Starbucks Financial Case

Starbucks Corporation – Cases in Financial Reporting

(a). In the notes to consolidated financial statements, the description of business is stated as “purchas(ing) and roast(ing) high quality coffees the we sell, along with handcrafted coffee and tea products and license our trademarks through other channels such as licensed stores, grocery, and national foodservice accounts.” They separate their operations into four segments; 1) Americas, 2) Europe, Middle East, and Africa, 3) China/Asia Pacific, and 4) Channel Development. Starbucks revenue is through company-operated stores, licensed stores, and CPG, Foodservice, and other. The majority of Starbucks revenue is produced from company-operated stores through the selling of coffee and coffee related products.

(b). Financial statements commonly prepared for external reporting are the four main statements; balance sheet, income statement, statement of cash flows, and statement of stockholder’s equity. Starbucks titles these statements as the consolidated statement of earnings, consolidated balance sheets, consolidated statements of cash flows, and consolidated statements of equity. The term consolidated reflects upon the terms of ownership and influence that Starbucks has on certain operations. The consolidation of these financial statements includes the financial position and operating results of the Starbucks Corporation that comprises “wholly owned subsidiaries and investees we (Starbucks) control.” Investments that Starbucks dos not have jurisdiction, but still employ a great deal of influence are accounted for under the equity method. Investments where Starbucks does not have jurisdiction, and do not practice a great deal of influence are accounted for under the cost method. Because these statements are “consolidated” transactions within the company are not included.

(c). Typically publically traded companies listed on the stock exchange and under the authority of the Securities and Exchange Commission...