Financial Statement Analysis Package (FSAP): Version 7.

0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column J to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

Company Name: Starbucks
Year (Most recent in far right column.) 2003 2004 2005 2006 2007

BALANCE SHEET DATA

Assets:
Cash and Cash Equivalents 201 145 174 313 281
Marketable Securities 149 508 133 141 157
Accounts Receivable - Net 114 140 191 224 288
Inventories 343 423 546 636 692
Prepaid Expenses and Other Current Assets 55 71 94 127 149
Deferred Tax Assets - Current 61 64 71 89 129
Other Current Assets (1)
Other Current Assets (2)
Current Assets 924 1,351 1,209 1,530 1,696
Long Term Investments 136 135 60 6 21
Property, Plant & Equipment - at cost 2,435 2,878 3,468 4,258 5,307
<Accumulated Depreciation> -1,050 -1,326 -1,626 -1,970 -2,416
Amortizable Intangible Assets (net) 25 27 35 38 42
Goodwill and Nonamortizable Intangibles 63 69 92 161 216
Deferred Tax Assets - Noncurrent
Equity and Other Investments 144 168 201 219 259
Other Non-Current Assets (2) 52 86 73 187 219
Total Assets 2,730 3,387 3,514 4,429 5,344
Liabilities and Equities:
Accounts Payable - Trade 169 199 221 341 391
Current Accrued Liabilities 366 425 553 662 757
Notes Payable and Short Term Debt 0 0 277 700 710
Current Maturities of Long Term Debt 1 1 1 1 1
Deferred Tax Liabilities - Current
Income Taxes Payable
Deferred Revenue 73 121 175 232 297
Other Current Liabilities (2)
Current Liabilities 609 746 1,227 1,936 2,156
Long Term Debt 4 4 3 2 550
Long Term Accrued Liabilities 1 145 194 263 354
Deferred Tax Liabilities - Noncurrent 33 22 0 0 0
Other Non-Current Liabilities (1)
Other Non-Current Liabilities (2)
Total Liabilities 648 917 1,423 2,201 3,060
Minority Interest
Preferred Stock

Common Stock + Paid in Capital 998 996 130 40 40

Retained Earnings <Deficit> 1,070 1,445 1,939 2,151 2,189
Accum. Other Comprehensive Income <Loss> 14 29 21 37 55
Other Equity Adjustments
<Treasury Stock>
Common Shareholders' Equity 2,082 2,470 2,091 2,229 2,284
Total Liabilities and Equities 2,730 3,387 3,514 4,429 5,344
INCOME STATEMENT DATA 2003 2004 2005 2006 2007

Revenues 4,076 5,294 6,369 7,787 9,411

<Cost of Sales and Occupancy> -1,681 -2,191 -2,605 -3,179 -3,999
Gross Profit 2,394 3,103 3,764 4,608 5,412
<Store Operating Expenses> -1,380 -1,790 -2,166 -2,688 -3,216
<Other Operating Expenses> -141 -172 -193 -254 -294
<Depreciation and Amortization> -245 -289 -340 -387 -467
<General and Administrative Expenses> -245 -304 -362 -479 -489
<Restructuring Charges>
Income from equity investees 38 59 77 94 108
Other Operating Income (2)
Non-Recurring Operating Gains
<Non-Recurring Operating Losses>
Operating Profit 422 607 780 894 1,054
Interest Income 12 15 17 21 41
<Interest Expense> 0 0 -1 -8 -38
Income <Loss> from Equity Affiliates
Other Income or Gains
<Other Expenses or Losses>
Income before Tax 434 621 796 906 1,056
<Income Tax Expense> -168 -232 -302 -325 -384
<Minority Interest in Earnings>
Income <Loss> from Discontinued Operations
Extraordinary Gains <Losses>
Changes in Acctg. Principles -17
Net Income (computed) 266 388 494 564 673
Net Income (enter reported amount as a check) 266 388 494 564 673

Other Comprehensive Income Items 23 15 -8 16 17

Comprehensive Income 288 403 486 581 690
STATEMENT OF CASH FLOWS DATA 2003 2004 2005 2006 2007

Net Income 266 388 494 564 673

Add back Depreciation and Amortization Expenses 259 305 367 413 491
Add back Stock-Based Compensation Expense 106 104
Deferred Income Taxes -6 -3 -31 -84 -37
<Income from Equity Affiliates, net of Dividends> -23 -33 -19 -11 0
<Increase> Decrease in Accounts Receivable -49
<Increase> Decrease in Inventories -65 -78 -122 -86 -49
<Increase> Decrease in Prepaid Expenses -13 -17
<Increase> Decrease in Tax Benefit from Exercise of Stock 37 63 110 -116 -85
Net Amortization of Trading Securities 6 12 10 2 1
Increase <Decrease> in Accounts Payable 25 28 10 105 36
Increase <Decrease> in Deferred Revenue 31 48 53 57 63
Increase <Decrease> in Accruals 46 80 23 187 125
Provision for impairment and asset disposal 8 14 20 20 26
Increase <Decrease> in Other Non-Current Liabilities (2)
Other Addbacks to Net Income 17
<Other Subtractions from Net Income>
Other Operating Cash Flows -7 -16 57 -41 -16
Net CF from Operations 563.752 790.238 923.452 1,132 1,331
Proceeds from Sales of Property, Plant, and Equipment
<Property, Plant, and Equipment Acquired> -357 -386 -644 -771 -1,080
<Increase> Decrease in Marketable Securities -54 -212 452 61 -12
Investments Sold
<Investments Acquired> -117 -72 -29 -131 -110
Distributions from equity investees 29 38
Other Investment Transactions (2)
Net CF from Investing Activities -499 -632 -221 -841 -1,202
Increase in Short-Term Borrowing 277 423 18,081
<Decrease in Short-Term Borrowing> -18,071
Increase in Long-Term Borrowing 549
<Decrease in Long-Term Borrowing> -1 -1 -1 -1 -1
Issue of Capital Stock 107 138 164 159 177
Proceeds from Stock Option Exercises 117 93
<Share Repurchases - Treasury Stock> -76 -203 -1,114 -854 -997
<Dividend Payments>
Other Financing Transactions (1)
Other Financing Transactions (2) -4
Net CF from Financing Activities 31 -67 -674 -155 -172
Effects of exchange rate changes on cash 3 3 0 4 11
Net Change in Cash 99 -56 29 139 -31
Cash and Cash Equivalents, Beginning of Year 201 145 174 313
Cash and Cash Equivalents, End of Year 145 174 313 281
SUPPLEMENTAL DATA 2003 2004 2005 2006 2007

Statutory Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0%

Average Tax Rate Implied from Income Statement Data 38.7% 37.5% 37.9% 35.8% 36.3%
After-tax Effects of Nonrecurring and Unusual Items on
Net Income 0 0 0 -17 0
Total Deferred Tax Assets (from above) 61 64 71 89 129
Deferred Tax Asset Valuation Allowance -14 -8 -8 -9 -14
Allowance for Uncollectible Accounts Receivable 5 2 3 4 3
Depreciation Expense 245 289 340 387 467
Preferred Stock Dividends (total, if any) 0 0 0 0 0
Common Shares Outstanding 787 795 767 757 738
Earnings per Share (basic) 0.35 0.50 0.63 0.74 0.90
Common Dividends per Share 0.00 0.00 0.00 0.00 0.00
Market Price per Share at Fiscal Year End 14.62 23.52 25.20 33.62 26.32

FINANCIAL DATA CHECKS

Assets - Liabilities - Equities 0 0 0 0 0
Net Income (computed) - Net Income (reported) 0 0 0 0 0
Cash Changes 0 0 0 0
 2008

270
53
330
693
169
234

1,748
71
5,717
-2,761
67
267

303
261
5,673

325
783
713
1

368

2,190
550
442
0

3,182

40
2,402
48
2,491
5,673
 2008

10,383
-4,645
5,738
-3,745
-330
-549
-456
-267
114

504
9
-53

460
-144

316
316

-6
309
 2008

316
605
75
-117
-9

-1

-11
-
-64
72
7
325

60
1,259

-985
24

-126

-1,087
66,299
-66,297

-1
112
15
-311

-2
-185
1
-11
281
270
 2008

35.0%
31.3%

0
234
-20
5
549
0
736
0.43
0.00
14.17

0
0
0
Financial Statement Analysis Package (FSAP): Version 7.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column J to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

Company Name: Starbucks

DATA CHECKS
Assets - Liabilities - Equities -0.479 -0.199 0.225 -0.148 -0.019
Net Income (computed) - Net Income (reported) -0.349 0.165 -0.156 0.045 -0.085
Cash Changes 0 -0.156 0.045 -0.085
In the computations below, a #DIV/0! message indicates that a ratio denominator is zero.

PROFITABILITY FACTORS:
Year 2004 2005 2006 2007 2008

RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 7.3% 7.8% 7.3% 7.4% Note:
x Asset Turnover 1.7 1.8 2.0 1.9 2008 Ratios must be calculated.
= Return on Assets 12.7% 14.4% 14.3% 14.3%

RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 7.3% 7.8% 7.5% 7.4%
x Asset Turnover 1.7 1.8 2.0 1.9
= Return on Assets 12.7% 14.4% 14.8% 14.3%

RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 7.3% 7.8% 7.2% 7.1%
x Asset Turnover 1.7 1.8 2.0 1.9
x Capital Structure Leverage 1.3 1.5 1.8 2.2
= Return on Common Equity 17.1% 21.7% 26.1% 29.8%

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 7.3% 7.8% 7.5% 7.1%
x Asset Turnover 1.7 1.8 2.0 1.9
x Capital Structure Leverage 1.3 1.5 1.8 2.2
= Return on Common Equity 17.1% 21.7% 26.9% 29.8%

OPERATING PERFORMANCE:
Gross Profit / Revenues 58.6% 59.1% 59.2% 57.5%
Operating Profit / Revenues 11.5% 12.3% 11.5% 11.2%
Net Income / Revenues 7.3% 7.8% 7.2% 7.1%
Comprehensive Income / Revenues 7.6% 7.6% 7.5% 7.3%

PERSISTENT OPERATING PERFORMANCE (excluding the effects of nonrecurring items):

Persistent Operating Profit / Revenues 11.5% 12.3% 11.5% 11.2%
Persistent Net Income / Revenues 7.3% 7.8% 7.5% 7.1%

GROWTH:
Revenue Growth 29.9% 20.3% 22.3% 20.9%
Net Income Growth 46.1% 27.3% 14.2% 19.2%
Persistent Net Income Growth 46.1% 27.3% 17.6% 15.7%

OPERATING CONTROL:
Gross Profit Control Index 99.8% 100.8% 100.1% 97.2%
Operating Profit Contol Index 110.6% 107.0% 93.7% 97.5%
Profit Margin Decomposition:
Gross Profit Margin 58.6% 59.1% 59.2% 57.5%
Operating Profit Index 19.5% 20.7% 19.4% 19.5%
Leverage Index 102.3% 102.0% 101.4% 100.2%
Tax Index 62.5% 62.1% 62.3% 63.7%
Net Profit Margin 7.3% 7.8% 7.2% 7.1%
Comprehensive Income Performance:
Comprehensive Income Index 103.9% 98.3% 102.9% 102.6%
Comprehensive Income Margin 7.6% 7.6% 7.5% 7.3%

RISK FACTORS:
Year 2004 2005 2006 2007 2008

LIQUIDITY:
Current Ratio 1.81 0.99 0.79 0.79
Quick Ratio 1.06 0.41 0.35 0.34
Operating Cash Flow to Current Liabilities 116.6% 93.6% 71.6% 65.1%

ASSET TURNOVER:
Accounts Receivable Turnover na 5.9 5.8 5.5 Uses specialty revenues only.
Days Receivables Held na 62 63 66
Inventory Turnover 5.7 5.4 5.4 6.0
Days Inventory Held 64 68 68 61
Accounts Payable Turnover 12.3 13.0 11.6 11.1
Days Payables Held 30 28 31 33
Net Working Capital Days na 102 99 94
Revenues / Average Net Fixed Assets 3.61 3.75 3.77 3.63
Cash Turnover 30.6 40.0 32.0 31.7
Days Sales Held in Cash 11.9 9.1 11.4 11.5

SOLVENCY:
Total Liabilities / Total Assets 27.1% 40.5% 49.7% 57.3%
Total Liabilities / Shareholders' Equity 37.1% 68.1% 98.7% 134.0%
LT Debt / LT Capital 0.1% 0.1% 0.1% 19.4%
LT Debt / Shareholders' Equity 0.1% 0.1% 0.1% 24.1%
Operating Cash Flow to Total Liabilities 101.0% 78.9% 62.5% 50.6%
Interest Coverage Ratio (reported amounts) 1552.6 613.5 106.8 28.7
Interest Coverage ratio (recurring amounts) 1552.6 613.5 108.9 28.7

RISK FACTORS:
Bankruptcy Predictors:
Altman Z Score 15.22 11.48 9.95 6.72 4.59
Bankruptcy Probability 0.00% 0.00% 0.00% 0.00% 0.02%
Earnings Manipulation Predictors:
Beneish Earnings Manipulation Score -2.82 -2.90 -2.89 -2.84 -3.06
Earnings Manipulation Probability 0.24% 0.19% 0.19% 0.23% 0.11%

STOCK MARKET-BASED RATIOS:

Stock Returns 60.9% 7.1% 33.4% -21.7% -46.2%
Price-Earnings Ratio (reported amounts) 47.52 40.00 45.43 29.24 32.95
Price-Earnings Ratio (recurring amounts) 47.52 40.00 44.08 29.24 32.95
Market Value to Book Value Ratio 7.6 9.3 11.4 8.5 4.2
INCOME STATEMENT ITEMS AS A PERCENT OF REVENUES:
Year 2004 2005 2006 2007 2008

Revenues 100.0% 100.0% 100.0% 100.0% 100.0%

<Cost of Sales and Occupancy> -41.4% -40.9% -40.8% -42.5% -44.7%
Gross Profit 58.6% 59.1% 59.2% 57.5% 55.3%
<Store Operating Expenses> -33.8% -34.0% -34.5% -34.2% -36.1%
<Other Operating Expenses> -3.2% -3.0% -3.3% -3.1% -3.2%
<Depreciation and Amortization> -5.5% -5.3% -5.0% -5.0% -5.3%
<General and Administrative Expenses> -5.7% -5.7% -6.2% -5.2% -4.4%
<Restructuring Charges> 0.0% 0.0% 0.0% 0.0% -2.6%
Income from equity investees 1.1% 1.2% 1.2% 1.1% 1.1%
Other Operating Income (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Non-Recurring Operating Gains 0.0% 0.0% 0.0% 0.0% 0.0%
<Non-Recurring Operating Losses> 0.0% 0.0% 0.0% 0.0% 0.0%
Operating Profit 11.5% 12.3% 11.5% 11.2% 4.9%
Interest Income 0.3% 0.3% 0.3% 0.4% 0.1%
<Interest Expense> 0.0% 0.0% -0.1% -0.4% -0.5%
Income <Loss> from Equity Affiliates 0.0% 0.0% 0.0% 0.0% 0.0%
Other Income or Gains 0.0% 0.0% 0.0% 0.0% 0.0%
<Other Expenses or Losses> 0.0% 0.0% 0.0% 0.0% 0.0%
Income before Tax 11.7% 12.5% 11.6% 11.2% 4.4%
<Income Tax Expense> -4.4% -4.7% -4.2% -4.1% -1.4%
<Minority Interest in Earnings> 0.0% 0.0% 0.0% 0.0% 0.0%
Income <Loss> from Discontinued Operations 0.0% 0.0% 0.0% 0.0% 0.0%
Extraordinary Gains <Losses> 0.0% 0.0% 0.0% 0.0% 0.0%
Changes in Acctg. Principles 0.0% 0.0% -0.2% 0.0% 0.0%
Net Income (computed) 7.3% 7.8% 7.2% 7.1% 3.0%

Other Comprehensive Income Items 0.3% -0.1% 0.2% 0.2% -0.1%

Comprehensive Income 7.6% 7.6% 7.5% 7.3% 3.0%

INCOME STATEMENT ITEMS: GROWTH RATES

Year 2004 2005 2006 2007 2008
COMPOUND
GROWTH
YEAR TO YEAR GROWTH RATES: RATE
Revenues 29.9% 20.3% 22.3% 20.9% 10.3% 20.6%
<Cost of Sales and Occupancy> 30.3% 18.9% 22.0% 25.8% 16.2% 22.5%
Gross Profit 29.6% 21.3% 22.4% 17.5% 6.0% 19.1%
<Store Operating Expenses> 29.8% 21.0% 24.1% 19.6% 16.5% 22.1%
<Other Operating Expenses> 21.4% 12.2% 31.8% 16.0% 12.2% 18.5%
<Depreciation and Amortization> 18.2% 17.6% 13.8% 20.7% 17.6% 17.6%
<General and Administrative Expenses> 24.4% 18.8% 32.6% 2.0% -6.8% 13.3%
<Restructuring Charges> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Income from equity investees 53.7% 29.8% 22.6% 15.0% 5.2% 24.2%
Other Operating Income (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Non-Recurring Operating Gains #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<Non-Recurring Operating Losses> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Operating Profit 43.6% 28.7% 14.5% 17.9% -52.2% 3.6%
Interest Income 24.8% 17.9% 21.1% 96.1% -77.8% -5.0%
<Interest Expense> 33.3% 225.0% 546.2% 354.8% 39.8% 181.9%
Income <Loss> from Equity Affiliates #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other Income or Gains #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<Other Expenses or Losses> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Income before Tax 43.1% 28.3% 13.8% 16.6% -56.5% 1.2%
<Income Tax Expense> 38.4% 29.9% 7.5% 18.2% -62.5% -3.0%
<Minority Interest in Earnings> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Income <Loss> from Discontinued Operations #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Extraordinary Gains <Losses> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Changes in Acctg. Principles #DIV/0! #DIV/0! #DIV/0! -100.0% #DIV/0! #DIV/0!
Net Income (computed) 46.1% 27.3% 14.2% 19.2% -53.1% 3.5%

Other Comprehensive Income Items -34.2% -155.3% -297.6% 5.5% -135.8% -177.1%
Comprehensive Income 39.8% 20.5% 19.5% 18.8% -55.2% 1.4%

COMMON SIZE BALANCE SHEET - AS A PERCENT OF TOTAL ASSETS

Year 2004 2005 2006 2007 2008

Assets:
Cash and Cash Equivalents 4.3% 4.9% 7.1% 5.3% 4.8%
Marketable Securities 15.0% 3.8% 3.2% 2.9% 0.9%
Accounts Receivable - Net 4.1% 5.4% 5.1% 5.4% 5.8%
Inventories 12.5% 15.5% 14.4% 12.9% 12.2%
Prepaid Expenses and Other Current Assets 2.1% 2.7% 2.9% 2.8% 3.0%
Deferred Tax Assets - Current 1.9% 2.0% 2.0% 2.4% 4.1%
Other Current Assets (1) 0.0% 0.0% 0.0% 0.0% 0.0%
Other Current Assets (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Current Assets 39.9% 34.4% 34.5% 31.7% 30.8%
Long Term Investments 4.0% 1.7% 0.1% 0.4% 1.3%
Property, Plant & Equipment - at cost 85.0% 98.7% 96.1% 99.3% 100.8%
<Accumulated Depreciation> -39.2% -46.3% -44.5% -45.2% -48.7%
Amortizable Intangible Assets (net) 0.8% 1.0% 0.9% 0.8% 1.2%
Goodwill and Nonamortizable Intangibles 2.0% 2.6% 3.6% 4.0% 4.7%
Deferred Tax Assets - Noncurrent 0.0% 0.0% 0.0% 0.0% 0.0%
Equity and Other Investments 5.0% 5.7% 4.9% 4.8% 5.3%
Other Non-Current Assets (2) 2.5% 2.1% 4.2% 4.1% 4.6%
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%

Liabilities and Equities:

Accounts Payable - Trade 5.9% 6.3% 7.7% 7.3% 5.7%
Current Accrued Liabilities 12.5% 15.7% 14.9% 14.2% 13.8%
Notes Payable and Short Term Debt 0.0% 7.9% 15.8% 13.3% 12.6%
Current Maturities of Long Term Debt 0.0% 0.0% 0.0% 0.0% 0.0%
Deferred Tax Liabilities - Current 0.0% 0.0% 0.0% 0.0% 0.0%
Income Taxes Payable 0.0% 0.0% 0.0% 0.0% 0.0%
Deferred Revenue 3.6% 5.0% 5.2% 5.6% 6.5%
Other Current Liabilities (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Current Liabilities 22.0% 34.9% 43.7% 40.3% 38.6%
Long Term Debt 0.1% 0.1% 0.0% 10.3% 9.7%
Long Term Accrued Liabilities 4.3% 5.5% 5.9% 6.6% 7.8%
Deferred Tax Liabilities - Noncurrent 0.6% 0.0% 0.0% 0.0% 0.0%
Other Non-Current Liabilities (1) 0.0% 0.0% 0.0% 0.0% 0.0%
Other Non-Current Liabilities (2) 0.0% 0.0% 0.0% 0.0% 0.0%
Total Liabilities 27.1% 40.5% 49.7% 57.3% 56.1%
Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%
Preferred Stock 0.0% 0.0% 0.0% 0.0% 0.0%

Common Stock + Paid in Capital 29.4% 3.7% 0.9% 0.8% 0.7%

Retained Earnings <Deficit> 42.7% 55.2% 48.6% 41.0% 42.4%
Accum. Other Comprehensive Income <Loss> 0.9% 0.6% 0.8% 1.0% 0.9%
Other Equity Adjustments 0.0% 0.0% 0.0% 0.0% 0.0%
<Treasury Stock> 0.0% 0.0% 0.0% 0.0% 0.0%
Common Shareholders' Equity 72.9% 59.5% 50.3% 42.7% 43.9%
Total Liabilities and Equities 100.0% 100.0% 100.0% 100.0% 100.0%

BALANCE SHEET ITEMS: GROWTH RATES

Year 2004 2005 2006 2007 2008
COMPOUND
GROWTH
Assets: YEAR TO YEAR GROWTH RATES: RATE
Cash and Cash Equivalents -27.8% 19.8% 79.9% -10.0% -4.1% 6.1%
Marketable Securities 240.7% -73.8% 5.9% 11.6% -66.7% -18.8%
Accounts Receivable - Net 22.5% 36.0% 17.6% 28.4% 14.4% 23.6%
Inventories 23.2% 29.3% 16.5% 8.7% 0.2% 15.1%
Prepaid Expenses and Other Current Assets 29.3% 32.4% 34.4% 17.2% 13.7% 25.1%
Deferred Tax Assets - Current 3.6% 11.2% 25.4% 45.8% 80.9% 30.7%
Other Current Assets (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other Current Assets (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current Assets 46.2% -10.5% 26.5% 10.9% 3.0% 13.6%
Long Term Investments -0.7% -55.3% -90.4% 261.8% 239.6% -12.1%
Property, Plant & Equipment - at cost 18.2% 20.5% 22.8% 24.6% 7.7% 18.6%
<Accumulated Depreciation> 26.3% 22.6% 21.2% 22.7% 14.3% 21.3%
Amortizable Intangible Assets (net) 7.4% 32.1% 7.2% 10.8% 58.4% 21.7%
Goodwill and Nonamortizable Intangibles 8.9% 34.1% 74.6% 33.5% 23.6% 33.3%
Deferred Tax Assets - Noncurrent #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Equity and Other Investments 16.3% 20.1% 8.8% 18.1% 16.9% 16.0%
Other Non-Current Assets (2) 64.2% -14.8% 156.4% 17.4% 19.0% 38.0%
Total Assets 24.1% 3.8% 26.0% 20.7% 6.2% 15.8%

Liabilities and Equities:

Accounts Payable - Trade 18.0% 10.8% 54.3% 14.6% -16.9% 14.0%
Current Accrued Liabilities 16.1% 30.1% 19.7% 14.3% 3.4% 16.4%
Notes Payable and Short Term Debt #DIV/0! #DIV/0! 152.7% 1.5% 0.4% #DIV/0!
Current Maturities of Long Term Debt 1.8% 1.8% 1.9% 1.7% -9.7% -0.6%
Deferred Tax Liabilities - Current #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Income Taxes Payable #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Deferred Revenue 65.2% 44.2% 32.5% 28.0% 24.1% 38.0%
Other Current Liabilities (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current Liabilities 22.5% 64.3% 57.8% 11.4% 1.6% 29.2%
Long Term Debt -16.9% -20.7% -31.8% 27996.1% -0.1% 163.2%
Long Term Accrued Liabilities 13745.3% 33.8% 35.9% 34.6% 24.9% 235.2%
Deferred Tax Liabilities - Noncurrent -34.5% -100.0% #DIV/0! #DIV/0! #DIV/0! -100.0%
Other Non-Current Liabilities (1) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other Non-Current Liabilities (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Liabilities 41.5% 55.3% 54.6% 39.0% 4.0% 37.5%
Minority Interest #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Preferred Stock #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Common Stock + Paid in Capital -0.2% -86.9% -69.2% 0.0% -0.1% -47.4%
Retained Earnings <Deficit> 35.1% 34.2% 10.9% 1.8% 9.7% 17.6%
Accum. Other Comprehensive Income <Loss> 105.2% -28.5% 78.2% 46.5% -11.4% 27.7%
Other Equity Adjustments #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
<Treasury Stock> #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Common Shareholders' Equity 18.6% -15.4% 6.6% 2.5% 9.1% 3.6%
Total Liabilities and Equities 24.0% 3.8% 26.0% 20.7% 6.2% 15.7%
RETURN ON ASSETS ANALYSIS (excluding the effects of non-recurring items)

Level 1 RETURN ON ASSETS

2006 2007 2008
14.8% 14.3% 0.0%

Level 2 PROFIT MARGIN FOR ROA ASSET TURNOVER

2006 2007 2008 2006 2007 2008
7.5% 7.4% 0.0% 2.0 1.9 0.0

Level 3 2006 2007 2008 2006 2007 2008 Turnovers:

Revenues 100.0% 100.0% 100.0% 5.8 5.5 0.0 Receivables
<Cost of Sales and Occupancy> -40.8% -42.5% -44.7% 5.4 6.0 0.0 Inventory
Gross Profit 59.2% 57.5% 55.3% 3.8 3.6 0.0 Fixed Assets
<Store Operating Expenses> -34.5% -34.2% -36.1%
Operating Profit 11.5% 11.2% 4.9%
Income before Tax 11.6% 11.2% 4.4%
<Income Tax Expense> -4.2% -4.1% -1.4%
Profit Margin for ROA* 7.5% 7.4% 0.0%
*
Amounts do not sum.

RETURN ON COMMON SHAREHOLDERS' EQUITY ANALYSIS (excluding the effects of non-recurring items)

RETURN ON COMMON SHAREHOLDERS' EQUITY

2006 2007 2008
26.9% 29.8% 0.0%

2006 2007 2008

PROFIT MARGIN FOR ROCE 7.5% 7.1% 0.0%
ASSET TURNOVER 2.0 1.9 -
CAPITAL STRUCTURE LEVERAGE 1.8 2.2 0.0
Financial Statement Analysis Package (FSAP): Version 7.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski, and Mark Bradshaw

The FSAP User Guides appear in column M to the right.

FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS

Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

Row Format: Row Format:

Actual Amounts Forecast Amounts Year +6 and beyond:
Common Size Percentage Forecast assumption Long-Run Growth Rate: 3.0%
Rate of Change Percentage Forecast assumption explanation Long-Run Growth Factor: 103.0%

Actuals Forecasts
Year 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
INCOME STATEMENT
Revenues 7,787 9,411 10,383 0 0 0 0 0 0
common size 100.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 20.9% 10.3% See Forecast Development worksheet for details.
<Cost of Sales and Occupancy> -3,179 -3,999 -4,645 0 0 0 0 0 0
common size -40.8% -42.5% -44.7% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 25.8% 16.2% Explain assumptions.
Gross Profit 4,608 5,412 5,738 0 0 0 0 0 0
common size 59.2% 57.5% 55.3% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 17.5% 6.0% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 <Store Operating Expenses> -2,688 -3,216 -3,745 0 0 0 0 0 0
common size -34.5% -34.2% -36.1% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 19.6% 16.5% Explain assumptions.
<Other Operating Expenses> -254 -294 -330 0 0 0 0 0 0
common size -3.3% -3.1% -3.2% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 16.0% 12.2% Explain assumptions.
<Depreciation and Amortization> -387 -467 -549 0 0 0 0 0 0
common size -5.0% -5.0% -5.3%
rate of change 20.7% 17.6% See depreciation schedule in Forecast Development.
<General and Administrative Expenses> -479 -489 -456 0 0 0 0 0 0
common size -6.2% -5.2% -4.4% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 2.0% -6.8% Explain assumptions.
<Restructuring Charges> 0 0 -267 0 0 0 0 0 0
common size 0.0% 0.0% -2.6% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
Income from equity investees 94 108 114 0 0 0 0 0 0
common size 1.2% 1.1% 1.1% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 15.0% 5.2% Explain assumptions.
Other Operating Income (2) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
Non-Recurring Operating Gains 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
<Non-Recurring Operating Losses> 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Operating Profit 894 1,054 504 0 0 0 0 0 0
common size 11.5% 11.2% 4.9% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 17.9% -52.2% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 Interest Income 21 41 9 0 0 0 0 0 0
common size 0.3% 0.4% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 96.1% -77.8% Interest rate earned on average balance in cash, ST and LT securities.
<Interest Expense> -8 -38 -53 0 0 0 0 0 0
common size -0.1% -0.4% -0.5% 0.00% 0.00% 0.00% 0.00% 0.00%
rate of change 354.8% 39.8% Interest rate on average balance in long-term debt.
Income <Loss> from Equity Affiliates 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
Other Income or Gains 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
<Other Expenses or Losses> 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Income before Tax 906 1,056 460 0 0 0 0 0 0
common size 11.6% 11.2% 4.4% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 16.6% -56.5% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 <Income Tax Expense> -325 -384 -144 0 0 0 0 0 0
common size -4.2% -4.1% -1.4% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change 18.2% -62.5% Effective income tax rate assumptions.
<Minority Interest in Earnings> 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Income <Loss> from Discontinued Operations 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Extraordinary Gains <Losses> 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Changes in Acctg. Principles -17 0 0 0 0 0 0 0 0
common size -0.2% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change -100.0% #DIV/0! Explain assumptions
Net Income (computed) 564 673 316 0 0 0 0 0 0
common size 7.2% 7.1% 3.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 19.2% -53.1% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other Comprehensive Income Items 16 17 -6 0 0 0 0 0 0
0.2% 0.2% -0.1% 0.0 0.0 0.0 0.0 0.0
5.5% -135.8% Explain assumptions
Comprehensive Income 581 690 309 0 0 0 0 0 0
common size 7.5% 7.3% 3.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 18.8% -55.2% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

Row Format: Row Format:

Actual Amounts Forecast Amounts Year +6 and beyond:
Common Size Percent Forecast assumption Long-Run Growth Rate: 3.0%
Rate of Change Percent Forecast assumption explanation Long-Run Growth Factor: 103.0%

Actuals Forecasts
2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
BALANCE SHEET
ASSETS:
Cash and Cash Equivalents 313 281 270 0 0 0 0 0 0
common size 7.1% 5.3% 4.8% 0.0 0.0 0.0 0.0 0.0
rate of change -10.0% -4.1% Explain assumptions
Marketable Securities 141 157 53 0 0 0 0 0 0
common size 3.2% 2.9% 0.9% 0.0 0.0 0.0 0.0 0.0
rate of change 11.6% -66.7% Explain assumptions
Accounts Receivable - Net 224 288 330 0 0 0 0 0 0
common size 5.1% 5.4% 5.8% 0.0 0.0 0.0 0.0 0.0
rate of change 28.4% 14.4% Explain assumptions
Inventories 636 692 693 0 0 0 0 0 0
common size 14.4% 12.9% 12.2% 0.0 0.0 0.0 0.0 0.0
rate of change 8.7% 0.2% Explain assumptions
Prepaid Expenses and Other Current Assets 127 149 169 0 0 0 0 0 0
common size 2.9% 2.8% 3.0% 0.0 0.0 0.0 0.0 0.0
rate of change 17.2% 13.7% Explain assumptions
Deferred Tax Assets - Current 89 129 234 0 0 0 0 0 0
common size 2.0% 2.4% 4.1% 0.0 0.0 0.0 0.0 0.0
rate of change 45.8% 80.9% Explain assumptions
Other Current Assets (1) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Other Current Assets (2) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Current Assets 1,530 1,696 1,748 0 0 0 0 0 0
common size 34.5% 31.7% 30.8% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 10.9% 3.0% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 Long Term Investments 6 21 71 0 0 0 0 0 0
common size 0.1% 0.4% 1.3% 0.0 0.0 0.0 0.0 0.0
rate of change 261.8% 239.6% Explain assumptions
Property, Plant & Equipment - at cost 4,258 5,307 5,717 0 0 0 0 0 0
common size 96.1% 99.3% 100.8%
rate of change 24.6% 7.7% PP&E assumptions - see schedule in forecast development
<Accumulated Depreciation> -1,970 -2,416 -2,761 0 0 0 0 0 0
common size -44.5% -45.2% -48.7%
rate of change 22.7% 14.3% See depreciation schedule in forecast development worksheet.
Amortizable Intangible Assets (net) 38 42 67 0 0 0 0 0 0
common size 0.9% 0.8% 1.2% 0.0 0.0 0.0 0.0 0.0
rate of change 10.8% 58.4% Explain assumptions
Goodwill and Nonamortizable Intangibles 161 216 267 0 0 0 0 0 0
common size 3.6% 4.0% 4.7% 0.0 0.0 0.0 0.0 0.0
rate of change 33.5% 23.6% Explain assumptions
Deferred Tax Assets - Noncurrent 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Equity and Other Investments 219 259 303 0 0 0 0 0 0
common size 4.9% 4.8% 5.3% 0.0 0.0 0.0 0.0 0.0
rate of change 18.1% 16.9% Explain assumptions
Other Non-Current Assets (2) 187 219 261 0 0 0 0 0 0
common size 4.2% 4.1% 4.6% 0.0 0.0 0.0 0.0 0.0
rate of change 17.4% 19.0% Explain assumptions
Total Assets 4,429 5,344 5,673 0 0 0 0 0 0
common size 100.0% 100.0% 100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 20.7% 6.2% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 LIABILITIES:
Accounts Payable - Trade 341 391 325 0 0 0 0 0 0
common size 7.7% 7.3% 5.7% 0.0 0.0 0.0 0.0 0.0
rate of change 14.6% -16.9% Explain assumptions
Current Accrued Liabilities 662 757 783 0 0 0 0 0 0
common size 14.9% 14.2% 13.8% 0.0 0.0 0.0 0.0 0.0
rate of change 14.3% 3.4% Explain assumptions
Notes Payable and Short Term Debt 700 710 713 0 0 0 0 0 0
common size 15.8% 13.3% 12.6% 0.0 0.0 0.0 0.0 0.0
rate of change 1.5% 0.4% Explain assumptions
Current Maturities of Long Term Debt 1 1 1 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change 1.7% -9.7% Explain assumptions
Deferred Tax Liabilities - Current 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Income Taxes Payable 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
Deferred Revenue 232 297 368 0 0 0 0 0 0
common size 5.2% 5.6% 6.5% 0.0 0.0 0.0 0.0 0.0
rate of change 28.0% 24.1% Explain assumptions
Other Current Liabilities (2) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change #DIV/0! #DIV/0! Explain assumptions.
Current Liabilities 1,936 2,156 2,190 0 0 0 0 0 0
common size 43.7% 40.3% 38.6% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 11.4% 1.6% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Long Term Debt 2 550 550 0 0 0 0 0 0
common size 0.0% 10.3% 9.7% 0.0 0.0 0.0 0.0 0.0
rate of change 27996.1% -0.1% Explain assumptions
Long Term Accrued Liabilities 263 354 442 0 0 0 0 0 0
common size 5.9% 6.6% 7.8% 0.0 0.0 0.0 0.0 0.0
rate of change 34.6% 24.9% Explain assumptions
Deferred Tax Liabilities - Noncurrent 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Other Non-Current Liabilities (1) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Other Non-Current Liabilities (2) 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
Total Liabilities 2,201 3,060 3,182 0 0 0 0 0 0
common size 49.7% 57.3% 56.1% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 39.0% 4.0% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 SHAREHOLDERS' EQUITY
Minority Interest 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Minority interest assumptions
Preferred Stock 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Preferred stock assumptions

Common Stock + Paid in Capital 40 40 40 0 0 0 0 0 0

common size 0.9% 0.8% 0.7% 0.0 0.0 0.0 0.0 0.0
rate of change 0.0% -0.1% Explain assumptions
Retained Earnings <Deficit> 2,151 2,189 2,402 0 0 0 0 0 0
common size 48.6% 41.0% 42.4% 0.0 0.0 0.0 0.0 0.0
rate of change 1.8% 9.7% Explain assumptions
Accum. Other Comprehensive Income <Loss> 37 55 48 0 0 0 0 0 0
common size 0.8% 1.0% 0.9% 0.0 0.0 0.0 0.0 0.0
rate of change 46.5% -11.4% Add accumulated other comprehensive income items from income statement
Other Equity Adjustments 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change #DIV/0! #DIV/0! Explain assumptions
<Treasury Stock> 0 0 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0 0 0 0 0
rate of change #DIV/0! #DIV/0! Treasury stock repurchases, net of treasury stock reissues.
Common Shareholders' Equity 2,229 2,284 2,491 0 0 0 0 0 0
common size 50.3% 42.7% 43.9% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 2.5% 9.1% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Liabilities and Equities 4,429 5,344 5,673 0 0 0 0 0 0
common size 100.0% 100.0% 100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
rate of change 20.7% 6.2% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Check figures: Balance Sheet A=L+OE? 0 0 0 0 0 0 0 0 0
Initial adjustment needed to balance the balance sheet:
-2,402 0 0 0 0 0

Account adjusted: Dividends

Dividends forecasts:
Common Dividends: 0 0 0 0 0 0
0.0% 0.0% 0.0% 0.0% 0.0%
Assume zero dividend payout.
Preferred Dividends: 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0
Enter preferred stock dividend payments, if any.
Implied Dividends: 2,402 0 0 0 0 0
Implied dividend amount to balance the balance sheet.
Total Dividends: 2,402 0 0 0 0 0
Total dividend forecast amounts.
FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

Actuals Forecasts
IMPLIED STATEMENT OF CASH FLOWS 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6

Net Income 673 316 0 0 0 0 0 0

Add back Depreciation Expense (net) 446 345 -2,761 0 0 0 0 0
<Increase> Decrease in Receivables - Net -64 -42 330 0 0 0 0 0
<Increase> Decrease in Inventories -55 -1 693 0 0 0 0 0
<Increase> Decrease in Prepaid Expenses -22 -20 169 0 0 0 0 0
<Increase> Decrease in Other Curr. Assets (1) 0 0 0 0 0 0 0 0
<Increase> Decrease in Other Curr. Assets (2) 0 0 0 0 0 0 0 0
Increase <Decrease> in Accounts Payable - Trade 50 -66 -325 0 0 0 0 0
Increase <Decrease> in Current Accrued Liabilities 95 26 -783 0 0 0 0 0
Increase <Decrease> in Income Taxes Payable 0 0 0 0 0 0 0 0
Increase <Decrease> in Other Current Liabilities (1) 65 72 -368 0 0 0 0 0
Increase <Decrease> in Other Current Liabilities (2) 0 0 0 0 0 0 0 0
Net Change in Deferred Tax Assets and Liabilities -41 -105 234 0 0 0 0 0
Increase <Decrease> in Long-Term Accrued Liabilities 91 88 -442 0 0 0 0 0
Increase <Decrease> in Other Non-Current Liabilities (1) 0 0 0 0 0 0 0 0
Increase <Decrease> in Other Non-Current Liabilities (2) 0 0 0 0 0 0 0 0
Net Cash Flows from Operations 1,238 612 -3,254 0 0 0 0 0
<Increase> Decrease in Prop., Plant, & Equip. at cost -1,049 -411 5,717 0 0 0 0 0
<Increase> Decrease in Marketable Securities -16 105 53 0 0 0 0 0
<Increase> Decrease in Investment Securities -15 -50 71 0 0 0 0 0
<Increase> Decrease in Amortizable Intangible Assets (net) -4 -25 67 0 0 0 0 0
<Increase> Decrease in Goodwill and Nonamort. Intang. -54 -51 267 0 0 0 0 0
<Increase> Decrease in Equity Method Affiliates -40 -44 303 0 0 0 0 0
<Increase> Decrease in Other Non-Current Assets (2) -33 -42 261 0 0 0 0 0
Net Cash Flows from Investing -1,211 -517 6,738 0 0 0 0 0
Increase <Decrease> in Short-Term Debt 10 3 -714 0 0 0 0 0
Increase <Decrease> in Long-Term Debt 548 -1 -550 0 0 0 0 0
Increase <Decrease> in Minority Interest and Preferred Stock 0 0 0 0 0 0 0 0
Increase <Decrease> in Common Stock + Paid in Capital 0 0 -40 0 0 0 0 0
Increase <Decrease> in Accum. OCI and Other Equity Adjs. 17 -6 -48 0 0 0 0 0
Increase <Decrease> in Treasury Stock 0 0 0 0 0 0 0 0
Dividends -634 -102 -2,402 0 0 0 0 0
Net Cash Flows from Financing -59 -107 -3,754 0 0 0 0 0
Net Change in Cash -31 -11 -270 0 0 0 0 0
Check Figure:
Net change in cash - Change in cash balance 0 0 0 0 0 0 0 0
FSAP OUTPUT: FINANCIAL STATEMENT FORECASTS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

Actuals Forecasts
2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5 Year +6
FORECAST VALIDITY CHECK DATA:
GROWTH
Revenue Growth Rates: 22.3% 20.9% 10.3% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Net Income Growth Rates: 14.2% 19.2% -53.1% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Asset Growth Rates 26.0% 20.7% 6.2% -100.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

RETURN ON ASSETS (based on reported amounts):

Profit Margin for ROA 7.3% 7.4% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Asset Turnover 2.0 1.9 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
= Return on Assets 14.3% 14.3% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

RETURN ON ASSETS (excluding the effects of nonrecurring items):

Profit Margin for ROA 7.5% 7.4% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Asset Turnover 2.0 1.9 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
= Return on Assets 14.8% 14.3% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

RETURN ON COMMON EQUITY (based on reported amounts):

Profit Margin for ROCE 7.2% 7.1% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Asset Turnover 2.0 1.9 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Capital Structure Leverage 1.8 2.2 0.0 2.3 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
= Return on Common Equity 26.1% 29.8% 0.0% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

RETURN ON COMMON EQUITY (excluding the effects of nonrecurring items):

Profit Margin for ROCE 7.5% 7.1% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Asset Turnover 2.0 1.9 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
x Capital Structure Leverage 1.8 2.2 0.0 2.3 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
= Return on Common Equity 26.9% 29.8% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
 OPERATING PERFORMANCE:
Gross Profit / Revenues 59.2% 57.5% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Operating Profit Before Taxes / Revenues 11.5% 11.2% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

ASSET TURNOVER:
Revenues / Avg. Accounts Receivable 5.8 5.5 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
COGS / Average Inventory 5.4 6.0 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Revenues / Average Fixed Assets 3.8 3.6 0.0 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

LIQUIDITY:
Current Ratio 0.8 0.8 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Quick Ratio 0.4 0.3 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

SOLVENCY:
Total Liabilities / Total Assets 49.7% 57.3% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Liabilities / Total Equity 98.7% 134.0% 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Interest Coverage Ratio 106.8 28.7 0.0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Financial Statement Analysis Package (FSAP): Version 7.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column M to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

Company Name: Starbucks

Sales Revenue Forecast Development

Actuals Forecasts
Year 2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5

(input your forecast assumptions in the blue font cells)

Sales (in millions):
Retail 5,391.9 6,583.1 7,998.3 8,771.9 9,122.2 9,122.2 9,122.2 9,122.2 9,122.2
Specialty 977.4 1,203.8 1,413.2 1,611.1 1,662.8 1,662.8 1,662.8 1,662.8 1,662.8
Net Revenues 6,369.3 7,786.9 9,411.5 10,383.0 10,785.0 10,785.0 10,785.0 10,785.0 10,785.0 Note: Sales figures here simply assume no g
Implied sales growth forecasts: stores or same store sales. User must enter
Sales growth rates: 20.3% 22.3% 20.9% 10.3% 3.9% 0.0% 0.0% 0.0% 0.0% these amounts in schedules below.

Sales by Segment and Type: Starbucks: Sales Forecasts by Segment and Type
2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Retail
U.S. 4,539.5 5,495.2 6,560.9 6,997.7 7,219.6 7,219.6 7,219.6 7,219.6 7,219.6
International 852.5 1,087.9 1,437.4 1,774.2 1,902.5 1,902.5 1,902.5 1,902.5 1,902.5

Specialty
U.S. Licensed 278.0 369.2 439.2 504.2 531.1 531.1 531.1 531.1 531.1
Int'l. Licensed 145.7 186.1 220.8 274.8 299.6 299.6 299.6 299.6 299.6
Foodservice & CPG 553.6 648.6 753.2 832.1 832.1 832.1 832.1 832.1 832.1

Net Revenues 6,369.3 7,786.9 9,411.5 10,383.0 10,785.0 10,785.0 10,785.0 10,785.0 10,785.0

Sales per Average Store-Year by Segment and Type: Expectations for comparable store sales growth rates by type:
2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Retail
U.S. 0.981 1.032 1.048 0.997 0.997 0.997 0.997 0.997 0.997
growth 5.2% 1.5% -4.8% 0% 0% 0% 0% 0%
0.6%
International 0.782 0.825 0.914 0.961 0.961 0.961 0.961 0.961 0.961
growth 5.5% 10.7% 5.2% 0% 0% 0% 0% 0%
7.1%
Specialty
U.S. Licensed - 0.132 0.124 0.123 0.123 0.123 0.123 0.123 0.123
growth -5.6% -1.4% 0% 0% 0% 0% 0%

Int'l. Licensed - 0.098 0.093 0.096 0.096 0.096 0.096 0.096 0.096
growth -4.6% 2.3% 0% 0% 0% 0% 0%

Foodservice & CPG 553.6 648.6 753.2 832.1 832.1 832.1 832.1 832.1 832.1
growth 17.2% 16.1% 10.5% 0% 0% 0% 0% 0%
14.5%
Starbucks: Store Operating Data: Forecasts: Numbers of Stores
2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Percentage change in comparable store sales:
U.S. 9% 7% 4% -5%
International 6% 8% 7% 2%
Consolidated 8% 7% 5% -3%

New stores opened during the year: Expectations for net new stores to be opened each year:
openings: 0 0 0 0 0
U.S. (closings): 0 0 0 0 0
 Company-operated: 580 810 1,065 445 0 0 0 0 0

Licensed: 596 733 723 438 0 0 0 0 0

International
openings: 0 0 0 0 0
(closings): 0 0 0 0 0
Company-operated: 166 233 277 236 0 0 0 0 0

Licensed: 330 423 506 550 0 0 0 0 0

Totals
Company-operated: 746 1,043 1,342 681 - - - - -
Licensed: 926 1,156 1,229 988 - - - - -

Total stores opened 1,672 2,199 2,571 1,669 - - - - -

Stores open at year end: Implied Expectations for Total Stores to be Open:
U.S.
Company-operated: 4,918 5,728 6,793 7,238 7,238 7,238 7,238 7,238 7,238
Licensed: 2,435 3,168 3,891 4,329 4,329 4,329 4,329 4,329 4,329
International
Company-operated: 1,202 1,435 1,712 1,979 1,979 1,979 1,979 1,979 1,979
Licensed: 1,686 2,109 2,615 3,134 3,134 3,134 3,134 3,134 3,134
Totals
Company-operated: 6,120 7,163 8,505 9,217 9,217 9,217 9,217 9,217 9,217
Licensed: 4,121 5,277 6,506 7,463 7,463 7,463 7,463 7,463 7,463

Total stores open: 10,241 12,440 15,011 16,680 16,680 16,680 16,680 16,680 16,680
Implied store growth rate forecasts:
Store growth rates: 19.5% 21.5% 20.7% 11.1% 0.0% 0.0% 0.0% 0.0% 0.0%

Starbucks: Operating Expense Data: Forecasts: Operating Expenses

2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5

Store Operating Expenses -2,166 -2,688 -3,216 -3,745 0 0 0 0 0

As a percent of retail revenues -40.2% -40.8% -40.2% -42.7% 0.0% 0.0% 0.0% 0.0% 0.0%

Other Operating Expenses -193 -254 -294 -330 0 0 0 0 0

As a percent of specialty revenues -19.7% -21.1% -20.8% -20.5% 0.0% 0.0% 0.0% 0.0% 0.0%
Forecast Development: Capital Expenditures, Property, Plant and Equipment, and Depreciation

Capital Expenditures: CAPEX Forecasts:

2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
CAPEX:
PP&E Acquired (net) 644 771 1,080 985
PP&E Sold 0 0 0 0
Net CAPEX 644 771 1,080 985 0 0 0 0 0

Number of new stores opened 746 1,043 1,342 681 - - - - -

Average CAPEX per new store $ 0.863 $ 0.739 $ 0.805 $ 1.446

Four-year average CAPEX per new store $ 0.963
Expected CAPEX per new store $ 0.992 $ 1.022 $ 1.053 $ 1.084 $ 1.117
CAPEX Inflation Forecast: 3% 3% 3% 3% 3%

Total CAPEX for New Stores $ - $ - $ - $ - $ -

Additional CAPEX for refurbishments $ - $ - $ - $ - $ -

Total CAPEX $ - $ - $ - $ - $ -

Property, Plant and Equipment and Depreciation Property, Plant and Equipment and Depreciation Forecasts:

PP&E at cost: 2005 2006 2007 2008 Year +1 Year +2 Year +3 Year +4 Year +5
Beg. balance at cost: 5,717 5,717 5,717 5,717 5,717
Add: CAPEX forecasts from above: 0 0 0 0 0
End balance at cost: 3,468 4,258 5,307 5,717 5,717 5,717 5,717 5,717 5,717

Accumulated Depreciation:
Beg. Balance: -2,761 -3,331 -3,900 -4,470 -5,040
Subtract: Depreciation expense forecasts from below: -570 -570 -570 -570 -570
End Balance: -1,626 -1,970 -2,416 -2,761 -3,331 -3,900 -4,470 -5,040 -5,610

PP&E - net 1,842 2,288 2,890 2,956 2,387 1,817 1,247 677 108

Depreciation Expense Forecast Development: Depreciation expense forecast on existing PP&E:

Existing PP&E at cost: 5,717 570 570 570 570 570
Remaining balance to be depreciated. 2,956 2,387 1,817 1,247 677 108

PP&E Purchases: Depreciation expense forecasts on new PP&E:

Capex Year +1 0 0 0 0 0 0
Capex Year +2 0 0 0 0 0
Capex Year +3 0 0 0 0
Capex Year +4 0 0 0
Capex Year +5 0 0
Total Depreciation Expense 570 570 570 570 570

Depreciation methods: 2005 2006 2007 2008

PPE at Cost 3,468 4,258 5,307 5,717

Avg Depreciable PPE 3,863 4,782 5,512
Depreciation Expense 340 387 467 549
Implied Avg. Useful Life in Years 10.0 10.2 10.0
Useful Life Forecast Assumption: 10.0
(in years)
FSAP User Guides:

Forecast Development:
This Forecast Development spreadsheet provides work space in which the analyst can:
- build detailed sales revenue forecasts
- build forecasts of capital expenditures, property, plant and equipment, depreciation expense, and accumulated depreciation.
- build detailed forecasts of other financial statement amounts.

It is not necessary to use this spreadsheet to build financial statement forecasts in the FSAP Forecasts
spreadsheet. If you use this spreadsheet to build more detailed forecasts, the you will need to link these
forecast amounts to the appropriate cells in the financial statements in the FSAP Forecasts spreadsheet.

This sales revenue forecast development schedule was developed specifically for PepsiCo. FSAP users who wish to develop detailed sales forecasts of other firms should adapt this schedule as necessary to incorporate the othe
ales figures here simply assume no growth in
or same store sales. User must enter forecasts for
mounts in schedules below.
The Capital Expenditures schedule permits the FSAP user to build detailed forecasts of future capital expenditures as a percent of future revenues, gross PP&E or any other reasonable basis for these forecast assumptions.

The Property, Plant & Equipment and Depreciation schedule automatically computes for the FSAP detailed forecasts of future PP&E based on exisitng PP&E plus projected future capital expenditures. The Depreciation expense
FSAP automatically links the projected amounts for gross PP&E, accumulated depreciation, depreciation expense, and capital expenditures into the financial statements in the Forecasts worksheet.

This computation shows depreciation expense based on the exisiting depreciable PP&E at the start of the forecast period. The computation assumes straight line depreciation methods, zero salvage value, and the estimated usef
This computation shows the amount of gross PP&E still to be depreciated. Once this amount falls to zero, depreciation is complete.The FSAP user should be sure that these amounts are not negative.

FSAP automatically computes a new depreciation schedule for each year's capital expenditures, which are included in PP&E. These computations assume straight line depreciation methods and zero salvage value. The computa
FSAP automatically estimates the estimated useful life for depreciation purposes by dividing the average amount of gross depreciable PP&E by depreciation expense. This estimate assume straight line depreciation and zero sal
ule as necessary to incorporate the other firms' various soruces of revenue.
sis for these forecast assumptions.

penditures. The Depreciation expense schedule automatically computes future depreciation expense based on exisitng depreciable PP&E future capital expenditures. The expected useful life for depreciation purposes is computed below.

o salvage value, and the estimated useful life computed below. .

s and zero salvage value. The computations use the extimated useful life as computed below.
e straight line depreciation and zero salvage value.
on purposes is computed below.
Financial Statement Analysis Package (FSAP): Version 7.0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition FSAP User Guides:
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column M to the right. A Comment on Entering Valuatio
The FSAP user must enter valuation
DATA CHECKS - Estimated Value per Share
Dividend Based Valuation $ 3.32 FSAP automatically references the
Free Cash Flow Valuation $ 3.39 FSAP automatically references the
Residual Income Valuation $ 3.39 FSAP automatically references the
Residual Income Market-to-Book Valuation #DIV/0! FSAP automatically references the
Free Cash Flow for All Debt and Equity Valuation #DIV/0! FSAP automatically references the
Check: All Estimated Value per Share amounts should be the same, possibly with an exception to Free Cash Flow for All Debt and Equity. See additional comments in cell M266.

FSAP OUTPUT: VALUATION MODELS

Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

VALUATION PARAMETER ASSUMPTIONS

Market Value Parameters:
Current share price $ 14.17 FSAP automatically references the
Number of shares outstanding 735.5 FSAP automatically references the
Current market value $ 10,422 FSAP automatically computes mark

Long-run growth assumption used in forecasts 3.0% Long Run Growth Parameters:
Long-run growth assumption used in valuation. 3.0% Enter the long run growth rate assum
(Both long-run growth assumptions should be the same.)

COST OF EQUITY CAPITAL: Cost of Equity Capital Parameter

Equity risk factor (market beta) 0.00 Enter market beta.
Risk free rate 0.0% Enter a risk-free rate of return, such
Market risk premium 0.0% Enter the expected market risk prem
Required rate of return on common equity: 0.00% Using the above parameters, FSAP

COST OF DEBT CAPITAL Cost of Debt Capital Parameters:

Debt capital $ 1,263 FSAP will automatically reference
Cost of debt capital, before tax 0.0% FSAP automatically references the
Effective tax rate 0.0% FSAP automatically references the
After-tax cost of debt capital 0.00% FSAP uses the above parameters to

COST OF PREFERRED STOCK Cost of Preferred Stock Paramete

Preferred stock capital $ - Enter the market value of preferred
Preferred dividends $ - Enter the amount of preferred divid
Implied yield 0.00% FSAP assumes most firms do not ha

WEIGHTED AVERAGE COST OF CAPITAL Weighted Average Cost of Capita

Weight of equity in capital structure 0.89 FSAP automatically computes the w
Weight of debt in capital structure 0.11 FSAP automatically computes the w
Weight of preferred in capital structure 0.00 FSAP automatically computes the w
Weighted average cost of capital 0.00% FSAP will use the valuation parame
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks
Continuing
1 2 3 4 5 Value Dividends-Based Valuation:
Dividends-Based Valuation Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 11 describes the dividends-

Dividends Paid to Common Shareholders 2,402.4 0.0 0.0 0.0 0.0 FSAP references implied dividends
Less: Common Stock Issues 40.1 0.0 0.0 0.0 0.0 FSAP references the change in com
Plus: Common Stock Repurchases 0.0 0.0 0.0 0.0 0.0 FSAP reference the change in treas
Dividends to Common Equity 2,442.5 0.0 0.0 0.0 0.0 0.0 Total dividends to common equity s

Present Value Factors 1.000 1.000 1.000 1.000 1.000 Present value factors based on the e
PV Net Dividends 2,442.5 0.0 0.0 0.0 0.0
Sum of PV Net Dividends 2,442.5 The sum of the present value of net
PV of Continuing Value 0.0 The present value of continuing val
Total 2,442.5
Adjust to midyear discounting 1.0000 This adjustment corrects for over-d
Total PV Dividends 2,442.5
Shares Outstanding 735.5
Estimated Value per Share $ 3.32 The estimated value per share.

Current share price $ 14.17

Percent difference -77% (Value/price)-1: positive number in
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks
Continuing
1 2 3 4 5 Value Free Cash Flows-Based Valuation
Free Cash Flows for Common Equity Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 12 describes the free cash f

Net Cash Flow from Operations -3,253.6 0.0 0.0 0.0 0.0 0.0 FSAP references net cash flows fro
Decrease (Increase) in Cash Required for Operations 269.8 0.0 0.0 0.0 0.0 0.0 The analyst should adjust free cash
Net Cash Flow from Investing 6,738.0 0.0 0.0 0.0 0.0 0.0 FSAP references net cash flows fro
Net CFs from Debt Financing -1,263.3 0.0 0.0 0.0 0.0 0.0 FSAP references net cash flows fro
Net CFs into Financial Assets 0.0 0.0 0.0 0.0 0.0 0.0 This row enables the analyst to adju
Net CFs - Pref. Stock and Minority Int. 0.0 0.0 0.0 0.0 0.0 0.0 FSAP references net cash flows fro
Free Cash Flow for Common Equity 2,490.9 0.0 0.0 0.0 0.0 0.0

Present Value Factors 1.000 1.000 1.000 1.000 1.000 Present value factors based on the e
PV Free Cash Flows 2,490.9 0.0 0.0 0.0 0.0
Sum of PV Free Cash Flows 2,490.9 The sum of the present value of free
PV of Continuing Value 0.0 The present value of continuing free
Total 2,490.9
Adjust to midyear discounting 1.0000 This adjustment corrects for over-d
Total PV Free Cash Flows to Equity 2,490.9
Shares Outstanding 735.5
Estimated Value per Share $ 3.39 The estimated value per share.

Current share price $ 14.17

Percent difference -76% (Value/price)-1: positive number in
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

Free Cash Flow Valuation Sensitivity Analysis:

Long-Run Growth Assumptions Sensitivity Analyses:

3.39 0% 2% 3% 4% 5% 6% 8% 10% The FSAP user can enter the releva
Discount 5% 3.31 3.31 3.31 3.31 #DIV/0! 3.31 3.31 3.31
Rates: 6% 3.29 3.29 3.29 3.29 3.29 #DIV/0! 3.29 3.29
6.48% 3.28 3.28 3.28 3.28 3.28 3.28 3.28 3.28
7.48% 3.27 3.27 3.27 3.27 3.27 3.27 3.27 3.27
8.48% 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25
10% 3.23 3.23 3.23 3.23 3.23 3.23 3.23 #DIV/0!
11% 3.22 3.22 3.22 3.22 3.22 3.22 3.22 3.22
12% 3.21 3.21 3.21 3.21 3.21 3.21 3.21 3.21
13% 3.19 3.19 3.19 3.19 3.19 3.19 3.19 3.19
14% 3.18 3.18 3.18 3.18 3.18 3.18 3.18 3.18
15% 3.17 3.17 3.17 3.17 3.17 3.17 3.17 3.17
16% 3.15 3.15 3.15 3.15 3.15 3.15 3.15 3.15
18% 3.13 3.13 3.13 3.13 3.13 3.13 3.13 3.13
20% 3.10 3.10 3.10 3.10 3.10 3.10 3.10 3.10
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks
Continuing
1 2 3 4 5 Value Residual Income Valuation:
RESIDUAL INCOME VALUATION Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 13 describes the residual in
Comprehensive Income Available
for Common Shareholders 0.0 0.0 0.0 0.0 0.0 0.0 FSAP references comprehensive inc
Lagged Book Value of Common
Shareholders' Equity (at t-1) 2,490.9 0.0 0.0 0.0 0.0 0.0 FSAP references beginning of year

Required Earnings 0.0 0.0 0.0 0.0 0.0 0.0 FSAP computes required earnings a
Residual Income 0.0 0.0 0.0 0.0 0.0 0.0 Residual income is the difference b

Present Value Factors 1.000 1.000 1.000 1.000 1.000 Present value factors based on the e
PV Residual Income 0.0 0.0 0.0 0.0 0.0
Sum of PV Residual Income 0.0 The sum of the present value of resi
PV of Continuing Value 0.0 The present value of continuing res
Total 0.0
Add: Beginning Book Value of Equity 2,490.9
PV of Equity 2,490.9
Adjust to midyear discounting 1.000 This adjustment corrects for over-d
Total PV of Equity 2,490.9
Shares Outstanding 735.5
Estimated Value per Share $ 3.39 The estimated value per share.

Current share price $ 14.17

Percent difference -76% (Value/price)-1: positive number in
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks

RESIDUAL INCOME VALUATION SENSITIVITY ANALYSIS:

Long-Run Growth Assumptions Sensitivity Analyses:

3.39 0% 2% 3% 4% 5% 6% 8% 10% The FSAP user can enter the releva
Discount 5% 3.31 3.31 3.31 3.31 #DIV/0! 3.31 3.31 3.31
Rates: 6% 3.29 3.29 3.29 3.29 3.29 #DIV/0! 3.29 3.29
7% 3.28 3.28 3.28 3.28 3.28 3.28 3.28 3.28
7.48% 3.27 3.27 3.27 3.27 3.27 3.27 3.27 3.27
9% 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25
10% 3.23 3.23 3.23 3.23 3.23 3.23 3.23 #DIV/0!
11% 3.22 3.22 3.22 3.22 3.22 3.22 3.22 3.22
12% 3.21 3.21 3.21 3.21 3.21 3.21 3.21 3.21
13% 3.19 3.19 3.19 3.19 3.19 3.19 3.19 3.19
14% 3.18 3.18 3.18 3.18 3.18 3.18 3.18 3.18
15% 3.17 3.17 3.17 3.17 3.17 3.17 3.17 3.17
16% 3.15 3.15 3.15 3.15 3.15 3.15 3.15 3.15
18% 3.13 3.13 3.13 3.13 3.13 3.13 3.13 3.13
20% 3.10 3.10 3.10 3.10 3.10 3.10 3.10 3.10
FSAP OUTPUT: VALUATION MODELS
Analyst Name: Wahlen, Baginski & Bradshaw
Company Name: Starbucks
Continuing
RESIDUAL INCOME VALUATION 1 2 3 4 5 Value Market-to-Book Valuation:
Market-to-Book Approach Year +1 Year +2 Year +3 Year +4 Year +5 Year +6 Chapter 14 describes the market-to-
Comprehensive Income Available
for Common Shareholders 0.0 0.0 0.0 0.0 0.0 0.0 FSAP references comprehensive inc
Book Value of Common
Shareholders' Equity (at t-1) 2,490.9 0.0 0.0 0.0 0.0 0.0 FSAP references beginning of year

Implied ROCE 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! FSAP computes the implied ROCE
Residual ROCE 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! FSAP computes the residual ROCE
Cumulative growth factor in common equity as of t-1 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% FSAP computes the cumulative gro
Residual ROCE times cumulative growth 0.0% #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! The product of residual ROCE and

Present Value Factors 1.000 1.000 1.000 1.000 1.000 Present value factors based on the e
PV Residual ROCE times growth 0.000 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Sum of PV Residual ROCE times growth #DIV/0! The sum of the present value of resi
PV of Continuing Value #DIV/0! The present value of residual ROCE
Total PV Residual ROCE #DIV/0!
Add one for book value of equity at t-1 1.0
Sum #DIV/0!
Adjust to mid-year discounting 1.000 This adjustment corrects for over-d
Implied Market-to-Book Ratio #DIV/0! The implied market-to-book value r
Times Beginning Book Value of Equity 2,490.9
Total PV of Equity #DIV/0!
Shares Outstanding 735.5
Estimated Value per Share #DIV/0! The estimated value per share.

Current share price $ 14.17

Percent difference #DIV/0! (Value/price)-1: positive number in

Sensitivity analysis for the market-to-book approach should be identical to that of the residual income approach.