a) What is the nature of Starbucks business? That is, based on what you know about the company and on the accompanying financial statements, how does Starbucks make money?
Starbucks is a roaster and retailer of specialty coffee. The company purchases, roasts and sells coffee, tea and other food items. The company also sells its product through other channels such as grocery stores, national food service accounts and convenience stores etc. Starbucks generate money through company owned stores, licensed retail stores and consumer packaged goods (CPG).
b) What financial statements are commonly prepared for external reporting purposes? What titles does Starbucks give these statements? What does “consolidated” mean?
Balance Sheet, Income Statement, Statement of Cash Flows, and Statement of Shareholders’ Equity. Starbucks names these statements as Consolidated Balance Sheets, Consolidated Statements of Earnings, Consolidated Statement of Cash Flows and Consolidated Statement of Equity, respectively.
Consolidated means combining or merging financial statements of a parent company and its subsidiaries.
c) How often do publicly traded corporations typically prepare financial statements for external reporting purposes?
Quarterly (4 times a year)
d) Who is responsible for the financial statements? Discuss the potential users of the Starbucks financial statements and the type of information they are likely interested in.
Company’s financial team, CEO and CFO is responsible for financial statements.
Company’s management team requires financial statements to manage and assess its financial performance. Investors use financial statements to assess the risk and return of their investments.
e) Who are Starbucks external auditors? Describe the two opinion letters that Starbucks received in 2013. What do these opinions mean? Why both opinions are dated several months after Starbucks’ year-end?
Deloitt & Touche LLP is the external auditor of Starbucks’. These...