Starbucks Finanancial
Starbucks Finanancial
At the end of a companys fiscal year, financial statements are completed. Financial statements are written reports of an organizations financial status. These reports include the balance sheet, changes to retained earnings, profit and loss statement, cash flows, and other forms of financial analysis that are important to management, stock holders, bankers and investors. These statements consist of account names and amounts taken from accounting records. However, in order to provide a complete and accurate record of a companys financial standing, a section entitled notes to the financial state must be examined. These notes provide an explanation and document certain items which are either presented in the financial statements or affect the financial position and performance of the reporting entity.
Notes should be arranged in the same order as the financial statement captions to which they refer. If notes are presented on a separate page or pages, they should be placed immediately following the basic financial statements, and each page should be titled with the name of the entity and the caption “NOTES TO FINANCIAL STATEMENTS”. Without these disclosures, users of the financial statements who are uninformed about the operation of an entity and how its financial statements are compiled would have a difficult time accurately assessing the operation. This paper will examine the disclosures contained in the notes to the financial statement for Starbucks Coffees quarterly reporting period ending January 1, 2006.
The Starbucks reporting period ending January 1, 2006 contained 6 notes to the financial statement. Note 1 was written to give insight on the financial statement preparation. Note 1 states certain reclassifications of prior years balances have been made to conform to the current format. Therefore the results of operations for the 13-week period ended January 1, 2006, are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 1, 2006.
Note 2 contain a summary of information significant accounting policies and accounting for stock for stock based compensation. Starbucks adopted the fair value recognition provision using the modified-prospective transition method. Under this transition method, stock-based compensation expense was recognized in the consolidated financial statements for granted, modified, or settled stock options and for expense related to the ESPP, since the related purchase discounts exceeded the amount allowed under SFAS 123R for non-compensatory treatment a for the first fiscal quarter. Prior to the adoption of SFAS 123R, Starbucks presented all tax benefits resulting from the exercise of stock options as operating cash inflows in the consolidated statements of cash flows, in accordance with the provisions of the Emerging Issues Task Force (“EITF”) Issue No 00-15, “Classification in the Statement of Cash Flows of the Income Tax Benefit Received by a Company upon Exercise of a Nonqualified Employee Stock Option.”
Note 3 contain information