Group 5:

Amanda Grieco

Tevin Chapman

James McCarty

INDUSTRY: Specialty Coffee

PRIMARY PRODUCTS: Coffee, Handcrafted Beverages, Merchandise, Fresh Food, and Consumer Products.

RAW MATERIALS: Coffee Beans, Dairy, Cups/Lids, Food and Drink Ingredients, and Teas.

COMPANY SIZE:SALES: $14.9 BillionASSETS: $11,516.7 millionEMPLOYEES: 182,000 worldwide

ANNUAL REPORT

LOCATION: Seattle, Washington20,891 stores in 64 countries

OTHER AFFILIATIONS: Seattle’s Best and MANY orgs!

IMAGE CONVEYED? …Sustainable growth by a company that has core values to maintain its image and control of its products and distribution.

SEGMENTS AND FUNCTIONAL CONTENTS – Same as 10-K with intro from CEO

ANNUAL REPORT

KEY ECONOMIC FACTORS: Growth rates Interest rates

Levels of employment Price stability

LIFE CYCLE: Growth Stage

FACTORS OF SUCCESS: Quality of products Quality of products

Shop Design Social Responsibility

Customer loyalty rewards.

THE COFFEE INDUSTRY

STANCE OF SUCCESS: Exceeded all of their expectations in all aspects

BUSINESS RISKS: Economic conditionsNot successfully implementing important

strategic initiativesIncreases in the cost of high-quality

Arabica coffee beansInterruption of supply chain Failing to meet market expectations

THE COFFEE INDUSTRY

NOTABLE ACCOUNTING CONSIDERATIONS:Property, Plant, and Equipment and Definite-

lived Assets Goodwill and Indefinite-lived Intangible AssetsIncome Taxes Litigation Accruals

LEGAL AND REGULATORY MATTERS: Starbucks VS. Kraft Foods

SOCIAL MATTERS: Community Service Community Stores Youth Leadership

Farming Communities Diversity and Inclusion Starbucks Foundation

THE COFFEE INDUSTRY

GOVERNANCERevised November 5, 2011Board of Directors

SARBANES-OXLEY ACT COMPLIANCE Deloitte & Touche, LLP Unqualified Opinion

THE COFFEE INDUSTRY

FINANCIAL STRENGTHDelivered record

performance and exceeded expectations on almost all fronts.

$14.9 billion in Revenues

12% increase!

GROWTH OVER NEXT YEAR:According to 4-Traders, the financial ratios have

stated an estimated company value of $57,533 M and $57,644 M in fiscals 2014 and 2015, respectively.

1,500 net new stores

Product Growth:Tevana Tea® Fine Teas + Tea Bars, La Boulange™ bakery itemsEvolution Fresh™ juice lines

FINANCIAL STRENGTH

SOURCES AND VALUE OF CAPITAL:$750 million unsecured, revolving credit $150 million may be used for issuances of

letters of creditApproved maximum of $1 billion of unsecured

commercial paper notesApproximately 18,470 shareholders of record26,359,511 sharesAs of March 19, 2014, the market rate went up

2.14% at $76.20

FINANCIAL STRENGTH

FINANCIAL STRENGTH

CAPITAL MARKET RESPONSE: Financial analysts state a “buy” status

and a “B” rating on stocks.

COMPETITOR COMPARISON: Revenues - 5.6% higher than the industryDebt-to-Equity ratio - below the industry

Company’s shares - risen by 27.04%

FINANCIAL STRENGTH

MAJOR TRANSACTION CYCLES:

SALES AND COLLECTION CYCLE

ACQUISITION AND PAYMENT CYCLE

PAYROLL AND PERSONNEL CYCLE

INVENTORY AND WAREHOUSING CYCLE

CAPITAL ACQUISITION AND REPAYMENT CYCLE

AUDIT PLANNING

Selected Ratios SBUX 2013

SBUX 2012

SHORT-TERM DEBT PAYING

Cash Ratio .60 .92

Quick Ratio .71 1.14

Current Ratio 1.02 1.9

LIQUIDITY ACTIVITY RATIOS

Accounts Receivable Turnover 21.01 21.68

Days to Collect A/R 17.38 16.84

Inventory Turnover 5.74 4.68

Days to Sell Inventory 63.55 77.95

ABILITY TO MEET LONG-TERM OBLIGATIONS

Debt to Equity 1.57 .6

Times Interest Earned -11.59 61.08

PROFITABILITY RATIOS

Earnings Per Share – Basic .01 1.83

Gross Profit Percent .57 .56

Profit Margin -.03 .15

Return on Assets -.02 .25

AUDIT PLANNING

FRAUDLENT REPORTING OPPORTUNITIES:Segment ReportingMaterial Misstatements

Raw Materials – Coffee BeansDistributionProductionStock Price PressuresLitigations

REDUCTION OF ASSESSED CONTROL RISK Can be slightly reduced

Core values of maintaining control of brand and distribution

Effective segregation of duties Proper documentation and recording procedures

AUDIT PLANNING

Based on the information contained in the 2013

Annual Report, the financial ratios assessed,

and the previous auditor’s history with Starbucks, we

expect an

unqualified opinion will be issued.

TYPE OF REPORT ISSUED