Chapter 6, Problem 6.1CTFSC

The notes are an important part of a company’s financial statements, giving valuable details that would clutter the tabular data presented in the statements. This case will help you learn to use a company's inventory notes. Visit http://www.pearsonhighered.com/Homgren to view a link to Starbucks Corporation’s Fiscal 2013 Annual Report. Access the financial statements and related notes, and answer the following questions:

Requirements

1. Which inventory costing method does Starbucks use? How does Starbucks value its inventories? See Note 1.

2. By using the cost of goods sold formula, you can compute net purchases, which are not reported in the Starbucks statements. How much were Starbucks’s invem01y purchases during the year ended September 29, 2013?

3. Determine Starbucks’s inventory turnover and days’ sales in inventory for the year ended September 29, 2013. (Round each ratio to one decimal place.) How do Starbucks’s inventory turnover and days’ sales in inventory compare with Green Mountain Coffee Roasters, Inc.’s for the year ended September 28, 2013? Explain.