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What Went Wrong with Starbucks? Financial Analysis and Business Evaluation Case Study
By Julia S. Kwok* Elizabeth C. Rabe Northeastern State University

* Corresponding author: Department of Accounting and Finance, College of Business and Technology, Northeastern State University, Broken Arrow, OK 74014; Email: kwok@nsuok.edu; Phone: 918-449-6516.

What Went Wrong with Starbucks? Financial Statement Analysis
Abstract After decades of grande growth based on the Starbucks experience, Starbucks Coffee Company experienced continuous drop of stock price since the beginning of 2007. Upon first glance of their financial statements, there was 20% increase in revenues and 9% increase in net income last year. Such growth could be counter
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Have you seen the latest financial report that should have come out two months ago? Let‘s start with 2006 to the most recent 2007 report. Company History Sandra had already collected some basic company information about Starbucks. The Starbucks Company, Inc. sold coffees, teas, and other drinks; foods items; accessories and equipment through retail outlets. It also sold coffee beans, teas, and cold drinks wholesale. The company began in 1971 in the Pikes Place area of Seattle, WA. It had expanded its number of retail stores to over 15,000 located in both the US and internationally by 2005. In 2005

Starbucks management announced its intention to double the number of retail stores and increase the number of customers to all stores. Starbucks had added 1672 stores during 2005. It continued to open new stores with 2199 openings in 2006 and 2571 openings in 2007. Earnings per share grew from 61 cents per share 87 cents per share over the period of 2005-2007. At the close of the 2007 fiscal year, the management was forecasting the opening of an additional 2500 stores in 2008.

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Starbucks Coffee Company Stock prices during this time span rose from the $30 per share in November 2005 to $35 per share a year later. The stock prices then began a steady downward slide to $23 per share as of November of 2007 (BUCX- Historical Prices for Starbucks Co –Yahoo! Finance 2009). Ronnie and Sandy both agreed that shareholders did not seem to agree with
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