Starbucks-Part 1 Case Study

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Case 1 (Starbucks - Part 1) a) The nature of Starbucks’ business is to generate income based on operating activities. When referencing the Statement of Cash Flows and looking at their operating activities, you can see that Starbucks generates $2,908.3M in net cash provided by operating activities. Investment is a significant item in this statement as well. The company spent $785.9M in investments in the year ending September 29th, 2013. Strong investment activities show that Starbucks is investing through buying and selling (Sales, maturities, and calls of investments $1,040.2M) and using their spare cash to invigorate future growth and fund future obligations. There is also heavy investment in property, plant, and equipment with additions totaling $1,151.2M. This type of investment show us that Starbucks is focused on expansion using cash from operations. They have a significant amount of cash coming in from operations, and money going out in PP&E. The analyst should not be concerned that Starbucks is borrowing money for negative reasons, and they are looking very strong from an operating and investing standpoint. They are effectively earning income and turning it into cash. ________________________________________ b) Commonly prepared financial statements for external reporting purposes are: 1) Balance Sheet 2) Income Statement 3) Statement of Stockholders’ Equity 4) Statement of Cash Flows Starbucks Specific Financial Statements: Consolidated Statements of Earnings

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