ACC 221 Intermediate Accounting II

Financial Statement Analysis Project #2

Final Assessment

1. What was the value of the cash and cash equivalents as of October 1, 2017?

2,462.3 million

2. According to the Notes to the Consolidated Financial Statements, what does Starbucks consider to be cash equivalents?

Cash and Cash Equivalents

We consider all highly liquid instruments with maturities of three months or less at the time of purchase, as well as credit card receivables for sales to customers in our company-operated stores that generally settle within two to five business days, to be cash equivalents. We maintain cash and cash equivalents balances with financial institutions that exceed federally insured limits. We have not experienced any losses related to these balances, and we believe credit risk to be minimal.

3. What was the value of accounts receivable, net as of October 1, 2017?

870.4 million

4. According to the Notes to the Consolidated Financial Statements, what was the total Allowance for Doubtful Accounts related to Starbucks accounts receivable?

9.8 million

5. According to the Notes to the Consolidated Financial Statements, how does Starbucks calculate their Allowance for Doubtful Accounts?

The gross receivables for Starbucks at the end of 2017 was $880.2 million is computed by adding the net accounts receivable of $870.4 million and the allowance for doubtful accounts of $9.8 million

6. Calculate the Accounts Receivable Turnover ratio as of October 1, 2017.

5.78 Accounts Receivable Turnover ratio

7. According to the Notes to the Consolidated Financial Statements, what method does Starbucks use to value its inventory 1) First In, First Out (FIFO), 2) Last In, First Out (LIFO), or 3) Average Cost method? (Choose one)

Average Cost Method

8. What was the value of Inventory as of October 1, 2017?

1,364 million

9. Calculate the Inventory Turnover ratio as of October 1, 2017.

5.18 Inventory Turnover ratio

10. What is the value of Starbucks property, plant, and equipment as of October 1, 2017?

4,919.5 million

11. According to the Notes to the Consolidated Financial Statements what are the categories of Property, Plant, and Equipment and their associated values as of October 1, 2017?

Property, Plant, and Equipment which includes assets under capital leases, are carried at cost less accumulated depreciation.

12. According to the Notes to the Consolidated Financial Statements what depreciation method does Starbucks use 1) Straight Line, 2) Sum of the Years Digits, 3) Declining Balance, or 4) Units of Production? (Choose One)

Straight-line Method

13. What amount did Starbucks report as depreciation and amortization for 2017?

1067.1 million

14. What was the Current Ratio for Starbucks at the end of 2017?

15. What was the largest current asset and the largest current liability for Starbucks as of October 1, 2017?

Cash and Cash Equivalents $2,462.3 million

Accrued Liabilities $1,934.5 million

16. What was the gross profit percentage for Starbucks for the year ended October 1, 2017?

59.63 %

17. What was the net cash provided by operating activities in 2017?

4,174.3 million

18. Provide one interesting and important piece of information from each of the following statements that you would find useful in deciding if you wanted to invest in Starbucks Corporation. It CANNOT be information in #1 17 above.

1. Consolidated Balance Sheets
2. Consolidated Statements of Earnings
3. Consolidated Statements of Cash Flows

EXTRA CREDIT (+5 POINTS):

Provide one additional interesting and important piece of information from the Consolidated Notes to the Financial Statements that you would find useful in deciding if you wanted to invest in Starbucks Corporation. It CANNOT be something already answered in #1 18 above.