Question: This case uses both the income statement (consolidated statement of earnings) and the balance sheet of Starbucks Corporation. Visit www.pearsonhighered.com/Horngren to view a link to

This case uses both the income statement (consolidated statement of earnings) and the balance sheet of Starbucks Corporation. Visit www.pearsonhighered.com/Horngren to view a link to the Starbucks Corporation Fiscal 2011 Annual Report.

Requirements

1. What was value of the company’s inventory at October 2, 2011, and October 3, 2010?

2. Review Note 4 (specifically Inventories) in the Notes to Consolidated Financial Statements. What do Starbucks’ inventories consist of?

3. What was the amount of Starbucks’ cost of goods sold (cost of sales) for the year ending October 2, 2011, and the year ending October 3, 2010?

4. What income statement format does Starbucks use? Explain.

5. Compute Starbucks’ gross profit percentage for the year ending October 2, 2011, and the year ending October 3, 2010. Did the gross profit percentage improve, worsen, or hold steady? Assuming the industry average for gross profit percentage is 56.83%, how does Starbucks compare to the industry?

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