Sam’s Sandwich Delivery

1. Given the profit loss (income statement) and balance sheet for Sam’s Sandwich Delivery (Table 4-8), answer the following:

a. Calculate the following ratios: current, quick, accounts receivable turnover, fixed asset turnover.

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· Current ratio= current assets / current liabilities

= 28,253 / 10,659

= 2.659

· Quick ratio = current assets-inventory-prepaid expenses /current liability

= 28,253-2,607-0 / 10,659

= 2.47

· Account receivable turnover = net credit sales / average account receivable

= 172,700 / 6843

=25.249

· Fixed assets turnover =net sales /average fixed assets

= 172,700 / 20,351

= 8.499

b. Using the inventory figure on the balance sheet as average inventory, calculate the inventory turnover ratio.

· Inventory turnover ratio = cost of goods sold / average inventory

= 52,067 / 2607

= 19.979

c. Calculate the debt-to-equity ratio, debt-to-total asset ratio, and operating profit margin ratio.

· Debt-to-equity ratio = total liabilities / total equity

= 29,285 / 19,319

= 1.515

· Debt-to-total asset ratio = total liabilities / total assets

= 29,285 / 48,604

=0.603

· Operating profit margin ratio = operating income /net sales

=9,516 / 172,700

= 0.055

d. Perform a vertical analysis of the income statement.

e. Perform a vertical analysis of the balance sheet.

f. Based on your analysis, would you consider investing in Sam’s Sandwich Delivery?

Ans: based on my analysis ,I wouldn’t consider investing in sam’s sandwich delivery because the net profit margin is too low.

 

 

 

Table 4-8 Financial Statements for Sam’s Sandwich Delivery

Revenues

Retail Sales68,283$

Wholesale Sales104,417

Total Revenues172,700$

Cost of Sales52,067

Gross Profit120,633$

Total Operating Expenses111,117

Operating Profit9,516$

Other Income/Expenses

Interest Income41

Interest Expense(651)

Depreciation-Store Equipment(292)

Total Other Income/Expenses(902)

Net Profit8,614$

Assets

Current Assets

Change Fund569$

Cash in Bank-Checking8,612

Cash in Bank-Savings9,622

Accounts Receivable6,843

Inventories2,607

Total Current Assets28,253$

Fixed Assets

Furniture and Fixtures4,296

Less: Accum Depreciation4,110 186

Equipment68,293

Less: Accum Depreciation67,725 568

Transportation Equipment31,168

Less: Accum Depreciation11,571 19,597

Total Fixed Assets20,351$

Total Assets48,604$

Current Liabilities

Accounts Payable Trade6,208

Accrued Payroll Taxes3,464

Accrued Sales Taxes987

Total Current Liabilities10,659$

Long-Term Liabilities

Auto Loans Payable18,626

Total Long-Term Liabilities18,626$

Total Liabilities29,285$

Stockholder’s Equity

Common Stock83,081

Retained Earnings(72,376)

Net Profit/Loss8,614

Total Equity19,319

Balance Sheet as of 06-30-2013

Profit Loss (Income Statement) for Six Months Ending 06-30-2013

T4-1

Table 4-1 Sample Income Statement Data
Markadel Retail Store
Income Statement Data
From January 1 through December 31, 2005 and 2006
Account Year 2005 Year 2006 Vertical Analysis 2005 (%) Horizontal Analysis 2005-2006 (%)
Gross sales $ 300,580 $ 315,487 101.73 4.96
Less returns 5,124 9,253 1.73 80.58
Net sales 295,456 306,234 100.00 3.65
Cost of goods sold 101,250 120,002 34.27 18.52
Gross profit 194,206 186,232 65.73 (4.11)
Operating expenses
Administration 74,983 76,450 25.38 1.96
Advertising 35,214 37,250 11.92 5.78
Overhead 27,120 28,300 9.18 4.35
Operating income 56,889 44,232 19.25 (22.25)
Interest 7,000 6,250 2.37 (10.71)
Earnings before taxes 49,889 37,982 16.89 (23.87)
Taxes 7,483 5,697 2.53 (23.87)
Net profit $ 42,406 $ 32,285 14.35 (23.87)

T4-2

Table 4-2 Sample Balance Sheet Data
Markadel Retail Store
Balance Sheet Data
As of December 31, 2005 and 2006
Category Year 2005 Year 2006 Vertical Analysis 2005 (%) Horizontal Analysis 2005-2006 (%)
Current assets
Cash $ 10,210 $ 8,175 4.77 (19.93)
Notes receivable 3,000 5,000 1.40 66.67
Accounts receivable 15,320 18,025 7.16 17.66
Inventory 35,020 50,515 16.37 44.25
Prepaid insurance 1,000 1,500 0.47 50.00
Prepaid legal 1,280 1,602 0.60 25.16
Total current assets 65,830 84,817 30.77 28.84
Fixed assets
Land 25,000 25,000 11.69 0.00
Buildings 135,000 135,000 63.10 0.00
Accumulated depreciation (47,000) (50,000) 21.97 6.38
Equipment 58,250 58,250 27.23 0.00
Accumulated depreciation (23,150) (28,150) 10.82 21.60
Total fixed assets 148,100 140,100 69.23 (5.40)
Total assets $ 213,930 $ 224,917 100.00 5.14
Current liabilities
Accounts payable 34,250 40,003 16.01 16.80
Notes payable 25,000 33,035 11.69 32.14
Total current liabilities 59,250 73,038 27.70 23.27
Long-term debt
Mortgage payable 65,000 63,000 30.38 (3.08)
Bank loan payable 10,000 15,000 4.67 50.00
Total long-term debt 75,000 78,000 35.06 4.00
Total liabilities 134,250 151,038 62.75 12.51
Owner’s equity 79,680 73,879 37.25 (7.28)
Total liabilities and owner’s equity $ 213,930 $ 224,917 100.00 5.14

T4-3

Table 4-3 Balance Sheet, Sample Company
Vertical Vertical
Category 2005 Analysis 2005 2006 Analysis 2006
Current assets $ 7,000,000 46.67% $ 9,000,000 60.00%
Total fixed assets 8,000,000 53.33% 6,000,000 40.00%
Total assets 15,000,000 100.00% 15,000,000 100.00%
Current liabilities $ 3,000,000 20.00% $ 1,000,000 6.67%
Long term debt 4,000,000 26.67% 4,000,000 26.67%
Owner’s equity 8,000,000 53.33% 10,000,000 66.67%
Total liabilities &
owner’s equity $ 15,000,000 100.00% $ 15,000,000 100.00%

T4-4

Table 4-4 Sample Balance Sheet
2005 2006 Horizontal Analysis
Current assets $ 7,000,000 $ 9,000,000 28.57%
Total fixed assets 8,000,000 6,000,000 -25.00%
Total assets 15,000,000 15,000,000 0.00%
Current liabilities $ 3,000,000 $ 1,000,000 -66.67%
Long term debt 4,000,000 4,000,000 0.00%
Owner’s equity 8,000,000 10,000,000 25.00%
Total liabilities &
owner’s equity $ 15,000,000 $ 15,000,000 0.00%

T4-5

Table 4-5 Starbucks Corporation Consolidated Balance Sheet*
CONSOLIDATED BALANCE SHEETS
In thousands, except share data
Fiscal Year Ended Oct 2, 2005 Oct 3, 2004
ASSETS
Current assets:
Cash and cash equivalents $ 173,809 $ 145,053
Short-term investments — available-for-sale securities 95,379 483,157
Short-term investments — trading securities 37,848 24,799
Accounts receivable, net of allowances of $3,079 and $2,231, respectively 190,762 140,226
Inventories 546,299 422,663
Prepaid expenses and other current assets 94,429 71,347
Deferred income taxes, net 70,808 63,650
Total current assets 1,209,334 1,350,895
Long-term investments — available-for-sale securities 60,475 135,179
Equity and other investments 201,461 167,740
Property, plant and equipment, net 1,842,019 1,551,416
Other assets 72,893 85,561
Other intangible assets 35,409 26,800
Goodwill 92,474 68,950
TOTAL ASSETS $ 3,514,065 $ 3,386,541
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 220,975 $ 199,346
Accrued compensation and related costs 232,354 208,927
Accrued occupancy costs 44,496 29,231
Accrued taxes 78,293 62,959
Short-term borrowings 277,000
Other accrued expenses 198,082 123,684
Deferred revenue 175,048 121,377
Current portion of long-term debt 748 735
Total current liabilities 1,226,996 746,259
Deferred income taxes, net 21,770
Long-term debt 2,870 3,618
Other long-term liabilities 193,565 144,683
Shareholders’ equity:
Common stock ($0.001 par value) and additional paid-in-capital — authorized, 1,200,000,000 shares; issued and outstanding, 767,442,110 and 794,811,688 shares, respectively, (includes 3,394,200 common stock units in both periods) 90,968 956,685
Other additional paid-in-capital 39,393 39,393
Retained earnings 1,939,359 1,444,892
Accumulated other comprehensive income 20,914 29,241
Total shareholders’ equity 2,090,634 2,470,211
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,514,065 $ 3,386,541
Source: Securities and Exchange Commission, Washington DC, Edgar Online, Form 10-K, Filing Date: 12/16/2005.

T4-6

Table 4-6 Starbucks Corporation Consolidated Statement of Earnings
CONSOLIDATED STATEMENTS OF EARNINGS
In thousands, except earnings per share
Fiscal Year Ended 2-Oct-05 Oct 3, 2004 Sept 28, 2003
Net revenues:
Company-operated retail $ 5,391,927 $ 4,457,378 $ 3,449,624
Specialty:
Licensing 673,015 565,798 409,551
Foodservice and other 304,358 271,071 216,347
Total specialty 977,373 836,869 625,898
Total net revenues 6,369,300 5,294,247 4,075,522
Cost of sales including occupancy costs 2,605,212 2,191,440 1,681,434
Store operating expenses 2,165,911 1,790,168 1,379,574
Other operating expenses 197,024 171,648 141,346
Depreciation and amortization expenses 340,169 289,182 244,671
General and administrative expenses 357,114 304,293 244,550
Subtotal operating expenses 5,665,430 4,746,731 3,691,575
Income from equity investees 76,745 59,071 36,903
Operating income 780,615 606,587 420,850
Interest and other income, net 15,829 14,140 11,622
Earnings before income taxes 796,444 620,727 432,472
Income taxes 301,977 231,754 167,117
Net earnings $ 494,467 $ 388,973 $ 265,355
Net earnings per common share — basic $ 0.63 $ 0.49 $ 0.34
Net earnings per common share — diluted $ 0.61 $ 0.47 $ 0.33
Weighted average shares outstanding:
Basic 789,570 794,347 781,505
Diluted 815,417 822,930 803,296
Source: Securities and Exchange Commission, Washington DC, Edgar Online, Form 10-K, Filing Date: 12/16/2005.

T4-7

Table 4-7 Starbucks Corporation Consolidated Statement of Cash Flows*
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Fiscal Year Ended Oct 2, 2005 Oct 3, 2004 Sept 28, 2003
OPERATING ACTIVITIES
Net earnings $ 494,467 $ 388,973 $ 265,355
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 367,207 314,047 266,258
Provision for impairments and asset disposals 20,157 13,568 7,784
Deferred income taxes, net (31,253) (3,770) (6,767)
Equity in income of investees (49,633) (31,801) (21,320)
Distributions of income from equity investees 30,919 38,328 28,966
Tax benefit from exercise of nonqualified stock options 109,978 63,405 36,590
Net accretion of discount and amortization of premium on marketable securities 10,097 11,603 5,996
Cash provided/(used) by changes in operating assets and liabilities:
Accounts receivable (49,311) (24,977) (8,384)
Inventories (121,618) (77,662) (64,768)
Accounts payable 9,717 27,948 24,990
Accrued compensation and related costs 22,711 54,929 42,132
Deferred revenue 53,276 47,590 30,732
Other operating assets and liabilities 56,894 36,356 8,554
Net cash provided by operating activities 923,608 858,537 616,118
INVESTING ACTIVITIES
Purchase of available-for-sale securities (643,488) (887,969) (481,050)
Maturity of available-for-sale securities 469,554 170,789 218,787
Sale of available-for-sale securities 626,113 452,467 141,009
Acquisitions, net of cash acquired (21,583) (7,515) (69,928)
Net additions to equity investments, other investments and other assets (7,915) (64,747) (47,259)
Net additions to property, plant and equipment (643,989) (412,537) (377,983)
Net cash used by investing activities (221,308) (749,512) (616,424)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 163,555 137,590 107,183
Borrowings under revolving credit facility 277,000
Principal payments on long-term debt (735) (722) (710)
Repurchase of common stock (1,113,647) (203,413) (75,710)
Net cash provided/(used) by financing activities (673,827 (66,545) 30,763
Effect of exchange rate changes on cash and cash equivalents 283 3,111 3,278
Net increase in cash and cash equivalents 28,756 45,591 33,735
CASH AND CASH EQUIVALENTS
Beginning of period 145,053 99,462 65,727
End of period $ 173,809 $ 145,053 $ 99,462
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 1,060 $ 370 $ 265
Income taxes $ 227,812 $ 172,759 $ 140,107
Source: Securities and Exchange Commission, Washington DC, Edgar Online, Form 10-K, Filing Date: 12/16/2005.

T4-8

Table 4-8 Financial Statements for Sam’s Sandwich Delivery
Profit Loss (Income Statement) for Six Months Ending 06-30-2013
Revenues
Retail Sales $ 68,283
Wholesale Sales 104,417
Total Revenues $ 172,700
Cost of Sales 52,067
Gross Profit $ 120,633
Total Operating Expenses 111,117
Operating Profit $ 9,516
Other Income/Expenses
Interest Income 41
Interest Expense (651)
Depreciation-Store Equipment (292)
Total Other Income/Expenses (902)
Net Profit $ 8,614
Balance Sheet as of 06-30-2013
Assets
Current Assets
Change Fund $ 569
Cash in Bank-Checking 8,612
Cash in Bank-Savings 9,622
Accounts Receivable 6,843
Inventories 2,607
Total Current Assets $ 28,253
Fixed Assets
Furniture and Fixtures 4,296
Less: Accum Depreciation 4,110 186
Equipment 68,293
Less: Accum Depreciation 67,725 568
Transportation Equipment 31,168
Less: Accum Depreciation 11,571 19,597
Total Fixed Assets $ 20,351
Total Assets $ 48,604
Current Liabilities
Accounts Payable Trade 6,208
Accrued Payroll Taxes 3,464
Accrued Sales Taxes 987
Total Current Liabilities $ 10,659
Long-Term Liabilities
Auto Loans Payable 18,626
Total Long-Term Liabilities $ 18,626
Total Liabilities $ 29,285
Stockholder’s Equity
Common Stock 83,081
Retained Earnings (72,376)
Net Profit/Loss 8,614
Total Equity 19,319
Total Liabilities and Equity $ 48,604

Q6

Table 4-5 Starbucks Corporation Consolidated Balance Sheet*
CONSOLIDATED BALANCE SHEETS
In thousands, except share data
Fiscal Year Ended Oct 2, 2005 Oct 3, 2004 Horizontal Analysis
ASSETS
Current assets:
Cash and cash equivalents $ 173,809 $ 145,053 19.82%
Short-term investments — available-for-sale securities 95,379 483,157 -80.26%
Short-term investments — trading securities 37,848 24,799 52.62%
Accounts receivable, net of allowances of $3,079 and $2,231, respectively 190,762 140,226 36.04%
Inventories 546,299 422,663 29.25%
Prepaid expenses and other current assets 94,429 71,347 32.35%
Deferred income taxes, net 70,808 63,650 11.25%
Total current assets 1,209,334 1,350,895 -10.48%
Long-term investments — available-for-sale securities 60,475 135,179 -55.26%
Equity and other investments 201,461 167,740 20.10%
Property, plant and equipment, net 1,842,019 1,551,416 18.73%
Other assets 72,893 85,561 -14.81%
Other intangible assets 35,409 26,800 32.12%
Goodwill 92,474 68,950 34.12%
TOTAL ASSETS $ 3,514,065 $ 3,386,541 3.77%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 220,975 $ 199,346 10.85%
Accrued compensation and related costs 232,354 208,927 11.21%
Accrued occupancy costs 44,496 29,231 52.22%
Accrued taxes 78,293 62,959 24.36%
Short-term borrowings 277,000
Other accrued expenses 198,082 123,684 60.15%
Deferred revenue 175,048 121,377 44.22%
Current portion of long-term debt 748 735 1.77%
Total current liabilities 1,226,996 746,259 64.42%
Deferred income taxes, net 21,770
Long-term debt 2,870 3,618 -20.67%
Other long-term liabilities 193,565 144,683 33.79%
Shareholders’ equity:
Common stock ($0.001 par value) and additional paid-in-capital — authorized, 1,200,000,000 shares; issued and outstanding, 767,442,110 and 794,811,688 shares, respectively, (includes 3,394,200 common stock units in both periods) 90,968 956,685 -90.49%
Other additional paid-in-capital 39,393 39,393 0.00%
Retained earnings 1,939,359 1,444,892 34.22%
Accumulated other comprehensive income 20,914 29,241 -28.48%
Total shareholders’ equity 2,090,634 2,470,211 -15.37%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,514,065 $ 3,386,541 3.77%
Source: Securities and Exchange Commission, Washington DC, Edgar Online, Form 10-K, Filing Date: 12/16/2005.

Q7

Table 4-5 Starbucks Corporation Consolidated Balance Sheet*
(in thousands, except share data)
3-Oct-04 28-Sep-03 Vertical Analysis
ASSETS
Current Assets
Cash and cash equivalents $ 299,128 $ 200,907 8.82%
Short-term investments-Available-for-sale securities 329,082 128,905 9.71%
Short-term investments-Trading securities 24,799 20,199 0.73%
Accounts receivable, net of allowances of $2,231 and $4,809, respectively 140,226 114,448 4.14%
Inventories 422,663 342,944 12.47%
Prepaid expenses and other current assets 71,347 55,173 2.10%
Deferred income taxes, net 63,650 47,404 1.88%
Total current assets 1,350,895 909,980 39.84%
Long-term investments – availabe-fro-sale securities 135,179 136,159 3.99%
Equity and other investments 171,747 144,257 5.07%
Property, plant, and equipment, net 1,551,416 1,447,738 45.76%
Other assets 85,561 52,113 2.52%
Other intangible assets 26,800 24,942 0.79%
Goodwill, net 68,950 63,344 2.03%
Total Assets $ 3,390,548 $ 2,778,533 100.00%
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities:
Accounts payable $ 199,346 $ 168,984 5.88%
Accrued compensation and related costs 208,927 152,608 6.16%
Accrued occupancy costs 29,231 21,741 0.86%
Accrued taxes 62,959 54,882 1.86%
Other accrued expenses 123,684 101,800 3.65%
Deferred revenue 121,377 73,476 3.58%
Current portion of long-term debt 735 722 0.02%
Total current liabilities 746,259 574,213 22.01%
Deferred income taxes, net 21,770 12,542 0.64%
Long-term debt 3,618 4,354 0.11%
Other long-term liabilities 144,683 116,314 4.27%
Shareholders’ Equity:
Common stock ($0.001 par value) and additional paid-in capital — authorized, 600,000,000 shares; issued and outstanding, 397,405,844 and 393,692,536 shares, respectively, (includes 1,697,100 common stock units in both periods) 956,685 959,103 28.22%
Other additional paid-in-capital 39,393 39,393 1.16%
Retained Earnings 1,448,899 1,058,340 42.73%
Accumulated other comprehensive income 29,241 14,274 0.86%
Total Shareholders’ equity 2,474,218 2,071,110 72.97%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 3,390,548 $ 2,778,533 100.00%
* Secutities and Exchange Commission, Washington DC 20549, Form 10-K Annual Report.

Q9

Table 4-6 Starbucks Corporation Consolidated Statement of Earnings
(Income Statement)
(in thousands, except earning per share)
Fiscal year ended: 3-Oct-04 28-Sep-03 Horizontal Analysis
Net revenues
Company-operated retail $ 4,457,378 $ 3,449,624 29.21%
Specialty
Licensing 565,798 409,551 38.15%
Food service and other 271,071 216,347 25.29%
Total specialty 836,869 625,898 33.71%
Total Net Revenues $ 5,294,247 $ – 0 $ 4,075,522 29.90%
Cost of sales and related occupancy costs 2,191,440 1,681,434 30.33%
Store operating expenses 1,790,168 1,379,574 29.76%
Other operating expenses 171,648 141,346 21.44%
Depreciation and amortization 289,182 244,671 18.19%
General and administrative expenses 304,293 244,550 24.43%
Subtotal operating expenses 4,746,731 3,691,575 28.58%
Income from equity investees 60,657 38,396 57.98%
Operating income 608,173 422,343 44.00%
Interest and other income, net 14,140 11,622 21.67%
Gain on sale of investment

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