a. Build your own spreadsheets to develop and capture your financial statement forecast assumptions and data for Starbucks. Building your own financial statement forecast spreadsheets is a valuable learning experience. You can use the PepsiCo examples presented throughout this chapter as models to follow in building your spreadsheets. If you have already had the learning experience of building forecast spreadsheets, you can build your financial statement forecasts using the FSAP template for Starbucks that accompanies this book. If you want to start from scratch, you can download the blank FSAP template from the book’s website:www.cengagebrain.com and input the accounting data for Starbucks from Exhibits 10.14–10.16 into the Data Spreadsheet.
b. Starbucks’ operating, investing, and financing activities involve primarily opening and operating company-owned retail coffee shops in the United States and around the world. Starbucks’ annual reports provide useful data on the number of company-operated stores Starbucks owns, the new stores it opens each year, and the same-store sales growth rates. These data reveal that Starbucks’ revenues and revenue growth rates differ significantly across different segments. Use these data, summarized in Exhibit 10.17 as a basis to forecast (1) Starbucks’ future sales from existing stores, (2) the number of new company- operated stores Starbucks will open, (3) future sales from new stores, and (4) capital expenditures for new stores.
c. Starbucks’ business also involves generating revenues from licensing Starbucks stores and selling Starbucks coffee and other products through foodservice accounts, grocery stores, warehouse clubs, and so on. Use the data in Exhibits 10.17 to build forecasts of future revenues from licensing activities and foodservice and other activities.
d. Use your forecasts of capital expenditures for new stores together with Starbucks’ data on property, plant, and equipment and depreciation to build a schedule to forecast property, plant, and equipment and depreciation expense as described in the chapter for PepsiCo.
e. Starbucks appears to use repurchases of common equity shares as the flexible financial account for balancing the balance sheet. Common equity share repurchases are similar to dividends as a mechanism to distribute excess capital to common equity shareholders. Therefore, build your financial statement forecasts using dividends as the flexible financial account.
f. Save your forecast spreadsheets. In subsequent chapters, you will continue to use Starbucks as a comprehensive integrative case. In those chapters, you will apply the valuation models to your forecasts of Starbucks’ future earnings, cash flows, and dividends to assess Starbucks’ share value.