Starbucks Financial Statement Analysis

The research shows that the earnings announcements of firms within an industry can impact the share prices of other firms in the same industry. This effect has been labelled as the ‘information transfer effect’. The ‘information transfer effect’ highlights the belief that share prices react to public information emanating from various sources—including

Such an intense focus has been placed on quarterly earnings as an indication of a company’s success by everyone from analysts to executives that ethics have for the most part been thrown out the window, sacrificed to the all important number, i.e. earnings per share. This is the theory in Alex Berenson’s book “The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America.” This number has become part of a game to be played, a figure to be manipulated – beat the number and Wall Street all but throws a parade, miss it and a company’s stock may be abandoned. Take into account the incentives that executives have to beat the number and one can find plenty of reasons to manage earnings.

In this research paper the authors want to express their thoughts by stating that how to them earnings reporting pertains to the discovery of information that has not been disclosed by either people or other types of sources and focus towards the negative in this study. In my opinion, the title of the paper itself could have had a different title only because throughout the paper it analyzes negative or bad news rather than really paying attention to both perspectives. Also the paper captures the information or news that occurs by using a three day window in which Quarterly Earnings Announcement (QEA) take place and compares it to a period where it does not take place. Furthermore, in this paper there are three hypotheses that arise

Using a sample data comprised 297 NYSE and American Stock Exchange companies for 1977 to 1980-time period, indicating twelve quarterly announcements for each of the company. MacKinlay (1997) utilised 30 companies which comprised into Dow Jones Industrial Index, as a sample to test the impact of quarterly earnings announcements to stock prices. The researcher examined totally 600 quarterly announcements, thus MacKinlay (1997) obtained stock price response separately to bad news, good news and no news cases of earnings per share (EPS) announcements.

After a profit announcement was made by David Jones Ltd, it is the objective of this report to note whether there was an impact of such information on investor behaviour via the share prices of this company. To ensure that the information found was accurate, the effect of the All Ordinaries was taken into consideration and comparisons were made between David Jones and its two main competitors. After analysing the closing share prices before and after the date of the announcement, it was found that share prices reduced more than that of the general stock market and also more than that of its main competitors. This report concludes that the announcement of accounting information by

Pro forma earnings are earnings which often exclude non-recurring items and are defined by each individual firm rather than under the general accepted accounting principle (GAAP). Pro forma earnings reporting is commonplace in the U.S. (Doyle et al. 2013; Bentley et al. 2016). Items such as nonrecurring gains and losses, depreciation and amortization expenses, write-downs, restructuring and merger costs, stock compensation expenses, and interest expenses are often excluded in pro forma earnings figures. Since many of these exclusions are likely to be transitory in nature, pro forma earnings can be viewed as a better measure of permanent earnings and have received increasing focus recently. Research studies found that pro forma earnings are more value relevant, informative, and better associated with stock prices than GAAP earnings (Bradshaw and Sloan, 2002; Bhattacharya et al.,2003; Brown and Sivakumar, 2003; Entwistle et al., 2010). However, exclusion of the non-recurring items is completely discretionary (Doyle et al., 2013) and managers may use the flexibility to opportunistically influence the market’s perception of the firm’s recurring earnings (Dechow and Schrand, 2004). Managers may have strong incentives to manipulate the reported pro forma earnings to influence investors’ perceptions about the

Hello everyone, I am Lacey Merritt from Georgia. I live in very small town that is out in the middle of nowhere. I am taking this course for my Master in MBA with non-profit management. This course I see help me understand the financial for a non-profit.

S. Basu (1997) tested for the information content of price-earnings multiple. He tested to see whether low P/E stocks outperform stocks with high P/E ratios. If historical P/E ratios provided useful information for obtaining higher stock returns then it would be refutation of semi strong form of efficient market hypothesis. His results indicated that low P/E portfolios provided superior returns relative to the market and high P/E provided inferior returns relative to the market. The results reported in this paper indicate that P/E ratio information was not fully

The results from this study ought to be useful in providing managers with some guidance as to the specific information analysts believe contributes most to high quality earnings. Given that higher quality earnings are likely to be attached a higher multiple by analysts for valuation purposes, this information should be particularly important for managers wishing to maximize the market value of their company's shares.

The onset of the Q3 US corporate profits season provides a useful backdrop to analyse what financial markets are currently discounting in terms of profits growth. Furthermore, the current discussion about the prospective path of Fed policy raises the importance of accurately assessing whether earnings expectations are too optimistic. Historically, the S&P500 has tended to display sensitivity to changes in 12-month forward earnings expectations. There are weekly estimates available from a number of competing sources, such as Thomson Reuters and Factset. Typically, profit forecasts are time-weighted, thus implying that quarterly EPS estimates for 2017 will, therefore, receive a higher weighting. S&P500 operating EPS peaked in 2014, consistent with the rival data produced in the National Income & Product Accounts. The latest 12-month forward S&P500 EPS estimate is $129.93, compared to the previous actual peak of $114.51 in 2014 Q3. Thus, it appears that analysts are expecting a sharp uptick in EPS growth and that Q3’s results will constitute the final quarter of negative growth during the current profits recession. S&500 EPS growth is subsequently expected to accelerate sharply in 2017 H1 (+13%) and more-or-less maintain a +14% expansion rate during H2. Consequently, the 2017 outcome should be a new record annual operating EPS of $133.75, thereby implying a forward P/E of 16. Assuming the continuation of low inflationary

Investors and analysts have a tendency to rely too heavily on the record of past earnings growth (La Porta et al. 1997). According to Lakonishok, Shleifer & Vishny (1994) popular strategies like 'extrapolating past earnings growth too far into the future' or 'assuming a trend in stock prices', 'overreacting to good or bad news', or 'simply equating a good investment with a well-run company

The diagram illustrates the studies by Beaver, Clarke and Wright (1979) and Foster, Olsen and Shevlin (1984). The studies are based on the Ball & Brown study regarding the relationship between earnings and share prices. This diagram shows that the size and sign of unexpected Earnings per Share (EPS) is related to the sign and size of cumulative Abnormal Return (AR).

“Management Earnings Forecasts: A Review and Framework” by D. E. Hirst, L. Koonce and S. Venkataraman explained the antecedents, characteristics and consequences interlinked with earnings forecasts. Antecedents are characteristics that are prevalent prior to the consequence such as the existing environment/firm specific characteristics; and consequence is the outcome from antecedents and characteristics. Characteristics are the choices the management has deciding on how the report will be issued. The article guides the reader giving explanations of why management decides to release earnings forecasts, interactions of the three variables and its findings and how these findings may impact one period to another. Studies

In the underlying paper the author re-examines the conservatism principle and its asymmetric effects on earnings. With samples consisting of all firm-year observations from 1963 to 1990 with returns data on the CRSP NYSE/AMEX Monthly files and respective accounting data on the COMPUSTAT Annual Industrial and Research files, he formulates and tests four major hypotheses to find evidence for his predictions. At first he chracterizes “conservatism in accounting as the more timely recognition in earnings of bad news regarding future cash flows than good news”.1 In his first hypothesis he predicts a more sensitive response of earnings towards bad news in comparison to good news, proxied by negative and positve annual stock returns. His second prediction is that earnings are more timely than cash flow, indicating a stronger association of accruals to conservative accounting effects. Hypotheses three and four account for a test on the

Accounting is used as a tools to inform investors and other stakeholders about management’s performance. However, accounting standards permits management to use judgment in financial reporting methods for some accounts as they have best knowledge of its business so it can choose accounting alternatives that suit their business. With ability to choose its preferable reporting methods, estimates and disclosure, this flexibility creates opportunity for managers to distort earnings in which they adopt accounting methods that do not truly reflect firms’ financial status (Healy and Wahlen, 1999). In addition, due to the fact that management has better access to firms’ business transactions and operations than stakeholders do and auditing and