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Title: Starbucks

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Using the Starbucks tab on the attached file please answer the following:

5.Offer interpretive analysis of your company’s actual growth rate compared to its internal and sustainable growth rates. Discuss what these numbers mean regarding your firm’s ability to finance a growth strategy. Justify your projection of the sales growth rate for the next 5 years.

https://finance.yahoo.com/quote/SBUX/financials?p=SBUX This link can also be used as a source.

ForecastingTemplate

The Body Shop 2013:You can vary your assumptions to see what happens to your bottom line.
Hypothetical Three-Year Forecast Worksheet.
AssumptionsInputsForecast
2011201220132013201420152016
($m)($m)($m)(% sales)($m)($m)($m)
Income Statement
Revenue303.7330.1374.1100%Growth13.0%422.7477.7539.8
Cost of Revenue127.7130.9149.039.83%% sales40.0%169.1191.1215.9
Gross profit176.0199.2225.1253.6286.6323.9
Operating expenses
Research Development0.50.50.50.13%0.2%0.60.70.8
Selling General and Administrative151.4166.2195.752.31%% sales50.0%211.4238.8269.9
Others4.50.011.22.99%% sales3.0%12.714.316.2
Earnings Before Interest and Taxes (EBIT)19.632.517.729.032.737.0
Interest expense0.11.54.4% of debt6.0%3.7
Chao and Emil: 6%*(LTD+STD)-6%*(cash)
3.73.7
Income before Tax19.531.013.325.229.033.2
Income Tax expense5.99.34.0% of EBT30.0%7.68.710.0
Net Income13.721.79.317.720.323.3
Preferred stock and other adj.0.10.10.10.03%0.03%0.10.10.2
Ordinary dividends 30%4.16.52.8Div Payout30%5.36.17.0
Retatined earnings9.515.16.412.214.116.1
2011201220132013201420152016
Balance Sheet($m)($m)($m)(% sales)($m)($m)($m)
Assets
Cash and Cash Equivalents24.010.010.02.7%Plug, min.$10m10.010.0
Chao and Emil: If Trial plug<0, then -Trial plug, otherwise 10 In other words, if Assets<(D+E), then add the excess financing to the Cash cell. Otherwise, if Assets>(D+D), then EFN: financed by taking overdraft or STD
10.010.0
Short Term Investments10.09.23.71.0%1.0%4.24.85.4
Accounts receivable27.830.330.38.1%% sales8.0%33.838.243.2
Inventories38.644.751.313.7%% sales13.0%55.062.170.2
Other current assets12.515.617.54.7%% sales4.7%19.922.525.4
Longterm investment0.00.00.00.0%% sales1.0%4.24.85.4
Property Plant and Equipmen87.8104.7110.629.6%% sales29.0%122.6138.5156.5
Other assets4.96.05.71.5%% sales1.5%6.37.28.1
Total assets205.6220.5229.161.2%256.0288.0324.2
Liabilities and equity
Accounts payable13.020.510.72.9%% sales4.0%16.919.121.6
Accruals10.815.611.53.1%% sales3.0%12.714.316.2
Short/current long term debts11.08.010.0% LTD15.0%9.29.29.2
Other current liabilities108.77Plug21.4
Chao and Emil: If Trial plug>0, then plug, otherwise 0
47.677.2
Long-term liabilities28.030.061.2Fixed61.261.261.261.2
Other liabilities1.91.20.70.2%carry forward0.20%0.81.01.1
Retained Earnings9.515.16.4RE12.214.116.1
Shareholders’ equity121.4121.4121.6carry forward$ 121.60121.6121.6121.6
Total liabilities and equity205.6220.5229.161.2%256.0288.0324.2
Trial assets246.0
Chao and Emil: Addup all asset items exceptplug
278.0314.2
Trial liabs. & equity234.7
Chao and Emil: addup all LiabandE except the plug cell
240.4247.0
Trial plug11.437.667.2
Min. cash balance10.010.010.0
Plug21.447.677.2
Model Inputs
Costs (excluding depreciation) as percent of sales42.0%39.7%39.8%40.0%40.0%40.0%
Accounts receivable as percent of sales9.2%9.2%8.1%8.0%8.0%8.0%
Inventory as percent of sales12.7%13.5%13.7%13.0%13.0%13.0%
Model Outputs
Net operating profit after taxes (NOPAT)13.721.79.317.720.323.3
Net operating working capital (NOWC)89.173.790.679.990.1101.8
Total operating capital176.9178.4201.2202.5228.7258.3
Free cash flow (FCF)20.2(13.5)16.4(5.9)(6.4)
External financing needed (EFN)11.437.667.2
Ratio Analysis
Current ratio2.52.12.92.01.51.2
Inventory turnover30%34%34%33%33%33%
Total assets turnover1.51.51.61.71.71.7
Profit margin4.5%6.6%2.5%4.2%4.2%4.3%
Return on assets6.6%9.8%4.1%6.9%7.0%7.2%
Return on equity10.4%17.9%7.7%14.5%16.7%19.1%
Return on invested capital7.7%12.2%4.6%8.7%8.9%9.0%
b0.690.700.6969%69%69%
Internal growth rate4.8%7.3%2.9%5.0%5.1%5.2%
Sustainable growth rate7.8%14.2%5.6%11.2%13.1%15.3%
Historical revenue grrowth rate8.7%13.3%

Starbucks Corporation

Starbucks Corporation (SBUX) 2019:You can vary your assumptions to see what happens to your bottom line.
Hypothetical Three-Year Forecast Worksheet.
AssumptionsInputsForecast
2016201720182018201920202021
($m)($m)($m)(% sales)($m)($m)($m)
Income Statement
Revenue21,315,900.022,386,800.024,719,500.0100%Growth14.0%28180230.032125462.236623026.9
Cost of Revenue14,573,300.015,527,600.017,367,700.070.26%% sales40.0%11272092.012850184.914649210.8
Gross profit6,742,600.06,859,200.07,351,800.016908138.019275277.321973816.1
Operating expenses
Research Development0.00.00.00.00%0.2%42270.348188.254934.5
Selling General and Administrative1,408,900.01,450,700.01,755,400.07.10%% sales50.0%14090115.016062731.118311513.5
Others499,200.0500,300.0539,300.02.18%% sales3.0%845406.9963763.91098690.8
Earnings Before Interest and Taxes (EBIT)4,834,500.04,908,200.05,057,100.01930345.82200594.22508677.3
Interest expense(81,300.0)(92,500.0)(170,300.0)% of debt6.0%548793.6
Chao and Emil: 6%*(LTD+STD)-6%*(cash)
549267.1549806.8
Income before Tax4,915,800.05,000,700.05,227,400.01,381,552.11,651,327.11,958,870.6
Income Tax expense1,379,700.01,432,600.01,262,000.0% of EBT30.0%414465.6495398.1587661.2
Net Income3,536,100.03,568,100.03,965,400.0967086.51155929.01371209.4
Preferred stock and other adj.0.00.00.00.00%0.03%8454.19637.610986.9
Ordinary dividends 30%1,060,830.01,070,430.01,189,620.0Div Payout30%290125.9346778.7411362.8
Retatined earnings2,475,270.02,497,670.02,775,780.0668,506.5799,512.6948,859.7
2016201720182018201920202021
Balance Sheet($m)($m)($m)(% sales)($m)($m)($m)
Assets
Cash and Cash Equivalents2,128,800.02,462,300.08,756,300.035.4%Plug, min.$10m10.010.0
Chao and Emil: If Trial plug<0, then -Trial plug, otherwise 10 In other words, if Assets<(D+E), then add the excess financing to the Cash cell. Otherwise, if Assets>(D+D), then EFN: financed by taking overdraft or STD
10.010.0
Short Term Investments134,400.0228,600.0181,500.00.7%1.0%281802.3321254.6366230.3
Accounts receivable768,800.0938,400.01,648,500.06.7%% sales8.0%2254418.42570037.02929842.2
Inventories1,378,500.01,364,000.01,400,500.05.7%% sales13.0%3663429.94176310.14760993.5
Other current assets27,700.013,400.024,500.00.1%% sales4.7%1324470.81509896.71721282.3
Longterm investment1,496,200.01,023,900.0602,400.02.4%% sales1.0%281802.3321254.6366230.3
Property Plant and Equipmen4,533,800.04,919,500.05,929,100.024.0%% sales29.0%8172266.79316384.010620677.8
Other assets1,288,700.01,158,200.0546,900.02.2%% sales1.5%422703.5481881.9549345.4
Total assets11,756,900.012,108,300.019,089,700.077.2%16400903.918697029.021314611.7
Liabilities and equity
Accounts payable730,600.0782,500.01,179,300.04.8%% sales4.0%1127209.21285018.51464921.1
Accruals0.00.00.00.0%% sales3.0%845406.9963763.91098690.8
Short/current long term debts399,900.00.0349,900.0% LTD15.0%1363530.01363530.01363530.0
Other current liabilities252200025472003120300Plug2080190.8
Chao and Emil: If Trial plug>0, then plug, otherwise 0
3961253.16105664.0
Long-term liabilities3,185,300.03,932,600.09,090,200.0Fixed9090200.09090200.09090200.09090200.0
Other liabilities689,700.0755,300.08,152,600.033.0%carry forward0.20%56360.564250.973246.1
Retained Earnings2,475,270.02,497,670.02,775,780.0RE668,506.5799,512.6948,859.7
Shareholders’ equity5,884,000.05,450,100.01,169,500.0carry forward$ 1,169,500.001169500.01169500.01169500.0
Total liabilities and equity15,886,770.015,965,370.025,837,580.0104.5%16400903.818697029.021314611.7
Trial assets16400893.9
Chao and Emil: Addup all asset items exceptplug
18697019.021314601.7
Trial liabs. & equity14320713.0
Chao and Emil: addup all LiabandE except the plug cell
14735775.915208947.6
Trial plug2080180.83961243.16105654.0
Min. cash balance10.010.010.0
Plug2080190.83961253.16105664.0
Model Inputs
Costs (excluding depreciation) as percent of sales68.4%69.4%70.3%40.0%40.0%40.0%
Accounts receivable as percent of sales3.6%4.2%6.7%8.0%8.0%8.0%
Inventory as percent of sales6.5%6.1%5.7%13.0%13.0%13.0%
Model Outputs
Net operating profit after taxes (NOPAT)3,536,100.03,568,100.03,965,400.0967,086.51,155,929.01,371,209.4
Net operating working capital (NOWC)3,707,600.04,224,200.010,832,000.03,906,183.04,643,941.45,484,986.0
Total operating capital8,241,400.09,143,700.016,761,100.012,078,449.713,960,325.516,105,663.8
Free cash flow (FCF)2,665,800.0(3,652,000.0)5,649,736.8(725,946.8)(774,129.0)
External financing needed (EFN)2080180.83961243.16105654.0
Ratio Analysis
Current ratio1.21.52.61.41.11.0
Inventory turnover9%9%8%33%33%33%
Total assets turnover1.81.81.31.71.71.7
Profit margin16.6%15.9%16.0%3.4%3.6%3.7%
Return on assets30.1%29.5%20.8%5.9%6.2%6.4%
Return on equity42.3%65.5%339.1%82.7%98.8%117.2%
Return on invested capital42.9%39.0%23.7%8.0%8.3%8.5%
b0.700.700.7069%69%69%
Internal growth rate26.7%26.0%17.0%4.2%4.5%4.7%
Sustainable growth rate42.1%84.6%-172.8%133.4%216.1%430.0%
Historical revenue grrowth rate5.0%10.4%
2017 Growth in Sales (Revenue) Compared to 20165%
2018 Growth in Sales (Revenue) Compared to 201710%
2016 – 2018 Three Year Growth in Sales (Revenue)16%
2017 Growth in Sales (Gross Profit) Compared to 20161.7%
2018 Growth in Sales (Gross Profit) Compared to 20177.2%
2016 – 2018 Three Year Growth in Sales (Gross Profit)9%
2017 Growth in Sales (Net Income) Compared to 20160.9%
2018 Growth in Sales (Net Income) Compared to 201711%
2016 – 2018 Three Year Growth in Sales (Net Income)12%

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