-calculate invested capital
-calculate adjusted fcf and roic
- calculate economic profit in dollars using the spread and charge formula
Points for Question 4 Quantitative 37 Assume operating cash as a % of revenue = 10%, tax rate = 22% and WACC = 6% 4a) Calculate invested capital from sources and uses (24 points) ALL WORK Calculated in columns J through U 4b) Calculate adjusted FCF and ROIC (9 points) Operating Cash as a % of Revenue 10.00% 4c) Calculate economic profit in dollars using both the spread and charge formula (4 points) Balance Sheet - in millions 9/30/17 9/30/18 9/30/19 Marginal Tax rate WACC 22.00% 6.00% 2018 Income Statement - in millions 9/30/18 9/30/19 USES 2017 2018 2019 SOURCES 2018 2019 2019 $2,462.3 Company-operated stores Total specialty Licensed stores Foodservice and other Total net revenues $19,690.3 5,029.2 2,652.2 2.377.0 $24,719.5 $21,544.4 4,964.2 2,875.0 2,089.2 $26,508.6 Adjusted EBIT NOPLAT Depr and Amort Capex Change in NWC Operating CA Total Debt & Equiv $5,283.4 Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses Total current assets Equity and cost investments Property, plant and equipment, net Operating Leases Deferred tax assets Intangible assets & Other LT Assets Goodwill Total assets $8,756.3 $2,686.6 $181.5 $70.5 $693.1 $879.2 $1,400.5 $1,529.4 $1,462.8 $488.2 $12,494.2 $5,653.9 $602.4 $616.0 $5,929.1 $6,431.7 $0.0 $8,359.0 $134.7 $1,765.8 $1,454.4 $1,261.4 $3,541.6 $3,490.8 $24,156.4 $27,578.6 7,930.7 8,526.9 Free Cash Flow $4,919.5 $0.0 Total Equity & Equiv Non-GAAP ROIC Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring and impairments Income from equity investees Operating income / loss 9,472.2 554.9 1,247.0 1,708.2 224.4 -301.2 $3,883.3 10,493.6 371.0 1,377.3 1,824.1 135.8 -298.0 $4,077.9 Operating CL $1,539.2 $14,365.6 Total Funds Invested Non-operating assets Economic Profit Spread $ Economic Profit Charge $ Net Working Capital $162.7 Invested Capital 2018 Market Data Fiscal Year Stock Price % Change S&P 500 5.8% 2019 55.6% 2.2% 20.2% Gain resulting from acquisition of joint venture Loss on divestiture of certain operations Interest income and other, net Interest expense Earnings / loss before income taxes Income tax expense / benefit Earnings before effect of change in account rules Invested Capital 1,376.4 499.2 191.4 -170.3 $5,780.0 -1,262.0 $4,518.0 $7,421.2 Accounts payable Accrued liabilities Current portion of long-term debt Insurance reserves Stored value card liability & deferred rev Total current liabilities Long-term debt Capitalized Long Term Leases Operating lease liability Deferred revenue Deferred taxes $0.0 622.8 96.5 -331.0 $4,466.2 -871.6 $3,594.6 Check Point Invested Capital balance $1,179.3 $2,298.4 $349.9 $213.7 $1,642.9 $5,684.2 $9,090.2 $53.6 $0.0 $6,775.7 $1,376.9 balance $1,189.7 $3,710.0 $0.0 $0.0 $1,269.0 $6,168.7 11,167.0 $62.7 $8,359.0 6,744.4 $1,307.8 $4,220.7 $3,932.6 $0.00 $4.41 Total Funds Invested $11,136.0 Net earnings / loss including noncontrolling interests Net earnings / loss attributable to noncontrolling interests Net earnings / loss attributable to Starbucks $4,518.0 0.3 $4,518.3 $3,594.6 4.6 $3,599.2 Other operating assets incl acquisition related costs & stock options granted w 2018 tax change $5,563.2 -503.3 Inc from equity investees incl joint ventures from int'l locations where the gov't requires this structure Common stock Additional paid-in capital Retained earnings Accum other comprehensive inc / loss Noncontrolling interest Total shareholders' equity Total equity Total Liabilities & Equity $1.3 1.2 $41.1 41.1 $1,457.4 -5,771.2 -$330.3 $6.3 $1.2 $1,169.5 $6,232.2 $1,175.8 $6,231.0 $24,156.4 $27,578.6 Noncontrolling interests are from non wholly owned subsidiaries of Starbcuks $5,450.1 $5,457.0 $14,365.6 Balance Sheet 0 0 0 Other LT assets are part of international Starbucks locations All blank cells are intentionally left blank and do not imply $0 Points for Question 4 Quantitative 37 Assume operating cash as a % of revenue = 10%, tax rate = 22% and WACC = 6% 4a) Calculate invested capital from sources and uses (24 points) ALL WORK Calculated in columns J through U 4b) Calculate adjusted FCF and ROIC (9 points) Operating Cash as a % of Revenue 10.00% 4c) Calculate economic profit in dollars using both the spread and charge formula (4 points) Balance Sheet - in millions 9/30/17 9/30/18 9/30/19 Marginal Tax rate WACC 22.00% 6.00% 2018 Income Statement - in millions 9/30/18 9/30/19 USES 2017 2018 2019 SOURCES 2018 2019 2019 $2,462.3 Company-operated stores Total specialty Licensed stores Foodservice and other Total net revenues $19,690.3 5,029.2 2,652.2 2.377.0 $24,719.5 $21,544.4 4,964.2 2,875.0 2,089.2 $26,508.6 Adjusted EBIT NOPLAT Depr and Amort Capex Change in NWC Operating CA Total Debt & Equiv $5,283.4 Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses Total current assets Equity and cost investments Property, plant and equipment, net Operating Leases Deferred tax assets Intangible assets & Other LT Assets Goodwill Total assets $8,756.3 $2,686.6 $181.5 $70.5 $693.1 $879.2 $1,400.5 $1,529.4 $1,462.8 $488.2 $12,494.2 $5,653.9 $602.4 $616.0 $5,929.1 $6,431.7 $0.0 $8,359.0 $134.7 $1,765.8 $1,454.4 $1,261.4 $3,541.6 $3,490.8 $24,156.4 $27,578.6 7,930.7 8,526.9 Free Cash Flow $4,919.5 $0.0 Total Equity & Equiv Non-GAAP ROIC Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring and impairments Income from equity investees Operating income / loss 9,472.2 554.9 1,247.0 1,708.2 224.4 -301.2 $3,883.3 10,493.6 371.0 1,377.3 1,824.1 135.8 -298.0 $4,077.9 Operating CL $1,539.2 $14,365.6 Total Funds Invested Non-operating assets Economic Profit Spread $ Economic Profit Charge $ Net Working Capital $162.7 Invested Capital 2018 Market Data Fiscal Year Stock Price % Change S&P 500 5.8% 2019 55.6% 2.2% 20.2% Gain resulting from acquisition of joint venture Loss on divestiture of certain operations Interest income and other, net Interest expense Earnings / loss before income taxes Income tax expense / benefit Earnings before effect of change in account rules Invested Capital 1,376.4 499.2 191.4 -170.3 $5,780.0 -1,262.0 $4,518.0 $7,421.2 Accounts payable Accrued liabilities Current portion of long-term debt Insurance reserves Stored value card liability & deferred rev Total current liabilities Long-term debt Capitalized Long Term Leases Operating lease liability Deferred revenue Deferred taxes $0.0 622.8 96.5 -331.0 $4,466.2 -871.6 $3,594.6 Check Point Invested Capital balance $1,179.3 $2,298.4 $349.9 $213.7 $1,642.9 $5,684.2 $9,090.2 $53.6 $0.0 $6,775.7 $1,376.9 balance $1,189.7 $3,710.0 $0.0 $0.0 $1,269.0 $6,168.7 11,167.0 $62.7 $8,359.0 6,744.4 $1,307.8 $4,220.7 $3,932.6 $0.00 $4.41 Total Funds Invested $11,136.0 Net earnings / loss including noncontrolling interests Net earnings / loss attributable to noncontrolling interests Net earnings / loss attributable to Starbucks $4,518.0 0.3 $4,518.3 $3,594.6 4.6 $3,599.2 Other operating assets incl acquisition related costs & stock options granted w 2018 tax change $5,563.2 -503.3 Inc from equity investees incl joint ventures from int'l locations where the gov't requires this structure Common stock Additional paid-in capital Retained earnings Accum other comprehensive inc / loss Noncontrolling interest Total shareholders' equity Total equity Total Liabilities & Equity $1.3 1.2 $41.1 41.1 $1,457.4 -5,771.2 -$330.3 $6.3 $1.2 $1,169.5 $6,232.2 $1,175.8 $6,231.0 $24,156.4 $27,578.6 Noncontrolling interests are from non wholly owned subsidiaries of Starbcuks $5,450.1 $5,457.0 $14,365.6 Balance Sheet 0 0 0 Other LT assets are part of international Starbucks locations All blank cells are intentionally left blank and do not imply $0
