Libby_7e_MBA_Companion_Solutions

4 what is the impact on starbucks 2009 debt to equity

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Unformatted text preview: million (see calculations below). 4. What is the impact on Starbucks’ 2009 debt-to-equity ratio of adding the present value of its operating leases to the liability section of its 2009 balance sheet? • Starbucks’ 2009 debt-to-equity ratio before the adjustments is 0.83 ($2,531.1 / 3,045.7). After the adjustment it jumps to 1.96 ($5,966.0 / 3,045.7). 5. Would making the adjustment in #4 change your opinion about Starbucks’ credit worthiness? • Probably not since Starbucks tends to generate a lot of operating cash flows ($1,389.0 million in 2009), enough to easily cover its operating lease obligations. Page 13 of 21 END-OF-CHAPTER MATERIAL STARBUCKS’ 2009 BALANCE SHEET STARBUCKS CORPORATION CONSOLIDATED BALANCE SHEETS (In millions, except per share data) Sep 27, 2009 Sep 28, 2008 $ 599.8 21.5 44.8 271.0 664.9 147.2 286.6 2,035.8 71.2 352.3 2,536.4 253.8 68.2 259.1 $5,576.8 $ 269.8 3.0 49.5 329.5 692.8 169.2 234.2 1,748.0 71.4 302.6 2,956.4 261.1 66.6 266.5 $5,672.6 $ — 267.1 307...
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This homework help was uploaded on 03/27/2014 for the course ACCOUNTING 151 taught by Professor Chinn during the Spring '12 term at Lehigh University .

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