Review Starbuck’s Statement of Cash Flows activity for past three years using th

Question

Review Starbuck’s Statement of Cash Flows activity for past three years using the information found in the 10-k report.

a.     Write a short, bulleted analysis of the company’s use of cash flow from operating activities to cover investing and financing activities over the past three years. In other words, how did the company use the cash received from regular operations [sales of coffee and other products] on investing and financing activities over the past three years?

b.     Write a short, bulleted analysis of the company’s sources of cash flows over the past three years. In other words, what cash inflows came from investing and financing activities over the past three years?

c.     Compare the cash flow from operating activities to combined change in cash flow from investing and financing activities. If cash flow from operating activities does NOT cover investing and financing activities, then write another short, bulleted analysis of the use of cash flow from financing activities in the past. Discuss the likelihood that the company will adequately finance future investing/financing activities with cash flow from operations. Include financial information and narrative of corporate actions to support your analysis.

Explanation / Answer

The data availabe on internet is for year ended Sep 27,2015, Sep 28,2014, Sep 29,2013

Ans 1 27-Sep-15 28-Sep-14 29-Sep-13 Ans 1 Total Cash Flow From Operating Activities 3749100 607800 2908300 Total cash flow from Investing activities -1520300 -817700 -1411200 Total cash flow from Financing activities -2256500 -623300 -108200 Total of Investing and Financinf activity -3776800 -1441000 -1519400 Funds used from operations 3749100 607800 1519400 Remaing from reatined Earnings 27700 833200 As the company in all the three period did not have sufficient cash flow from operating activities so it has used the cash flow from opearting activities till the extent it is avialable The rest is funded by Retained earnings An 2 ` 27-Sep-15 28-Sep-14 29-Sep-13 Total Cash Inflow from Investing Activities Sale of Investments 60900 362300 362300 785500 Cash Inflow from Financing Activities Net Borrowings 238400 748500 714500 1701400 Total 299300 1110800 1076800 If we see tha data of last three years there is sale of Investment totalling $785500 but the cash outflows from investing activities is much more. The sale of investment in 2015 is less than the sale in 2014 and 2013. This shows that inflow is not sufficient to cover the outflows so this shows compnay is investing more amnd more If we see tha data of last three years there is borrowings totalling $1701400 but the cash outflows from financing activities is much more. The borrowings 2015 is less than the borrowings in 2014 and 2013. This shows that inflow is not sufficient to cover the outflows so this shows company is paying dividend and purchasing back its stock Ans 3 ` 27-Sep-15 28-Sep-14 29-Sep-13 Ans 1 Total Cash Flow From Operating Activities 3749100 607800 2908300 Total cash flow from Investing activities -1520300 -817700 -1411200 Total cash flow from Financing activities -2256500 -623300 -108200 Total of Investing and Financinf activity -3776800 -1441000 -1519400 Funds used from operations 3749100 607800 2908300 (Deficiency)/Surplus -27700 -833200 1388900 In 2015 and 2016 there was not sufficient cash from opeartions to cover investing and financing activity. But in 2013 it was sufficient to cover both activities. This also shows that there were more borrowings in 2013 and less purchase of its own stock which made cash outflow less than in comparison with 2014 and 2015 So, if there can be proper borrowings, or purchase of own stock is done more sysytematically after seeing the cash flow from opeartions than the cash flow opeartions will be suffiient to fund cash from financiang and investing activity

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