Understanding Financial Statements
Instructor: Elizabeth Mullaney
Date Due: 04/29/2012
Founded in 1985, by Howard Schultz, Starbucks is well known for its line of coffee products. From the purchase, roasting and selling of coffee beans, Starbucks Corporation and subsidiaries are involved in the whole process of making customers happy with their products. They sale whole and ground fresh roasted coffee beans, specialty teas, cappuccinos, espressos, fresh brewed coffees, cold blended coffee as well as sandwiches, baked treats and fresh fruit. Mr. Schultz founded the company in ’85 however it was not until 1987 that Howard and other co-partners opened their first store and called it Starbucks. Mr. Schultz servers not only as the Founder, but also as President, CEO and chairman.
For Starbucks, the gross profit margin for 2009 was more than it was in 2007; however the company still dropped 2.25%. The company had an increase of 2.25% in costs of goods sold, but there was also a decrease of 2.25% in revenue. An increase in the SG&A expense can mean that stores are being overstaffed in workers or that Starbucks may possibly be putting the money into paying people to come up with new products. New products could lead to an improvement of expense/income ratio however if it is just a matter of being overstaffed then there needs to be adjustments made to the workers schedules. Another expense that has increased is the amortization and depreciation accounts. An increase in these accounts could be as simple as purchasing new equipment. Due to the state of economics, we can probably assume this is what has lead to a decrease in the operating income and margin. According to news reports there have been many stores that Starbucks has shut down. Non-operating expenses and income has also seen an increase. From 2007 there has been a drop in net income of $357 million. This...