finance report 16 26 Essay

Submitted By queenie1188
Words: 1009
Pages: 5

Cash and Cash Equivalents
The Starbuck valued Cash and Cash Equivalents by using active markets for identical And maintain cash and cash equivalent balances with financial institutions that exceed federally insured limits.

Accounts Receivable
C: 5.6/485.9=1.15% P: 3.3/386.5=0.85%

C: 485.9/(485.9-386.5)=4.9 P: 386.5/(386.5-302.7)=2.1

Compare with 2011, the accounts receivables of 2012 increase 15.6M then 2011, the bad debt/doubtful accounts of 2012 is 5.6M and 2011 is 3.3M. And the uncollectible of the cash of 2012 is 5.6M and this amount of 2011 is 3.3M.

Inventories: raw materials, obsolete and slow-moving items, works in progress, finished goods


Inventory turnover
C: 5813.3*2/(965.8+1241.5)=5.27 P: 4915.5*2/(543.3+965.8)=6.51

Inventory turnover ratio decreased from 2011 to 2012. Because the relative size of Starbucks is based on inventory obsolescence trends and compare with 2012 and 2011 the inventory reserves were increase 3.1M and total average inventory increase 698.2 so the inventory turnover ratio decrease.

Depreciation Method
Fixed asset: generally ranging of useful live from 2 to 15 years for equipment and 30 to 40 years for buildings
Method: Straight-line method
Fixed asset: generally 10 years. The shorter of estimated useful lives or the related lease life
Method: Leasehold improvement
Fixed asset: Original lease term to determine estimated useful lives.
Method: Leases with renewal periods at their option

Yes, because the carrying values of long-lived assets may not be recoverable. Starbuck calculate impairments loss based on the asset’s estimated fair value. The losses may recorded in any operating expense line such as retail operations, disposition losses and so on. The net impairment and disposition losses of 2012 is $31.7M and in 2011 is $36.2M

Percentage of fixed asset depreciation
C: 550.3/(8219.2-4199.6-2658.9)=43.6% P: 523.3/(7360.4-3794.9-2355.0)=43.2%
There were not a big different because The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. When assets are retired or sold, the asset cost and related accumulated depreciation are eliminated with any remaining gain or loss recognized in net earnings.

Fixed asset turnover ratio
C: 132995*2/(7360.4+8219.2)=1.71 P: 11700.4*2/(6385.9+7360.4)=1.70

Capitalized leases:
Capitalized: 18M
Interest: 3.2M
Long term debt: 549.6M
Next year: 21M

Operating leases:
Payment: 803.7M
Rent with the operating leases: 759.0M
Next year: 787.9M

Long-term Debt
2007 An underwritten registered public offering 6.25% 550M
Year: 2017 $549.6M

Defined Contribution Pension Expense 420.8M
Defined Benefit Pension Expense (Benefit) average 14,256 for one person

Contingencies: On April 2, 2012, Starbucks and Kraft exchanged expert reports regarding alleged damages on their affirmative claims.
Reasonably possible: Starbucks believes an unfavorable outcome with respect to the arbitration is not probable, but as noted above is reasonably possible. As also noted above, Starbucks believes we have valid claims of material breach by Kraft under the Agreement that allowed us to terminate the Agreement without compensation to Kraft. In addition, Starbucks believes Kraft's damage estimates are highly inflated and based upon faulty analysis. As a result, we cannot reasonably estimate the possible loss. Accordingly, no loss contingency has been recorded for this matter.
Finance report: Starbucks claimed damages of up to $62.9 million from the loss of sales resulting from Kraft's failure to use commercially reasonable efforts to market Starbucks coffee, plus attorney fees. Kraft's expert opined that the fair market value of the Agreement was $1.9 billion. After applying a 35% premium and 9% interest, Kraft claimed damages of up to $2.9 billion, plus attorney