Financial Statement Analysis Package (FSAP): Version 7.

0
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th Edition
By James Wahlen, Steve Baginski and Mark Bradshaw

The FSAP User Guides appear in column J to the right.

Analyst Name: Wahlen, Baginski & Bradshaw

Company Name: Starbucks
Year (Most recent in far right column.) 2003 2004 2005 2006

BALANCE SHEET DATA

Assets:
Cash and Cash Equivalents 201 145 174 313
Marketable Securities 149 508 133 141
Accounts Receivable - Net 114 140 191 224
Inventories 343 423 546 636
Prepaid Expenses and Other Current Assets 55 71 94 127
Deferred Tax Assets - Current 61 64 71 89
Other Current Assets (1)
Other Current Assets (2)
Current Assets 924 1,351 1,209 1,530
Long Term Investments 136 135 60 6
Property, Plant & Equipment - at cost 2,435 2,878 3,468 4,258
<Accumulated Depreciation> -1,050 -1,326 -1,626 -1,970
Amortizable Intangible Assets (net) 25 27 35 38
Goodwill and Nonamortizable Intangibles 63 69 92 161
Deferred Tax Assets - Noncurrent
Equity and Other Investments 144 168 201 219
Other Non-Current Assets (2) 52 86 73 187
Total Assets 2,730 3,387 3,514 4,429
Liabilities and Equities:
Accounts Payable - Trade 169 199 221 341
Current Accrued Liabilities 366 425 553 662
Notes Payable and Short Term Debt 0 0 277 700
Current Maturities of Long Term Debt 1 1 1 1
Deferred Tax Liabilities - Current
Income Taxes Payable
Deferred Revenue 73 121 175 232
Other Current Liabilities (2)
Current Liabilities 609 746 1,227 1,936
Long Term Debt 4 4 3 2
Long Term Accrued Liabilities 1 145 194 263
Deferred Tax Liabilities - Noncurrent 33 22 0 0
Other Non-Current Liabilities (1)
Other Non-Current Liabilities (2)
Total Liabilities 648 917 1,423 2,201
Minority Interest
Preferred Stock

Common Stock + Paid in Capital 998 996 130 40

Retained Earnings <Deficit> 1,070 1,445 1,939 2,151
Accum. Other Comprehensive Income <Loss> 14 29 21 37
Other Equity Adjustments
<Treasury Stock>
Common Shareholders' Equity 2,082 2,470 2,091 2,229
Total Liabilities and Equities 2,730 3,387 3,514 4,429

INCOME STATEMENT DATA 2003 2004 2005 2006

Revenues 4,076 5,294 6,369 7,787

<Cost of Sales and Occupancy> -1,681 -2,191 -2,605 -3,179
Gross Profit 2,394 3,103 3,764 4,608
<Store Operating Expenses> -1,380 -1,790 -2,166 -2,688
<Other Operating Expenses> -141 -172 -193 -254
<Depreciation and Amortization> -245 -289 -340 -387
<General and Administrative Expenses> -245 -304 -362 -479
<Restructuring Charges>
Income from equity investees 38 59 77 94
Other Operating Income (2)
Non-Recurring Operating Gains
<Non-Recurring Operating Losses>
Operating Profit 422 607 780 894
Interest Income 12 15 17 21
<Interest Expense> 0 0 -1 -8
Income <Loss> from Equity Affiliates
Other Income or Gains
<Other Expenses or Losses>
Income before Tax 434 621 796 906
<Income Tax Expense> -168 -232 -302 -325
<Minority Interest in Earnings>
Income <Loss> from Discontinued Operations
Extraordinary Gains <Losses>
Changes in Acctg. Principles -17
Net Income (computed) 266 388 494 564
Net Income (enter reported amount as a check) 266 388 494 564

Other Comprehensive Income Items 23 15 -8 16

Comprehensive Income 288 403 486 581

STATEMENT OF CASH FLOWS DATA 2003 2004 2005 2006

Net Income 266 388 494 564

Add back Depreciation and Amortization Expenses 259 305 367 413
Add back Stock-Based Compensation Expense 106
Deferred Income Taxes -6 -3 -31 -84
<Income from Equity Affiliates, net of Dividends> -23 -33 -19 -11
<Increase> Decrease in Accounts Receivable -49
<Increase> Decrease in Inventories -65 -78 -122 -86
<Increase> Decrease in Prepaid Expenses -13 -17
<Increase> Decrease in Tax Benefit from Exercise of Stock O 37 63 110 -116
Net Amortization of Trading Securities 6 12 10 2
Increase <Decrease> in Accounts Payable 25 28 10 105
Increase <Decrease> in Deferred Revenue 31 48 53 57
Increase <Decrease> in Accruals 46 80 23 187
Provision for impairment and asset disposal 8 14 20 20
Increase <Decrease> in Other Non-Current Liabilities (2)
Other Addbacks to Net Income 17
<Other Subtractions from Net Income>
Other Operating Cash Flows -7 -16 57 -41
Net CF from Operations 563.752 790.238 923.452 1,132
Proceeds from Sales of Property, Plant, and Equipment
<Property, Plant, and Equipment Acquired> -357 -386 -644 -771
<Increase> Decrease in Marketable Securities -54 -212 452 61
Investments Sold
<Investments Acquired> -117 -72 -29 -131
Distributions from equity investees 29 38
Other Investment Transactions (2)
Net CF from Investing Activities -499 -632 -221 -841
Increase in Short-Term Borrowing 277 423
<Decrease in Short-Term Borrowing>
Increase in Long-Term Borrowing
<Decrease in Long-Term Borrowing> -1 -1 -1 -1
Issue of Capital Stock 107 138 164 159
Proceeds from Stock Option Exercises 117
<Share Repurchases - Treasury Stock> -76 -203 -1,114 -854
<Dividend Payments>
Other Financing Transactions (1)
Other Financing Transactions (2)
Net CF from Financing Activities 31 -67 -674 -155
Effects of exchange rate changes on cash 3 3 0 4
Net Change in Cash 99 -56 29 139
Cash and Cash Equivalents, Beginning of Year 201 145 174
Cash and Cash Equivalents, End of Year 145 174 313

SUPPLEMENTAL DATA 2003 2004 2005 2006

Statutory Tax Rate 35.0% 35.0% 35.0% 35.0%

Average Tax Rate Implied from Income Statement Data 38.7% 37.5% 37.9% 35.8%
After-tax Effects of Nonrecurring and Unusual Items on Net
Income 0 0 0 -17
Total Deferred Tax Assets (from above) 61 64 71 89
Deferred Tax Asset Valuation Allowance -14 -8 -8 -9
Allowance for Uncollectible Accounts Receivable 5 2 3 4
Depreciation Expense 245 289 340 387
Preferred Stock Dividends (total, if any) 0 0 0 0
Common Shares Outstanding 787 795 767 757
Earnings per Share (basic) 0.35 0.50 0.63 0.74
Common Dividends per Share 0.00 0.00 0.00 0.00
Market Price per Share at Fiscal Year End 14.62 23.52 25.20 33.62

FINANCIAL DATA CHECKS

Assets - Liabilities - Equities 0 0 0 0
Net Income (computed) - Net Income (reported) 0 0 0 0
Cash Changes 0 0 0
 FSAP User Guides:

The Data spreadsheet is designed for up to six years of financial statement data. The
The user must conform financial statement data to the FSAP template because the sp
Enter data in the blue-font cells shaded light green. FSAP automatically computes th
Throughout FSAP, enter amounts for account titles listed in brackets <> as negative
Insert your name in column B.
Enter the name of the company in Column B. This name will appear on the output o
2007 2008

Enter Balance Sheet Data:

281 270
157 53
288 330
692 693
149 169
129 234
Other Current Assets (1) and (2) can be renamed and used for different types of curre

1,696 1,748 FSAP automatically computes the amount of total current assets.
21 71
5,307 5,717
-2,416 -2,761
42 67
216 267

259 303 Other Non-Current Assets (1) and (2) can be renamed and used for different types of
219 261
5,344 5,673 FSAP automatically computes the amount of total assets.

391 325
757 783
710 713
1 1

297 368 Other Current Liabilities (1) and (2) can be renamed and used for different types of c

2,156 2,190 FSAP automatically computes the amount of total current liabilities.
550 550
354 442
0 0
Other Non-Current Liabilities (1) and (2) can be renamed and used for different type

3,060 3,182 FSAP automatically computes the amount of total liabilitries.

40 40
2,189 2,402
55 48 The amount for this item appears either on the Balance Sheet or the Statement of Sha
Include on this line any items that do not fall within some other shareholders' equity

2,284 2,491 FSAP automatically computes the amount of total shareholders' equity.
5,344 5,673 FSAP automatically computes the amount of total liabilities plus shareholders' equity

2007 2008 Enter Income Statement Data:

When entering income statement data, enter amounts that increase income (revenues
9,411 10,383
-3,999 -4,645
5,412 5,738 FSAP automatically computes the amount of gross profit.
-3,216 -3,745
-294 -330
-467 -549
-489 -456 Other Operating Expenses (1), (2), and (3) can be renamed and used for different typ
-267
108 114 Other Operating Income (1) and (2) can be renamed used for different sources of rec
38% 41% 45% 45% 40%
The FSAP user must decide whether particular operating gains or losses are non-recu

1,054 504 FSAP automatically computes the amount of operating profit.

41 9
-38 -53
Enter any amounts of income (or <loss>) from equity or noncontrolled affiliates.
Enter income or gain amounts that are unusual and non-recurring and outside of norm
Enter expense or loss amounts that are unusual and non-recurring and outside of norm
1,056 460 FSAP automatically computes the amount of income before tax.
-384 -144 Enter the amount of income tax expense that appears on the income statement in the
Enter the amount of minority interest in income. Enter the amount as a negative num
Enter any amount reported in the separate section of the income statement labeled Di
Enter any amount reported in the separate section of the income statement labeled Ex
Enter any amount reported in the separate section of the income statement labeled Ch
673 316 FSAP automatically computes the amount of net income using the above data for rev
673 316 Enter the amount of reported net income on this line. It will be used by FSAP to pro

17 -6 This amount usually appears in the Statement of Shareholders' Equity. Enter as a po

690 309 FSAP automatically computes the amount of comprehensive income.

2007 2008 Enter Statement of Cash Flows Data:

In the Statement of Cash Flows Data, enter amounts reported on the firm's statemen
673 316 FSAP automatically enters the Net Income amount computed above.
491 605
104 75
-37 -117
0 -9

-49 -1

-85 -11
1-
 36 -64
63 72
125 7
26 325

-16 60
1,331 1,259 FSAP automatically computes the amount of cash flow from operations.

-1,080 -985 Net Amount.

-12 24 Includes Maturity of AFS Securities

-110 -126 Net Amount.

-1,202 -1,087 FSAP automatically computes the amount of cash flow from investing activities.
18,081 66,299
-18,071 -66,297
549
-1 -1
177 112
93 15
-997 -311

-4 -2
-172 -185 FSAP automatically computes the amount of cash flow from financing activities.
11 1
-31 -11 FSAP automatically computes the net change in cash.
313 281
281 270

2007 2008 Enter Supplemental Data:

35.0% 35.0% Enter the statutory income tax rate applicable to ordinary income and deductions (su
36.3% 31.3% This rate is computed by FSAP as the ratio of the income tax expense to income befo

0 0 This row automatically sums the pre-tax amounts of unusual and nonrecurring items
129 234 This row automatically sums the total deferred tax assets (current plus non-current) a
-14 -20 Enter the deferred tax asset valuation allowance amounts. These amounts (if any) are
3 5 Enter the allowances for uncollectible accounts receivable. These amounts (if any) a
467 549 Enter the amount of depreciation expense on property, plant and equipment. These a
0 0 Enter the total amount of preferred stock dividends paid, if any.
738 736 Enter the number of common shares outstanding at the end of each year. Be sure to
0.90 0.43 Enter the amount that appears on the firm's income statement.
0.00 0.00 This cell computes common dividends per share by dividing the dividend payments
26.32 14.17 This should be the closing market price per share on the last day of the firm's accoun
0 0 FSAP checks for an equality between total assets and total liabilities plus shareholde
0 0 FSAP checks that the inputted amounts of revenues and expenses equal the reported
0 0 FSAP checks that the change in cash on the statement of cash flows equals the chang
 s of financial statement data. The user must input the most recent year of financial statement data in column G, regardless of the number of years of data
the FSAP template because the spreadsheets within FSAP use the Data spreadsheet as their base. The user can, however, rename account titles as necessa
FSAP automatically computes the amounts of various sub-totals and totals within the Data spreadsheet. These items are shaded in gray and serve in chec
listed in brackets <> as negative numbers. Except for per share amounts, be consistent with the units of the amounts entered (for example, thosands or mi

name will appear on the output of all spreadsheets within FSAP.

nd used for different types of current assets for different firms.

current assets.

med and used for different types of long term assets for different firms.

d and used for different types of current liabilities for different firms.

current liabilities.

named and used for different types of non-current liabilities for different firms.
ance Sheet or the Statement of Shareholders' Equity. Be sure to enter as a positive or negative amount as appropriate.
n some other shareholders' equity line. Such items seldom appear in balance sheets of U.S. firms. Amounts that increase (decrease) total shareholders' eq

shareholders' equity.
liabilities plus shareholders' equity.

nts that increase income (revenues, gains, income) as positive amounts, and enter amounts that decrease income (expenses, losses) as negative amounts.

enamed and used for different types of recurring operating expenses for different firms.

d used for different sources of recurring operating income for different firms.
- average returns on equity investments
rating gains or losses are non-recurring - infrequent and unusual given the firm's business and operating environment. If so, enter the amounts on the appr

ity or noncontrolled affiliates.

non-recurring and outside of normal business operations.
non-recurring and outside of normal buisness operations. Enter these amounts as negative numbers.
me before tax.
rs on the income statement in the section for income from continuing operations. If income tax expense reduces income, enter the amount as a negative n
nter the amount as a negative number.
of the income statement labeled Discontinued Operations. The amount is reported net of tax effects. Enter as a positive or negative number as appropriate.
of the income statement labeled Extraordinary Items. The amount is reported net of taxes. Enter as a positive or negative number as appropriate.
of the income statement labeled Changes in Accounting Principles. The amount is reported net of income taxes. Enter as a positive or negative number as a
come using the above data for revenues, expenses, gains and losses.
e. It will be used by FSAP to provide a mathematical check on the amounts of all revenues and expenses on preceding lines.

hareholders' Equity. Enter as a positive or negative number as appropriate.

rehensive income.

s reported on the firm's statement of cash flows. Enter amounts that increase (decrease) cash as positive (negative) numbers. The row headings help indic
computed above.
 flow from operations.

flow from investing activities.

flow from financing activities.

dinary income and deductions (such as the deduction for interest expense). The Federal corporate income tax rate is currently 35 percent in the United Stat
ncome tax expense to income before tax.

of unusual and nonrecurring items and the after-tax amounts of discontinued operatons, extraordinary items and changes in accounting principles from the
assets (current plus non-current) amounts from the asset section of teh balance sheet above.
mounts. These amounts (if any) are usually disclosed in the tax note.
eivable. These amounts (if any) are usually disclosed either in the receivables note or in a supplemental inforrmation note.
rty, plant and equipment. These amounts (if any) are usually disclosed either in the property, plant and equipment note or in a supplemental inforrmation n

the end of each year. Be sure to reduce the number of shares issued by the number of any shares held as treasury stock to arrive at the number of commo

y dividing the dividend payments from the cash flow statement by the number of outstanding shares. This assumes the firm pays immaterial preferred divi
n the last day of the firm's accounting period (usually December 31 of each year). If stock markets are closed on the last day of the accounting period, use
nd total liabilities plus shareholders' equity. A non-zero amount in this row indicates a likely data input error in one or more balance sheet accounts.
s and expenses equal the reported amount of net income. A non-zero amount on this row likely indicates an input error in one or more income statement a
ent of cash flows equals the change in cash on the balance sheet. A non-zero amount indicates either a data input error on one or more rows of the cash flo
he number of years of data inputted.
me account titles as necessary to match the account titles of the particular firm. FSAP contains a number of general purpose accounts that can be renamed t
d in gray and serve in checking the mathematical accuracy of inputted amounts. FSAP checks to ensure that total assets equal total liabilities and shareho
or example, thosands or millions).
ease) total shareholders' equity should be entered as positive (negative) amounts.

es) as negative amounts.

ter the amounts on the appropriate rows. Enter expense and loss amounts as negative numbers.

the amount as a negative number.

ive number as appropriate.

er as appropriate.
ive or negative number as appropriate.

he row headings help indicate whether amounts should be positive or negative.

5 percent in the United States. Alternatively, one can enter a statutory tax rate that captures the combined effects of Federal, state, and foreign income tax

unting principles from the income statement above. The analyst must then adjust the items that are stated in pre-tax amounts to an after-tax basis either by

upplemental inforrmation note. If depreciation expense is not disclosed separately from amortization expense, enter depreciation plus amortization expens

e at the number of common shares outstanding. The number of common shares outstanding should be expressed in the same numerical units (for example

s immaterial preferred dividends. If that assumption does not hold, enter the amount of common dividends per share directly.
the accounting period, use the closing price on the most recent trading day following the end of the period.
 ance sheet accounts.
or more income statement accounts.
r more rows of the cash flow statement or the use of a different definition of cash on the two financial statements. The user should identify the reason for
ounts that can be renamed to fit the accounts of the particular firm (for example, Other Current Assets (1) and (2)).
total liabilities and shareholders’ equity, that total revenues and gains minus total expenses and losses equal reported net income, and that cash flows from
ate, and foreign income taxes. These rates are commonly disclosed in the tax note.

an after-tax basis either by adjusting for the specific amounts of applicable tax (or tax savings) as disclosed by the firm, or if not disclosed, by adjusting th

n plus amortization expense.

umerical units (for example, thousands or millions) as the financial statement amounts entered in the preceding cells.
uld identify the reason for and correct any non-zero amount.
e, and that cash flows from operating, investing, and financing activities equal the change in cash on the balance sheet. These financial data checks appea
ot disclosed, by adjusting these items for the statutory tax rate.
inancial data checks appear at the bottom of the Data spreadsheet. Any material non-zero amounts (that are not due to rounding) on these rows require the
g) on these rows require the user to re-check amounts inputted to identify and correct the error.