Required: Evaluate the company'sperformance in terms of.

1. Liquidity 2. Profitability 3. Long-term Solvency 4. Adequacy of cash fiows 5. Market strength

Starbucks Corporation Consolidated Income Statements For the Years Ended September 28,2016, and September 30,2015 6 (Dollar amounts in millions Increase (Decrease) except per share amounts) 2016 2015 Amount Percentage Net revenues $10,383.00 $9,411.50 $971.50 $10.30 Cost of sales, including occupancy costs 4,645.3 3999.1 646.2 16.2 Gross margin $5,737.30 $5412.4 325.3 Operating expenses Store operating expenses $3745.1 $3.215.90 529.2 16.5 Other operating expenses 330.1 294.2 35.9 12.2 Depreciation and amortization expenses 549.3 467.2 82.1 17.6 General and administrative expense 456 489.2 -33.2 -6.8 Restructuring charges 266.9 266.9 100 Total operating expenses 5347.4 4466.5 880.9 19.7 Operating income $390.3 $945.90 555.6 -58.7 Other income, net 122.6 148.4 -25.8 -17.4 interest expense -53.4 -38 - 15.4 40.5 Income before taxes $459.5 $1056.3 -596.8 -56.5 Provision for income taxes 144 383.7 -239.7 -62.5 Income before cumulative change, net of taxes $315.5 $672.6 -357.1 -53.1 Cumulative effect of accounting change, net of taxes 0 Net income $315.5 $672.6 -357.1 -53.1 Percommon share: Net income per common share before cumulative of change in accounting principle- basic 0.43 -0.47 -52.2 Cumulative effect of accounting change, net of taxes 0 Net income per common share - basic 0.43 0.9 -0.47 -52.2 Net income per common share before cumulative effect of change in accounting principle-diluted 0.43 0.87 -0.44 -50.6 Cumulative effect of accounting change, net of taxes 0 Net income per common share- diluted 0.43 0.87 -0.44 -50.6 Shares used in calculation of net income per common share-basic 731.5 749.8 - 183 -2.4 Shares used in calculation of net income per common share-diluted 741.7 770.1 -28.4 0.9 -- - -3.7 Starbucks Corporation Consolidated Balance Sheets September 28, 2016, and September 30, 2015 Increase (Decrease) (Dollar amounts in millions) 2016 2015 Amount Percentage Assets Current assets: Cash and cash equivalents $269.8 $281.3 $(11.5) Short-term investments 52.5 157.4 (104.9) (66.6) Accounts receivable, net 329.5 287.9 41.6 14.4 Inventories 692.8 691.7 1.1 0.2 Prepaid and other current assets 169.2 148.8 20.4 13.7 Deferred income taxes, net 234.2 129.4 104.8 81.0 Total Current assets $1,748.0 $1,696.5 $51.5 3.0 Long-term investments 374.0 279.9 94.1 33.6 2,956.4 2,890.4 66.0 2.3 Property, plant and equipment, net Other assets 261.1 219.4 41.7 19.0 Other intangible assets 66.6 42.1 24.5 58.2 Goodwill Total assets 266.5 $5,672.6 215.6 $5.343.2 50.9 $328.7 23.6 6.2 Liabilities and Shareholder's Equity Current liabilities: Commercial paper and short-term borrowings $713.0 $710.3 Accounts payable 324.9 390.8 Accrued compensation and related costs 253.6 292.4 $2.7 0.4 (65.9) (16.9) (38.8) (13.3) Accrued occupancy costs 136.1 74.6 61.5 82.4 Accrued taxes 76.1 92.5 (16.4) (17.7) Insurance reserves 152.5 137.0 15.5 11.3 Other accrued expenses 164.4 160.3 4.1 2.6 368.4 296.9 71.5 24.1 0.7 0.8 10.11 (12.5) Deferred revenue Current portion of long-term debt Total current liabilities Long-term debt and other liabilities Shareholder's equity $2,189.7 $2,155.6 $34.1 1.6 992.0 904.2 87.8 9.7 2,490.9 2.284.1 206.8 9.1 Total liabilities and shareholder's equity $5,672.6 $5,343.9 $328.7 6.2 Related Ratios: 2016 Current ratio 0.8 times Quick ratio 0.3 times Receivable turnover 33.6 times Day's sales uncollected 10.9 days Inventory turnover 6.7 times Day's inventory on hand 54.5 days Payablestumover 13.0 times Day's payable 28.1 days Profit margin 3.0%. Asset tumover 1.9 times Return on assets 5.7% Return on equity 13.2% Debt to equity 1.3 times Interest coverage ratio 9.6 times Cash flow yield 4.0 times Cash flow to sales 12.1% Cash flow to assets 22.9% Free cash flow $274.2 Price Earnings ratio 35.5 times Required: Evaluate the company's performance in terms of 1. Liquidity (10 points) 2. Profitability (10 points) 3. Long-term Solvency (10 points) 4. Adequacy of cash flows (10 points) 5. Market strength (10 points) 2015 0.8 times 0.3 times 36.7 times 9.9 days 6.0 times 60.8 days 11.1 times 32.9 days 7.1% 1.9 times 13.8% 29.8% 1.3 times 28.8 times 2.0 times 14.1% 27.2%. $250.9 30. 1 times Starbucks Corporation Consolidated Income Statements For the Years Ended September 28,2016, and September 30,2015 6 (Dollar amounts in millions Increase (Decrease) except per share amounts) 2016 2015 Amount Percentage Net revenues $10,383.00 $9,411.50 $971.50 $10.30 Cost of sales, including occupancy costs 4,645.3 3999.1 646.2 16.2 Gross margin $5,737.30 $5412.4 325.3 Operating expenses Store operating expenses $3745.1 $3.215.90 529.2 16.5 Other operating expenses 330.1 294.2 35.9 12.2 Depreciation and amortization expenses 549.3 467.2 82.1 17.6 General and administrative expense 456 489.2 -33.2 -6.8 Restructuring charges 266.9 266.9 100 Total operating expenses 5347.4 4466.5 880.9 19.7 Operating income $390.3 $945.90 555.6 -58.7 Other income, net 122.6 148.4 -25.8 -17.4 interest expense -53.4 -38 - 15.4 40.5 Income before taxes $459.5 $1056.3 -596.8 -56.5 Provision for income taxes 144 383.7 -239.7 -62.5 Income before cumulative change, net of taxes $315.5 $672.6 -357.1 -53.1 Cumulative effect of accounting change, net of taxes 0 Net income $315.5 $672.6 -357.1 -53.1 Percommon share: Net income per common share before cumulative of change in accounting principle- basic 0.43 -0.47 -52.2 Cumulative effect of accounting change, net of taxes 0 Net income per common share - basic 0.43 0.9 -0.47 -52.2 Net income per common share before cumulative effect of change in accounting principle-diluted 0.43 0.87 -0.44 -50.6 Cumulative effect of accounting change, net of taxes 0 Net income per common share- diluted 0.43 0.87 -0.44 -50.6 Shares used in calculation of net income per common share-basic 731.5 749.8 - 183 -2.4 Shares used in calculation of net income per common share-diluted 741.7 770.1 -28.4 0.9 -- - -3.7 Starbucks Corporation Consolidated Balance Sheets September 28, 2016, and September 30, 2015 Increase (Decrease) (Dollar amounts in millions) 2016 2015 Amount Percentage Assets Current assets: Cash and cash equivalents $269.8 $281.3 $(11.5) Short-term investments 52.5 157.4 (104.9) (66.6) Accounts receivable, net 329.5 287.9 41.6 14.4 Inventories 692.8 691.7 1.1 0.2 Prepaid and other current assets 169.2 148.8 20.4 13.7 Deferred income taxes, net 234.2 129.4 104.8 81.0 Total Current assets $1,748.0 $1,696.5 $51.5 3.0 Long-term investments 374.0 279.9 94.1 33.6 2,956.4 2,890.4 66.0 2.3 Property, plant and equipment, net Other assets 261.1 219.4 41.7 19.0 Other intangible assets 66.6 42.1 24.5 58.2 Goodwill Total assets 266.5 $5,672.6 215.6 $5.343.2 50.9 $328.7 23.6 6.2 Liabilities and Shareholder's Equity Current liabilities: Commercial paper and short-term borrowings $713.0 $710.3 Accounts payable 324.9 390.8 Accrued compensation and related costs 253.6 292.4 $2.7 0.4 (65.9) (16.9) (38.8) (13.3) Accrued occupancy costs 136.1 74.6 61.5 82.4 Accrued taxes 76.1 92.5 (16.4) (17.7) Insurance reserves 152.5 137.0 15.5 11.3 Other accrued expenses 164.4 160.3 4.1 2.6 368.4 296.9 71.5 24.1 0.7 0.8 10.11 (12.5) Deferred revenue Current portion of long-term debt Total current liabilities Long-term debt and other liabilities Shareholder's equity $2,189.7 $2,155.6 $34.1 1.6 992.0 904.2 87.8 9.7 2,490.9 2.284.1 206.8 9.1 Total liabilities and shareholder's equity $5,672.6 $5,343.9 $328.7 6.2 Related Ratios: 2016 Current ratio 0.8 times Quick ratio 0.3 times Receivable turnover 33.6 times Day's sales uncollected 10.9 days Inventory turnover 6.7 times Day's inventory on hand 54.5 days Payablestumover 13.0 times Day's payable 28.1 days Profit margin 3.0%. Asset tumover 1.9 times Return on assets 5.7% Return on equity 13.2% Debt to equity 1.3 times Interest coverage ratio 9.6 times Cash flow yield 4.0 times Cash flow to sales 12.1% Cash flow to assets 22.9% Free cash flow $274.2 Price Earnings ratio 35.5 times Required: Evaluate the company's performance in terms of 1. Liquidity (10 points) 2. Profitability (10 points) 3. Long-term Solvency (10 points) 4. Adequacy of cash flows (10 points) 5. Market strength (10 points) 2015 0.8 times 0.3 times 36.7 times 9.9 days 6.0 times 60.8 days 11.1 times 32.9 days 7.1% 1.9 times 13.8% 29.8% 1.3 times 28.8 times 2.0 times 14.1% 27.2%. $250.9 30. 1 times