1. Starbucks Coffee Robin Southwell Acg2021-080

2. Executive Summary Starbucks attained record high net revenue and earnings. Business is doing well and will continue with progress in innovations of new beverages and new markets and roasting plants worldwide. www.starbucks.com/aboutus/invester.asp

3. Part A. Introduction ► Orin C. Smith, CEO ► Home Office: 2701 Utah Ave. S.; Seattle, WA 98134 ► Recent end of fiscal year: September 28, 2003 ► Principle products: Coffee, Iced Shaken Drinks, Mugs, Music and Assorted Hot and Cold Beverages ► Main locations: Starbucks has shops all over the world including the United States, Chile, Peru, Southern China, and Turkey.

4. Part A. Audit Report ►A►A►A►Auditors: Deloitte and Touche LLP. ►C►C►C►Company is doing well, but has not paid any dividends on common stock and has no plans to pay dividends in near future.

5. Part A. Stock Market Information ► Average price of stock: $22.95 ► Twelve month trading range of the company’s stock: $20.36 - $30.19 ► Dividends per share: $0.00 ► As of September 28, 2003 ► I would suggest to sell stock due to rising prices and no dividends being paid.

6. Part B. Industry Situation and Company Plans The Company’s objective is to establish Starbucks as the most recognized and respected brand in the world. To achieve this objective the Company:  Continue rapid expansion of its retail operations  Grow its Specialty Operations  Selectively pursue other opportunities to leverage the Starbucks brand through the introduction of new products and development of new channels of distribution According to Starbucks Annual Report 2003

7. Part C. Income Statement Starbucks uses a Multi-step Income Statement 20032002 Gross Profit $2,389,594,000 $1,938,897,000 Income from Operations $566,447,000 $477,685,000 Net Income $268,346,000 $212,686,000 There was a definite increase between 2002 and 2003 which indicates that the company is doing well.

8. Part C. Balance Sheet Assets = Liabilities + Stockholder’s Equity 2003 $ 2,729,746 = $647,319 + $2,082,427 2002 $2,214,392 = $491,203 + $1,723,189

9. Part C. Statement of Cash Flows ► Cash flows from Operations is more than Net Income. ► Starbucks is growing by opening new venues and purchasing new roasting plants. ► Starbucks’ primary source of financing is through stock options. ► Cash continues to increase over the years.

10. Part D. Accounting Policies ► Cash management system provides for the reimbursement of al major bank disbursement accounts on a daily basis. ► Short-term investments consist primarily of investment- grade marketable debt and equity securities as well as bond and equity mutual funds. ► Inventories stated at the lower of cost or market. The company records inventory reserves for obsolete and slow- moving items and for estimated shrinkage between physical inventory counts. ► Property, Plant, and Equipment is carried at cost less accumulated depreciation.

11. Part E. Financial Analysis Liquidity Ratios 2003 2002 Working capital $315,326,000$310,048,000 Current ratio1.52 1.67 Receivable turnover 35.6 times 33.7 times Avg. days’ sales uncoll. 10.3 days 10.8 days Inventory turnover 4.63 times 5.13 times Avg. days’ inventory on hand 74.2 days 71.2 days

12. Part E. Financial Analysis Profitability Ratios 20032002 Profit Margin 7% 6% Asset Turnover 1.49 times 1.49 times Return on Assets 0.10 times 0.10 times Return to Equity 0.13 times 0.12 times

13. Part E. Financial Analysis Solvency Ratio 20032002 Debt to equity0.31 times 0.29 times

14. Part E. Financial Analysis Market Strength Ratios 20032002 Price/earnings per share$0.67$0.59 Dividends yield$0.00$0.00 Little is earned per share and no dividends have been paid and there is no plan on paying dividends in near future. Little is earned per share and no dividends have been paid and there is no plan on paying dividends in near future.