Starbucks Corporation: An Annual Flexible Budget for the Year 2012

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Flexible Budget Flexible Budget Levels (in millions) Competitor Corporate Economic 10% Rate 9% Rate 6.5% Rate Revenue Company Operating Stores 10,595.60 10,499.30 10,258.50 Licensed Stores 1,108.30 1,098.20 1,073.00 CPG, food service, & other 1,166.60 1,165.00 1,129.40 Total Revenue 12,870.40 12,753.40 12,460.90 Cost of Sales 5,444.20 5,394.70 5,271.00 Total Operating Expenses 11,193.40 11,091.60 10,837.20 Total Cost 16,627.60 16,486.30 16,108.20 Income from equity investees 191.1 189.30 185.00 Operating Income 1,901.40 1,884.10 1,840.90 Interest Income 127.5 126.30 123.40 Interest Expense -36.6 -36.10 -35.50 Earnings Before Tax 1,992.20 1,974.10 1,928.80 Income Tax 619.4 613.80 599.70 Net Earnings 1,372.80 1,360.30 1,329.10 This is an annual flexible budget done for Starbucks Corporation for the year 2012. Caribou Coffee is one of Starbucks Corporation's largest competitors. Caribou Coffee's annual projected sales growth for 2012 is 10% (Caribou Coffee Reports Fourth Quarter and fiscal Year 2011 Results, 2012). Even though Caribou had a consolidated sales increase of 15.0% for the year 2011, for a competitive basis, a flexible budget was done based on the 10% annual projected increase for the year 2012. Starbucks had a sales growth of 6% decrease for 2009, 7% increase for 2010, and an 8% increase for 2011 (Starbucks Corporation Fiscal 2011 Annual Report, 2011). The tax rate for 2011 was 31.1% and for

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