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Reformulation of Starbucks. Mitchell Schmitt. Talking Points. Brief Overview of Enterprise Operations vs. Financing Activities Calculation and Consideration of Net Enterprise Assets (NEA) Calculation of Net Financial Liabilities (Net Financial Assets for Starbucks)

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Reformulation of Starbucks


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talking points
Talking Points
  • Brief Overview of Enterprise Operations vs. Financing Activities
  • Calculation and Consideration of Net Enterprise Assets (NEA)
  • Calculation of Net Financial Liabilities (Net Financial Assets for Starbucks)
  • Enterprise Profit After Tax (EPAT)
  • Identifying and Calculating Financing Expenses after Tax (FEAT)
reformulation
Reformulation
  • Purpose is to provide relevant information for forecasting and valuation purposes
  • Focus is on cash flows from operations rather than accounting income
  • Identification of Enterprise Income (EPAT) and Assets (NEA) is the first step
identification of enterprise operations
Identification of Enterprise Operations
  • The background obtained from Module 1 is key to knowing what the firm does
  • Similar activities may be categorized differently at each firm
  • Certain line items will demand further research into the notes
net financial lender
Net Financial Lender
  • Large amount of excess cash and short-term investments
  • May be gearing up for future expansion or large dividend
  • Most firms are net borrowers
  • Add Financial Assets to NEA to arrive at Common Shareholders Equity
line items i questioned
Line Items I questioned

1. Gain on Sale of Property Classified as Operating

  • No description in notes, laid out as operating in original Income Statement

2. Income from Equity Investees

  • Royalties and gross margin receipt from franchisees