in the late fiscal 2021 and 2020. After netting the qualified credits against their payable, a receivable balance of $69.4 million and $172.4 million was included in prepaid expenses and other current assets. As of October 3, 2021, differed payroll tax payments of $116.4 million were included in both accrued liabilities and other long-term liabilities, respectively, on our consolidated balance sheets. This would explain why the sudden increase in accounts payable, long-term debt and lease obligations (Starbucks., 2020)
1.
Explain the findings regarding the company’s equity accounts for the previous five years. Include the following details in your response:
Common stock and treasury stock decreased slightly form 2021 to 2022. During the first quarter of fiscal 2022, Starbucks resumed their share repurchasing program which had been temporarily suspended in March 2020. They purchased 36.3 million shares of common stock for $40 billion. In April 4, 2022 they announced another temporary suspension of share repurchase program. As of October 2, 2022, 52.6 million shares remained available for repurchase under current authorization (Starbucks., 2022). By repurchasing stock, it did effect the cash flow on the balance sheet. At the same time, the share repurchase reduced shareholders’ equity by the same amount on the liabilities side of the balance
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sheet. (Investopedia., 2024)
In the fourth quarter of fiscal 2019 and each of the first three quarters of fiscal 2020, they declared a cash dividend of $.41 per share. Dividends are paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2020 and 2019 totaled $1.9 billion and $1.8 billion, respectively. Subsequent to the fourth quarter of fiscal 2020, they declared a cash dividend of $0.45 per share to be paid on November 27, 2020 with an expected payout of approximately $527.9 million (Starbucks., 2012). During each of the first three quarters of fiscal 2021, Starbucks declared a cash dividend to shareholders of $0.45 per share. Then during the fourth quarter of fiscal 2021, and for each of the first three quarters of fiscal 2022, Starbucks declared a cash dividend of $0.49 per share. Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2022 and 2021 totaled $2.3 billion and $2.1 billion, respectively. In the fourth quarter of fiscal 2022, they declared a cash dividend of $0.53 per share to be paid on November 25, 2022, with an expected payout of approximately $608.3 million.
During the first quarter of 2023 the Board of Directors approved a quarterly cash dividend to the shareholders of $0.53 per share. They also declared a $.57 per share cash dividend to be paid on November 24, 2023. (Starbucks., 2023). Starbucks recently has had some negative shareholder equity. The biggest driving force for this is refranchising and building new stores. This can be a warning
signed that a company is struggling but we know that Starbucks is working towards 55,000 stores which is part of why their total equity is low. (Investopedia). Starbucks also relies heavily on operating leases which can carry a substantial amount of debt. (Investopedia., 2022)
1.
Explain what the company’s current and prior year liquidity and debt-to-equity ratios say about the company’s financial health. Consider the following questions to guide your response:
In 2022 it was -4.22, in 2023, it hit -4.69. Ideally, 2.0 is where a debt-to-equity ratio should be. Starbucks operates in a little different industry. They use operating leases which is a contract that permits the use of an asset but doesn’t convey ownership rights of the asset. With that, these are essentially treated as a debt. They choose to use this type of lease because of the nature of their business. A high cost is incurred if they choose to purchase the asset instead of leasing it. It allows for flexibility in business without the fear of obsolescence. There really isn’t an appropriate level of debt. As long as a company is meeting its obligations and bringing in revenue, its acceptable. If a company is losing money and can’t pay debts, they are in too much debt. This year is very similar to last year and no notable changes occurred. Starbucks continues to bring in more revenue as more stores are built. Income Statement and Cash Flow Analysis
1.
Explain the profitability ratios that are included in the company’s financial statements. Include the following detail in your response:
2.
A.
Explain any trends and relate any changes back to the balance sheet and income statement accounts used in the ratio calculation.
1.
Explain the profitability of the company for the prior and current years. Consider the following questions to guide your response:
We see in 2019 that the gross revenue percentage was at 67.83% and it slightly increased/decreased over the years. 2020 was 67.28%, 2021 was 69.93%, 2022 was 68.01%, and 2023 was 68.29%. This shows us that Starbucks is still increasing their sales and gross revenue but it’s slower growth. (Starbucks., 2023) Cost of sales slowly increases with a slight dip in 2020. 2019 was $8,526.90, 2020 was $7,694.90, 2021 was 8,739.00, 2022 was 10,317.00 and 2023 was 11,409.10. (Starbucks.,2023) We see that even though the cost of sales has increased, the profit margin has increased. This shows us that Starbucks is still managing their costs to maintain a profit.
We see an increase to 60.64% of when the sales fell during 2020 to 23,518.00. It then drops to 53.16% as the sales increased in 2021 $29,060.60. This is expected as stores were reopening after the pandemic and naturally sales began to increase.
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In 2022, 53.69% with a $32,250.30 sales. In 2023, it drops to 51.97% as we see sales increase to $35,975.60. This is a normal business cycle for Starbucks and it tells us that Starbucks is in their expansion phase of their business cycle. (Starbucks., 2023) 1.
Describe what free cash flow is and how it is calculated.
This is the cash a company generates after taking into consideration cash outflows that support its operations and maintains its capital assets. (Investopedia, 2023) The free Cash Flow is equal to Cash form Operations minus Capital Expenditures. 1.
Explain the free cash flow history for the company.
Starbucks annual cash flow for 2023 was $3.785B, a 48.09% increase from 2021 which was $2.556B. (SBUX., 2023) 1.
Explain the data reported in the cash flow statement for all five years reported. Include the following details in your response:
A.
Identify the amount of cash flow reported from operations.
B.
Identify the amount of cash flow reported from investments.
C.
Identify the amount of cash flow reported from financing.
D.
Explain the correlation between each of these categories of cash flow for the past five years.
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Operating: 2019: $5,047.0
2020: $1,597.8
2021: $5989.1
2022: $4397.3
2023: $6,008.7
Investing: 2019: (1,010.8)
2020: (1,711.5)
2021: (319.5)
2022: (2,146.3)
2023: (2,270.8)
Financing: 2019: (6,069.7)
2020: 1,713.3
2021: (3,651.0)
2022: (5,638.0)
2023: (2,990.6)
The cash flow statement is a summary of the movement of cash and cash equivalents that come in a go out. The operating activities on the cash flow statement will include any
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sources and uses of cash from business activities. Examples of this would include receipts from sales of goods and services, income tax payments, salary and wage payments to employees, rent payments and any other type of operating expense. Any changes that occur in cash, accounts receivable, inventory or accounts payable are typically a result of cash from operations. (Murphy, C.B., 2023)
Investing activities will typically include any source or use of cash from the company’s investments. Purchases or sales of assets, loans made to venders or received from customers, or any payments related to mergers and acquisitions are included in this category. In short, changes in equipment, assets, or investments relate to cash from investing. (Murphy, C.B., 2023) Any changes to the cash from investing are typically cash-out items. These are used to by buildings or short-term assets like marketable securities. (Murphy, C.B., 2023)
Cash from financing activities includes cash from investors and banks as well as the way cash is paid to shareholders. This does include dividends Starbucks pays, any re-
purchases they make as well as repayment of debt principal that are made by the company. If Starbucks were to issue a bond to the public, the company will receive cash financing. If they choose to pay interest to bond holders, the company is reducing its cash. (Murphy, C.B., 2023)
N
ormalization Adjustments Analysis
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1.
Define the term normalization adjustment.
Normalizing adjustment are made if a company is seeking external funding, normalized financial statements provide the investor or lender with a clear picture of the actual expenses, revenues, and cash flow during a particular period. (Vipond., 2020). 1.
Identify three examples of balance sheet normalization adjustments that might appear. Non-operating assets, excess assets, and asset shortages. (BKC, CPAs.) 1.
Identify three examples of income statement normalization adjustments that might appear.
Unreasonable compensation and related fringe benefit, non-recurring income and expense, related party revenue or expense. (BKC, CPAs.)
Summary
1.
Summarize your findings for the valuation team. Include the following details in your response:
A.
Explain what you learned as you researched the company.
B.
Identify the key points the valuation team needs to be aware of.
Use the common-size analysis in the Project Workbook Template to inform your
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summary. Include key identifiers from your research in your summary.
Starbucks, like many companies hit a low in 2020 with the onset of COVID-19. With this included an increase in the accounts payable and long-term debt due to the deferred tax payments that the CARES act allowed for businesses. However, Starbucks has increased their net profit margin from 3.95% in 2020 to 14.45% in 2021. In 2022 and 2023 it dipped to 10.18% and 11.46%. With this though, its not a concern, if it dips below 10% then we need to re-evaluate the profitability of Starbucks. They are expanding rapidly and updated stores across the country. With that will come a dip in revenues. In order to offset this, Starbucks has increased their prices. Their operating margin measures how much profit they make on a dollar of sales after costs are paid. They have maintained roughly 15-16% operating margin in the past five years besides 2020. This shows that they have efficiently been able to generate profit through its core operations. (Hayes, 2022). 1.
Create at least one effective visualization that supports key points. Include the following detail in your response:
A.
Appropriate labels for the visualization(s).
Examples of ideas for your visualization(s) include a line chart showing sales growth and gross profit margin and other expenses or a graph of the ratio analysis data.
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Milestone Two References
Share Repurchase: Why Do Companies Do Share Buybacks?
(n.d.). Investopedia. Retrieved January 28, 2024, from https://www.investopedia.com/terms/s/
sharerepurchase.asp#:~:text=A%20share%20repurchase%20reduces%20a
Hayes, A. (2022, June 18). What Is Operating Margin?
Investopedia. https://
www.investopedia.com/terms/o/
operatingmargin.asp#:~:text=The%20operating%20margin%20measures%20how
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Form 10-K ☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Starbucks Corporation Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol
. (n.d.). Retrieved January 28, 2024, from https://
d18rn0p25nwr6d.cloudfront.net/CIK-0000829224/0bf5535f-877e-4550-
aae7-610a8d843e5b.pdf#page2
Vipond, T. (2020, March 9). Normalization
. Corporate Finance Institute. https://
corporatefinanceinstitute.com/resources/accounting/financial-statement-
normalization/
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NORMALIZATION ADJUSTMENTS, ONE STEP IN THE VALUATION PROCESS | BKC, CPAs, PC
. (n.d.). https://www.bkc-cpa.com/normalization/
Starbucks Free Cash Flow 2010-2023 | SBUX
. (2023). Macrotrends.net. https://
www.macrotrends.net/stocks/charts/SBUX/starbucks/free-cash-
flow#:~:text=Starbucks%20annual%20free%20cash%20flow
Negative Shareholders’ Equity: What Does It Mean?
(n.d.). Investopedia. https://
www.investopedia.com/ask/answers/08/negative-shareholder-
equity.asp#:~:text=Some%20major%2C%20profitable%20companies%20have
Yu, J. (2019). Starbucks stock: Capital structure analysis
. Investopedia. https://
www.investopedia.com/articles/markets/050616/starbucks-stock-capital-structure-
analysis.asp
Fernando, J. (2021, February 20). Free Cash Flow (FCF)
. Investopedia. https://
www.investopedia.com/terms/f/freecashflow.asp
Milestone Three: Economic Outlook
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Microeconomic Industry Analysis
1.
Explain the industry outlook for the company. Include the following details in your response:
A.
Identify the primary industry the company operates in.
B.
Provide a general overview of the size of the industry both domestically and internationally.
C.
Explain current industry trends and emerging technologies that might impact the company's industry in the future.
[Insert text.]
1.
Explain how the supply and demand for the company’s industry may affect consumer behavior. Include the following details in your response:
A.
Explain major events have impacted supply and demand for the company’s industry.
B.
Identify if there have been any supply chain issues. If so, explain how these issues have affected overall supply and demand.
[Insert text.]
1.
Evaluate the competitive landscape for the company. Include the following details
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in your response:
A.
List the company’s current percentage of the market share in this industry.
B.
List the company’s top three competitors and what percentage of the market share each competitor holds.
C.
Explain how the percentage of market share changed over the last three years for the company and its competitors.
D.
Explain the new competitors entering this industry.
[Insert text.]
1.
Identify key data from the SWOT analysis for the company and its primary competitor. Include the following details to your response:
A.
Provide the citation for SWOT analysis from a reputable source for the company.
B.
Provide the citation for SWOT analysis from a reputable source for the company’s primary competitor.
C.
Identify the company’s major strengths and weaknesses compared to the company’s primary competitor.
[Insert text.]
1.
Evaluate the impact of new or recently changed regulations specific to the
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company’s industry. Include the following details in your response:
A.
Provide a citation to the specific new regulation.
B.
Explain the advantages and/or disadvantages of the new regulation(s) for the company’s industry.
[Insert text.]
1.
Identify potential international issues with the company expanding into global markets. Consider the following questions to guide your response:
A.
What historical data may affect the company as it expands?
B.
What potential future issues may arise based on current economic conditions?
Search the company’s most recent 10-K filing first for information on protentional international issues. Search in Part 2, Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations. If there isn’t anything in the filing, do an internet search for news stories and/or issues regarding the company’s experience with expanding into global markets.
[Insert text.]
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1.
Describe labor market trends in the company’s industry.
[Insert text.]
1.
Explain how labor market trends might impact the company’s operations.
[Insert text.]
General Macroeconomic Analysis
1.
Explain macroeconomic trends that might impact the company and/or its industry now or in the future. Consider the following questions to guide your response:
A.
How could economic output and consumption trends impact the company and/or its industry?
B.
How have interest rate changes impacted the company?
C.
How might the current Gross Domestic Product (GDP) and its projected future movement impact the company’s future operations?
[Insert text.]
1.
Identify changes in monetary policy trends that impacted the domestic and/or global economy the company’s operates in.
[Insert text.]
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1.
Explain how monetary policy changes have affected the company and/or its industry.
[Insert text.]
1.
Identify changes in trade policy trends that impacted the domestic and/or global economy the company operates in.
[Insert text.]
1.
Explain how trade policy changes have affected the company and/or its industry.
[Insert text.]
Summary
1.
Summarize your findings for the valuation team. Include the following details in your response:
A.
Explain what you learned as you researched the external factors for the company.
B.
Identify the key points the valuation team needs to be aware of.
[Insert text.]
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1.
Create at least one effective visualization that supports key points. Include the following detail in your response:
A.
Appropriate labels for the visualization(s).
Create an effective visualization(s) based on your research to support your summary report. Examples of ideas for your visualization(s) include a graph showing any of the key economic indicators over the past five years, showing changes in market share of key competitors over the past 3-5 years, or showing the industry outlook projections.
[Insert visualization(s).]
Milestone Three References
[Insert text.]
Project
Assumptions and Rationale
Address rubric criteria 1-7 in this section.
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[Insert text.]
Analysis
Address rubric criteria 8-10 in this section. [Insert text.]
Project References
[Insert text.]
Valuation Team Report
This Valuation Team Report will be submitted separately. Refer to the Project Guidelines and Rubric for submission guidelines.
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Question 10 of 25
Based on the following data, what is the amount of working capital?
Accounts payable
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Intangible assets
Inventory
Long-term investments
Long-term liabilities
Short-term investments
Notes payable (short-term)
Property, plant, and equipment
Prepaid insurance
$404240
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>
O $458800
$79360
141360
86800
124000
171120
198400
248000
99200
69440
1661600
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Exercise 4
Information. You have been provided with the following table for the Australian
economy:
Year
2014
2015
2016 2017 2018 2019
Interest rate (%)
8
6
7
5
4
3
Investment ($ bn)
235
250
215
240
265
265
Requirements. Describe the steps you would take to find the correlation
coefficient
Possible steps & Solution
1. ??
1. ??
2. ??
3. ??
4. ??
arrow_forward
Answer question 8, is it a b c or d
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12
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Question content area top
Part 1
Assuming a 1-year, money market account investment at
2.282.28
percent (APY), a
1.391.39
percent inflation rate, a
2525
percent marginal tax bracket, and a constant
$50 comma 00050,000
balance, calculate the after-tax rate of return, the real rate of return, and the total monetary return. What are the implications of this result for cash management decisions?
Question content area bottom
Part 1
Assuming a 1-year, money market account investment at
2.282.28%
(APY), a
2525%
marginal tax bracket, and a constant
$ 50 comma 000$50,000
balance, the after-tax rate of return is
1.711.71%.
(Round to two decimal places.)
Part 2
Assuming a 1-year, money market account investment at
2.282.28%
(APY), a
2525%
marginal tax bracket, and a constant
$ 50 comma 000$50,000
balance, the after-tax monetary return is
$855855.
(Round to the nearest dollar.)
Part 3
Given an after-tax return of
1.711.71%
and an inflation rate of…
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Princip X
Princip X
Princip X
L Accorc X
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https://strayer.sophia.org/spcc/principles-of-finance-practice-milestone-1-1/4
Question
Unit 1 Tutorials
6 If your
Consider the P/E ratios of the following companies:
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• Company B: 3.33
Company C: 7.90
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Company C is more
per unit of current net income than Company B.
O expensive
O economical
O volatile
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SAVE AND CONTINUE
"pe here to search
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What are two kinds of paid-in capital accounts?
arrow_forward
S
Year
0
1
2
3
Cash Flow
-$ 9,900
2,300
2,900
5,200
a. What is the profitability index for the cash flows if the relevant discount rate is 6
percent?
Profitability index
0.949
0.967
0.875
0.893
0.921
b. What is the profitability index for the cash flows if the relevant discount rate is 16
percent?
Profitability index
c. What is the profitability index for the cash flows if the relevant discount rate is 23
percent?
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Financial Accounting Question please solve this problem
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What is the amount of the total paid-in capital? What makes up this amount?
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Consider the table given below to answer the following question.
Year
1
2
3
4
7
9.
10
Asset value
13.00 14.56 16.31
18.26
19.91 21.70 23.65
25.07 26.58 28.17
Earnings
1.56
1.75
1.96
2.19
2.39
2.50
2.60
2.63
2.13
2.25
Net investment
1.56
1.75
1.96
1.64
1.79
1.95
1.42
1.50
1.59
1.69
Free cash flow (FCF)
0.55
0.60
0.54
1.18
1.13
0.53
0.56
Return on equity (ROE)
0.12
0.12
0.12
0.12
0.12 0.115
0.11 0.105
0.08
0.08
Asset growth rate
Earnings growth rate
0.12
0.12
0.12
0.09
0.09
0.09
0.06
0.06
0.06
0.06
0.12
0.12
0.12
0.09
0.04
0.04
0.01
-0.19
0.06
Assuming that competition drives down profitability (on existing assets as well as new investment) to 11.5% in year 6, 11% in year 7,
10.5% in year 8, and 8% in year 9 and all later years. What is the value of the concatenator business? Assume 11% cost of capital. (Do
not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
X Answer is complete but not entirely correct.
Present value
2$
19.72 X million
6.
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Cost of the capital is the minimum required rate of earnings or the cut-off rate of capital expenditure, is defined by
a.
William and Donaldson
b.
John J. Hampton
c.
Solomon Ezra
d.
James C. Van Horne
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