Ipo Paper

Intermediate Accounting II

Mini Case: Starbucks Corporation

Select a major industrial or commercial company based in the United States and listed on one of the major stock exchanges in the United States. Each student should select a different company. Avoid selecting an insurance company or a bank, because the financial ratios for these financial businesses are different. Write a seven-to-eight-page double-spaced paper answering and demonstrating with calculations and financial data the following questions.

1. What is the name of the company? What is the industry sector?

The company is Starbucks which is a company that represents the beverage industry. Starbucks was founded in 1971 by Howard Schultz and opened its first store in Seattle Washington at the Pike Place Market. When the store first opened, they offered whole and ground coffee bean, along with tea. Today, Starbucks has become a multi- million dollar company that offers more than specialty coffee and has 20,519 stores represented all over the world.

2. What are the operating risks of the company?

Starbucks has a few operating risk that they list on their 10-K financial forms. Some of these risks are; (Starbucks Corporation, 2013)

Economic conditions in the U.S. and certain international markets could adversely affect our business and financial results

* Customers of today discretionary purchases could change because of these economic conditions, which would cause customers to no longer purchase Starbucks products, or they will go to a lessor priced competitor.

Starbucks is highly dependent on the financial performance of their American operating segment.

* The American segment makes up 74% of Starbucks’ consolidated total net revenues in fiscal 2013. (Starbucks Corporation, 2013). Since the Americas is the abundance of the cash flows used to fund expansion of international businesses and other initiatives; any slowdown of the trends in the Americas segment could have adverse...