Problem is on P318 and is the Interactive Case Study 4.1 (Starbucks) Part A [a,b,c]. It is not answered in Chegg Solutions.

CHAPTER 4 Profitability Analysis Exhibit 4.42 (Continued) 21.6 94.8 25.7 17.7 Accounts receivable turnover Inventory turnover Fixed assets turnover Revenues per restaurant Operating income per restaurant Fixed assets per restaurant Percentage of restaurants owned and operated Growth in revenues Growth in number of restaurants 0.6 $ 551 $ 67 $ 856 28.8% 605 $ 881 $ 795 29.2% 11.2% 1.4% 11.3% 0.1% INTEGRATIVE CASE 4.1 Starbucks Part A Integrative Case 1.1 introduced the industry economics of coffee shops and the business strategy of Starbucks to compete in this industry. Exhibit 126 presents balance sheets for Starbucks for the years ending 2009-2012. Exhibit 127 presents its income statements and Exhibit 1,28 presents the statement of cash flows for the same years. Exhibit 129 presents common-size balance shets Exhibit 1.30 presents com Integrative Case 41, we recommend that you review integrative Case 1.1 in Chapter 1. mon-size income statements for Starbucks. Before beginning preparation of Part A of Integrative Case 4.1 analyzes changes in the profitability of Starbucks. REQUIRED a. Exhibit 4.43 presents profitability ratios for Starbucks for fiscals 2010 and 2011. Using the f nancial statement data in Exhibits 1.26 and 1.27, compute the values of these ratios 2012. The income tax rate is 35%. For accounts receivable turnover, use only specialty ree nues for the numerator, because the accounts receivable are primarily related to licensng and food service operations, not the retail operations. Use cost of sales, including costs, for the numerator of the inventory turnover, because Starbucks does not disclose seph for fiscal rately the cost of products sold (the appropriate numerator) and occupancy costs.he b. What are the most important reasons for Starbucks' ROA fluctuation during the three year period? Analyze the financial ratios to the maximum depth possible with the mation given. Using the nomenclature from the schematic in Exhibit 4.21 (page Exhibit 4.44 (page 320) provides information for analyzing profitability at Level1, and Level 3. Exhibit 4.44 presents additional information for Starbucks at a business ment level to permit analysis at Level 4. Differences between the sum of segne expenses and total expenses reflect corporate-level expenses not allocated to the ind ual segments. Additionaly, if necessary, access Starbuck's annual report or form which you should be able to access at the company's investor relations website. c. What are the most important reasons for Starbucks' ROCE fluctuation during the year period? Exhibit 1.27 Starbucks Corporation Comparative Income Statements amounts in millions, except per-share data) (Integrative Case 1.1) 30-Sep 2012 2-Oct 2011 27-Sep Fiscal Year Ended Net revenues: Company-operated retail Specialty: 2010 $10,535 $ 9,632 8,964 8,180 Licensing 1,210 1,555 $13,300 1,008 1,061 875 869 1,222 373 Foodservice and other Total Net Revenues $1100 $10,707 $9775 9,775 Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring charges 5,813 4,916 4417 $4,325 3,425 3,472 280 510 705 53 9,436 3,918 430 550 393 264 535 453 332 $9,993 Total Operating Expenses $11,513 10,176 30 174 Gain on sale of properties Income from equity investees 148 114 S 1,997 s 1,729 $ 1419 50 504 Operating Income Interest income and other, net Interest expense 94 2,059 1,811 1437 $456 Earnings before Income Taxes Income taxes 674 563 489 144 Net earnings including noncontrolling interests $1,385 Net earnings (loss) attributable to 1,248 S 948 noncontrolling interests $ 946 183 1.66 $ 1.27 124 S 316 $ 0.43 0.43 S 1,246 Net Earnings Attributable to Starbucks Earnings per share-basic Earnings per share-diluted Source: Starbucks Corporation, Forms 10-K for the Fiscal Years ended September 30, 2012, and October 2, 2011 $1.79 S 1.62 Summary of Profitability Ratios ROCE Profit AssetsCapital Profit Margin for ROA Level 2 Assets Turnover Margin Turnover Structure for ROCE Leverage Various Expense- to-Sales Percentages Level 3 Accounts Receivable Turnover, Inventory Turnover, Fixed Assets Turnover ROA, Profit Margin, and Assets Turnover for Product and Geographic Segments Level 4 Exhibit 4.44 Starbucks Segment Profitability Data (Integrative Case 4.1, Parts A and B) Americas China/Asia Pacific Channel Development 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 $ 9,936 $ 9,065 8,489 1,141 s 1,047 5 953 721 552 407 1,292 861 7074 2012 2011 Total net revenues Common-Size Income Statements Total net revenues 100.0% 39.1% 34.5% 0.8% 3.9% 2% 100.0% 38.8% 35.1% 0.8% 43% 0.7% 100.0% 38.4% 36.3% 0.7% 46% 0.7% 0.3% 81.1% 0.0% 18.9% 100096 52.3% 32.5% 2- % 50% 6.3% 0.0% 99.1% 0.0% 0.9% 100.0% 50,7% 31.3% 35% s1%, 6.2% -0.0% 96.7% 0696 38% 100096 495% 34096 3.8% sa- 6.1% -2.6% 10.3% 0.7% -06% 1000% % 16596 6S% se, 53% -0.0% 81.8% 17.0% 35.1% 1000% sml, 1S1% 6.5% 33% 60% 0.0% 81.9% 16.8% 35.0% 1000% 000% 52a6640% 157% 0.0% 148% as 07% 0.0% 7%6% 6.6% 270% 1000% 56.7% 1000% 50% 00% 163% as% OS% 00% Cost of sales including occupancy costs Store operating expenses Other operating expenses 74% 19% 67% 0.0% 86.1% 17.9% 31.8% 176% Depreciation and amortization expenses on, ag% 00% 753% 8,8% 334 15.7 13.1 526.1%500.9% General and administrative expenses Restructuring charges 79.1% 0.0% 20.9% 79.7% 0.0% 20.3% n)% 100% 38.3% Total operating expenses Income from equity investees Segment profit margin Segment asset turnover 0.9 146 29.3% 392.5% 94.3% 100.0% 87,4% 2.2% 10.1% -1.296 38.6% 3s8% 7,857 7.623 7580 882 872 847 666 512 439 N/A. N/A N/A Stores owned Stores licensed 5,046 4,776 5,044 987 862 82628 2334 2141 NA NA NA 12903 12.399 12624 1.869 1734 1.654 3 2846 2580 Total stores Total revenues/Total stores Operating income/Total stores Assets/Total stores Total revenues increase Comparable stores sales increase" $770,053 $731,107 $672410 $610,647 $603,691 $576,421 $219,004 $194062 $157868 $160,769 $148,585 $127,281 5564 23,241 $ (3325) $ 76958 $ 67850 s $170425 $148,552 $145,588 $250,080 $229,642 $287 666 $199,332 $189,740 $171,318 98% 32.2% 30.6% 3S6% -685% 5% 15% 22% 11% 96% 68% 643.8% 90% Comparable stores represent stores open at least 13 months. CHAPTER 4 Profitability Analysis Exhibit 4.42 (Continued) 21.6 94.8 25.7 17.7 Accounts receivable turnover Inventory turnover Fixed assets turnover Revenues per restaurant Operating income per restaurant Fixed assets per restaurant Percentage of restaurants owned and operated Growth in revenues Growth in number of restaurants 0.6 $ 551 $ 67 $ 856 28.8% 605 $ 881 $ 795 29.2% 11.2% 1.4% 11.3% 0.1% INTEGRATIVE CASE 4.1 Starbucks Part A Integrative Case 1.1 introduced the industry economics of coffee shops and the business strategy of Starbucks to compete in this industry. Exhibit 126 presents balance sheets for Starbucks for the years ending 2009-2012. Exhibit 127 presents its income statements and Exhibit 1,28 presents the statement of cash flows for the same years. Exhibit 129 presents common-size balance shets Exhibit 1.30 presents com Integrative Case 41, we recommend that you review integrative Case 1.1 in Chapter 1. mon-size income statements for Starbucks. Before beginning preparation of Part A of Integrative Case 4.1 analyzes changes in the profitability of Starbucks. REQUIRED a. Exhibit 4.43 presents profitability ratios for Starbucks for fiscals 2010 and 2011. Using the f nancial statement data in Exhibits 1.26 and 1.27, compute the values of these ratios 2012. The income tax rate is 35%. For accounts receivable turnover, use only specialty ree nues for the numerator, because the accounts receivable are primarily related to licensng and food service operations, not the retail operations. Use cost of sales, including costs, for the numerator of the inventory turnover, because Starbucks does not disclose seph for fiscal rately the cost of products sold (the appropriate numerator) and occupancy costs.he b. What are the most important reasons for Starbucks' ROA fluctuation during the three year period? Analyze the financial ratios to the maximum depth possible with the mation given. Using the nomenclature from the schematic in Exhibit 4.21 (page Exhibit 4.44 (page 320) provides information for analyzing profitability at Level1, and Level 3. Exhibit 4.44 presents additional information for Starbucks at a business ment level to permit analysis at Level 4. Differences between the sum of segne expenses and total expenses reflect corporate-level expenses not allocated to the ind ual segments. Additionaly, if necessary, access Starbuck's annual report or form which you should be able to access at the company's investor relations website. c. What are the most important reasons for Starbucks' ROCE fluctuation during the year period? Exhibit 1.27 Starbucks Corporation Comparative Income Statements amounts in millions, except per-share data) (Integrative Case 1.1) 30-Sep 2012 2-Oct 2011 27-Sep Fiscal Year Ended Net revenues: Company-operated retail Specialty: 2010 $10,535 $ 9,632 8,964 8,180 Licensing 1,210 1,555 $13,300 1,008 1,061 875 869 1,222 373 Foodservice and other Total Net Revenues $1100 $10,707 $9775 9,775 Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring charges 5,813 4,916 4417 $4,325 3,425 3,472 280 510 705 53 9,436 3,918 430 550 393 264 535 453 332 $9,993 Total Operating Expenses $11,513 10,176 30 174 Gain on sale of properties Income from equity investees 148 114 S 1,997 s 1,729 $ 1419 50 504 Operating Income Interest income and other, net Interest expense 94 2,059 1,811 1437 $456 Earnings before Income Taxes Income taxes 674 563 489 144 Net earnings including noncontrolling interests $1,385 Net earnings (loss) attributable to 1,248 S 948 noncontrolling interests $ 946 183 1.66 $ 1.27 124 S 316 $ 0.43 0.43 S 1,246 Net Earnings Attributable to Starbucks Earnings per share-basic Earnings per share-diluted Source: Starbucks Corporation, Forms 10-K for the Fiscal Years ended September 30, 2012, and October 2, 2011 $1.79 S 1.62 Summary of Profitability Ratios ROCE Profit AssetsCapital Profit Margin for ROA Level 2 Assets Turnover Margin Turnover Structure for ROCE Leverage Various Expense- to-Sales Percentages Level 3 Accounts Receivable Turnover, Inventory Turnover, Fixed Assets Turnover ROA, Profit Margin, and Assets Turnover for Product and Geographic Segments Level 4 Exhibit 4.44 Starbucks Segment Profitability Data (Integrative Case 4.1, Parts A and B) Americas China/Asia Pacific Channel Development 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010 $ 9,936 $ 9,065 8,489 1,141 s 1,047 5 953 721 552 407 1,292 861 7074 2012 2011 Total net revenues Common-Size Income Statements Total net revenues 100.0% 39.1% 34.5% 0.8% 3.9% 2% 100.0% 38.8% 35.1% 0.8% 43% 0.7% 100.0% 38.4% 36.3% 0.7% 46% 0.7% 0.3% 81.1% 0.0% 18.9% 100096 52.3% 32.5% 2- % 50% 6.3% 0.0% 99.1% 0.0% 0.9% 100.0% 50,7% 31.3% 35% s1%, 6.2% -0.0% 96.7% 0696 38% 100096 495% 34096 3.8% sa- 6.1% -2.6% 10.3% 0.7% -06% 1000% % 16596 6S% se, 53% -0.0% 81.8% 17.0% 35.1% 1000% sml, 1S1% 6.5% 33% 60% 0.0% 81.9% 16.8% 35.0% 1000% 000% 52a6640% 157% 0.0% 148% as 07% 0.0% 7%6% 6.6% 270% 1000% 56.7% 1000% 50% 00% 163% as% OS% 00% Cost of sales including occupancy costs Store operating expenses Other operating expenses 74% 19% 67% 0.0% 86.1% 17.9% 31.8% 176% Depreciation and amortization expenses on, ag% 00% 753% 8,8% 334 15.7 13.1 526.1%500.9% General and administrative expenses Restructuring charges 79.1% 0.0% 20.9% 79.7% 0.0% 20.3% n)% 100% 38.3% Total operating expenses Income from equity investees Segment profit margin Segment asset turnover 0.9 146 29.3% 392.5% 94.3% 100.0% 87,4% 2.2% 10.1% -1.296 38.6% 3s8% 7,857 7.623 7580 882 872 847 666 512 439 N/A. N/A N/A Stores owned Stores licensed 5,046 4,776 5,044 987 862 82628 2334 2141 NA NA NA 12903 12.399 12624 1.869 1734 1.654 3 2846 2580 Total stores Total revenues/Total stores Operating income/Total stores Assets/Total stores Total revenues increase Comparable stores sales increase" $770,053 $731,107 $672410 $610,647 $603,691 $576,421 $219,004 $194062 $157868 $160,769 $148,585 $127,281 5564 23,241 $ (3325) $ 76958 $ 67850 s $170425 $148,552 $145,588 $250,080 $229,642 $287 666 $199,332 $189,740 $171,318 98% 32.2% 30.6% 3S6% -685% 5% 15% 22% 11% 96% 68% 643.8% 90% Comparable stores represent stores open at least 13 months