Suppose the years 2005 to 2009 were a period of rapid growth for a certain chain of coffeehouses and the company's revenues grew by more than 50% during that period. Use the hypothetical financial data for the company to answer the questions. Selected Financial Data (In millions, except earnings per share) As of and for the fiscal year ended Sept. 27, 2009 (52 wks) Sept. 28, 2008 (52 wks) Sept. 30, 2007 (52 wks) Oct. 1, 2006 (52 wks) Oct. 2, 2005 (52 wks) Results of Operations Net revenues: Company-operated retail $8,110.1 $8,691.9 $7,888.3 $6,463.1 $5,261.9 Specialty: Licensing 1,222.3 1,171.6 1,026.3 860.6 673.0 Food service and other 372.2 439.5 386.9 343.2 304.4 Total specialty 1,594.5 1,611.1 1,413.2 1,203.8 977.4 Total net revenues $9,704.6 $10,303.0 $9,301.5 $7,666.9 $6,239.3 Operating income $562.0 $503.9 $1,053.9 $894.0 $780.5 Earnings before cumulative effect of change in accounting principle 520.8 395.5 782.6 691.5 584.4 Cumulative effect of accounting change for asset retirement obligations, net of taxes — — — 17.2 — Net earnings $520.8 $395.5 $782.6 $674.3 $584.4 Earnings per common share before cumulative effect of change in accounting principle—diluted ("EPS") $0.52 $0.43 $0.87 $0.73 $0.61 Cumulative effect of accounting change for asset retirement obligations, net of taxes—per common share — — — 0.02 — EPS—diluted $0.52 $0.43 $0.87 $0.71 $0.61 Net cash provided by operating activities $1,389.0 $1,258.7 $1,331.2 $1,131.6 $922.9 Capital expenditures (additions to property, plant and equipment) $445.6 $984.5 $1,080.3 $771.2 $643.3 Balance Sheet Total assets $5,706.8 $5,752.6 $5,463.9 $4,528.9 $3,613.7 Short-term borrowings — 713.0 710.3 700.0 277.0 Long-term debt (including current portion) 549.5 550.3 550.9 2.7 3.6 Shareholders' equity $2,935.7 $2,400.9 $2,154.1 $2,098.5 $1,990.3 (a)Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.) 2008:_____ 2009:_____ (b)Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.) 2007:______% 2008:_______ % 2009:_______ % (c)Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.) 2007:______ % 2008:______ % 2009:______ %

Suppose the years 2005 to 2009 were a period of rapid growth for a certain chain of coffeehouses and the company's revenues grew by more than 50% during that period. Use the hypothetical financial data for the company to answer the questions. Selected Financial Data (In millions, except earnings per share) As of and for the fiscal year ended Sept. 27, 2009 (52 wks) Sept. 28, 2008 (52 wks) Sept. 30, 2007 (52 wks) Oct. 1, 2006 (52 wks) Oct. 2, 2005 (52 wks) Results of Operations Net revenues: Company-operated retail $8,110.1 $8,691.9 $7,888.3 $6,463.1 $5,261.9 Specialty: Licensing 1,222.3 1,171.6 1,026.3 860.6 673.0 Food service and other 372.2 439.5 386.9 343.2 304.4 Total specialty 1,594.5 1,611.1 1,413.2 1,203.8 977.4 Total net revenues $9,704.6 $10,303.0 $9,301.5 $7,666.9 $6,239.3 Operating income $562.0 $503.9 $1,053.9 $894.0 $780.5 Earnings before cumulative effect of change in accounting principle 520.8 395.5 782.6 691.5 584.4 Cumulative effect of accounting change for asset retirement obligations, net of taxes — — — 17.2 — Net earnings $520.8 $395.5 $782.6 $674.3 $584.4 Earnings per common share before cumulative effect of change in accounting principle—diluted ("EPS") $0.52 $0.43 $0.87 $0.73 $0.61 Cumulative effect of accounting change for asset retirement obligations, net of taxes—per common share — — — 0.02 — EPS—diluted $0.52 $0.43 $0.87 $0.71 $0.61 Net cash provided by operating activities $1,389.0 $1,258.7 $1,331.2 $1,131.6 $922.9 Capital expenditures (additions to property, plant and equipment) $445.6 $984.5 $1,080.3 $771.2 $643.3 Balance Sheet Total assets $5,706.8 $5,752.6 $5,463.9 $4,528.9 $3,613.7 Short-term borrowings — 713.0 710.3 700.0 277.0 Long-term debt (including current portion) 549.5 550.3 550.9 2.7 3.6 Shareholders' equity $2,935.7 $2,400.9 $2,154.1 $2,098.5 $1,990.3 (a)Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.) 2008:___ 2009:_ (b)Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.) 2007:% 2008:_ % 2009:_ % (c)Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.) 2007: % 2008: % 2009:__ %

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

Section: Chapter Questions

Problem 1AIC: Compute the values of each of the ratios in Exhibit 5.27 for Starbucks for 2012. Starbucks had 749.3...

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Selected Financial Data (In millions, except earnings per share)

As of and for the fiscal year ended	Sept. 27, 2009 (52 wks)	Sept. 28, 2008 (52 wks)	Sept. 30, 2007 (52 wks)	Oct. 1, 2006 (52 wks)	Oct. 2, 2005 (52 wks)
Results of Operations
Net revenues:
Company-operated retail	$8,110.1	$8,691.9	$7,888.3	$6,463.1	$5,261.9
Specialty:
Licensing	1,222.3	1,171.6	1,026.3	860.6	673.0
Food service and other	372.2	439.5	386.9	343.2	304.4
Total specialty	1,594.5	1,611.1	1,413.2	1,203.8	977.4
Total net revenues	$9,704.6	$10,303.0	$9,301.5	$7,666.9	$6,239.3
Operating income	$562.0	$503.9	$1,053.9	$894.0	$780.5
Earnings before cumulative effect of change in accounting principle	520.8	395.5	782.6	691.5	584.4
Cumulative effect of accounting change for asset retirement obligations, net of taxes	—	—	—	17.2	—
Net earnings	$520.8	$395.5	$782.6	$674.3	$584.4
Earnings per common share before cumulative effect of change in accounting principle—diluted ("EPS")	$0.52	$0.43	$0.87	$0.73	$0.61
Cumulative effect of accounting change for asset retirement obligations, net of taxes—per common share	—	—	—	0.02	—
EPS—diluted	$0.52	$0.43	$0.87	$0.71	$0.61
Net cash provided by operating activities	$1,389.0	$1,258.7	$1,331.2	$1,131.6	$922.9
Capital expenditures (additions to property, plant and equipment)	$445.6	$984.5	$1,080.3	$771.2	$643.3
Balance Sheet
Total assets	$5,706.8	$5,752.6	$5,463.9	$4,528.9	$3,613.7
Short-term borrowings	—	713.0	710.3	700.0	277.0
Long-term debt (including current portion)	549.5	550.3	550.9	2.7	3.6
Shareholders' equity	$2,935.7	$2,400.9	$2,154.1	$2,098.5	$1,990.3

(a)Calculate the asset turnover ratio for 2008 and 2009. (Round your answers to two decimal places.)

2008:_____

2009:_____

(b)Calculate the net profit margin (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)

2007:______%

2008:_______ %

2009:_______ %

(c)Calculate the return on investment (as a %) for 2007, 2008, and 2009. (Round your answers to the nearest tenth of a percent.)

2007:______ %

2008:______ %

2009:______ %

(d)

Prepare a trend analysis of the net revenue and total assets for 2005 through 2009. (Round your answers to one decimal place.)

	2009	2008	2007	2006	2005
Net Revenue					100.0
Total Assets					100.0

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Meaning of Assets Turnover Ratio:-

Asset turnover ratio is the ratio between the value of a company’s sales or revenues and the value of its assets. It is an indicator of the efficiency with which a company is using its assets to produce the revenue. Thus, asset turnover ratio can be a determinant of a company’s performance. The higher the ratio, the better is the performance of the company.

Formula:-

Assets Turnover Ratio = Net Sales / Average Total Assets

Meaning of Net Profit Margin Ratio :

The net profit margin is a ratio that compares a company's profits to the total amount of money invested. It measures how effectively a company operates. If a company has a 30% net profit margin, for example, that means that it keeps $0.30 for every $1 in sales revenue.

Formula:-

Net Profit Margin Ratio(%) = ( Net Profit / Net Sales ) * 100

Meaning of Return on Investment :

Return on investment (ROI) is a financial ratio used to calculate the benefit an investor will receive in relation to their investment cost. It is most commonly measured as net income divided by the original capital cost of the investment. The higher the ratio, the greater the benefit earned.

Formula:-

Return on Investment = (Net Profit before Interest, Tax and Dividend/Capital Employed) x 100

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