Starbucks Case Accounting

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Starbucks Case Part I – Prior to reading Starbuck’s Form 10-K, please answer the following questions. Your answers should be based upon your general knowledge of Starbucks, gained from visiting their stores, purchasing their products and/or observing them in the marketplace. a. Up until the economic downturn (Fall of 2008) what do you believe was Starbucks’ growth strategy? Give three examples of specific actions (growth initiatives) you observed Starbucks execute upon as part of their growth strategy? 1. Saturate the U.S. market: Based on our observations, it seemed that Starbuck’s primary strategy for growth was to saturate the U.S. market. At one point there seemed to be a Starbucks at every corner, sometimes so close…show more content…
As seen above, Starbucks does carry outstanding balances as deferred revenue (a liability) as well, but once the cards are deemed unlikely to be redeemed, it treats the unclaimed balance as an asset. Part III – Trend Analysis of Sales and Earnings Growth During 2006 - 2010 Review Starbucks income statement and common size income statement for the years 2006 through 2010. Identify and comment on the major trends in the growth in Starbucks sales and earnings, including: a. Sales growth – was Starbucks’ sales growth consistent or inconsistent over the above five year period? Do you see signs of acceleration or deceleration in Starbucks’ historic growth rates? How does Starbucks’ sales growth compare to its industry averages? Are same store sales or the opening of new stores the more important factor in driving Starbucks’ sales growth during this period? Do you believe Starbucks sale trends over the past few years will continue over the next two to three years? Please provide rationale for your belief. Starbucks’ sales growth was inconsistent over the above 5 year period. Data from the last 5 years suggests that Starbucks’ growth rate is actually decelerating. Starbucks’ sales growth was below the industry sales growth. The industry has average 9.25% over the last 5 years while Starbucks averaged 7.5% only. The opening of new stores is vital to Starbucks’ sales strategy. During 2006, 2007, and
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