Disclosure Analysis Paper

694 Words Nov 18th, 2010 3 Pages
RUNNING head: DISCLOSURE ANALYSIS PAPER

Disclosure Analysis Paper

August 30, 2010

Disclosure Analysis Paper

Analyzing the disclosures contained in a company’s financial statement is important to understanding the heath of the company. Starbucks is the corporation that I will be analyzing. Understanding cash and cash equivalents, receivables, and inventories is important for investors. Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich brewed coffees through company operated retail stores. [ (Starbucks Investor Relations, 2009) ] Starbucks first opened in 1971 which was in Seattle. Starbucks mission is to inspire and nurture the human spirit – one person, one cup, and
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For the fiscal years 2009 and 2008 there were immaterial realized gains and losses on sales and maturities. Inventories are stated at the lower of cost or market. The company records inventory reserves for obsolete and slow-moving items and for estimated shrinkage between physical inventory counts. Inventory reserves are based on inventory turnover trends, historical experience and application of the specific identification method. As of September 2009 and September 2008 inventory reserves were $21.1 million and $25.5 million, respectively [ (Starbucks Investor Relations, 2009) ].
Inventories consisted of the following in millions Sept. 2009 Sept. 2008
Coffee:
Unroasted $381.6 $377.7 Roasted 76.7 89.6
Other merchandise held for sale 116.0 120.6
Packaging and other supplies 90.6 104.9 Total $664.9 $692.8

Other merchandise held for sale included serve ware, tea and brewing equipment. The company had committed to purchasing green coffee totaling $155 million under fixed price contracts and an estimated $84 million under price to be fixed contracts. Starbucks believes, based on relationships established with suppliers in the past, the risk of non delivery on such purchase commitments is remote [ (Starbucks Investor Relations, 2009) ]. The drop in inventory I believe would be in part related to the economic downturn. I would imagine that sales had decreased for

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