Starbucks: Financial Statements

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The notes to the financial statements can reveal a lot about the details of the line item in question. It is often said that to fully understand financial statements, one must read the notes. The company that I have selected is Starbucks, and to that end their financial statements are available online at MSN Moneycentral. To read the notes, however, I will need the annual report. Note 1 refers to the significant accounting policies, something that relates a wide range of individual line items. For example, cash and cash equivalents refers to all highly liquid instruments with less than 3 months until maturity. Inventories "are stated at the lower of cost or market." There is nothing under Note 1 about receivables. The other notes highlight specific details about each of these balance sheet items. Note 3 touches on the category of cash and cash equivalents. Some of the cash equivalents are "available for sale securities." These include agency obligations ($20 million), commercial paper ($87 million), corporate debt securities ($78 million), government treasury securities ($606 million) and certificates of deposit ($64 million). In addition, the balance sheet shows $1.1886 billion in cash. There are stated at fair market value, which if it cannot be determined on the open market is estimated. The company values auction rate securities using an internally-developed valuation model. The company also notes that some of the "available for sale" securities are longer-term in
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