Question

Many parties provide the cash (or capital) to finance the acquisition of SBUX’s assets. Often overlooked capital providers are suppliers that we have not paid, municipalities and power companies that we have not paid, and customers that give us cash in advance of our delivering a product or service. These liabilities are reported in the current liabilities section of the balance sheet. Although these parties are technically capital providers, they are usually thought of as financing the current assets section of the balance sheet. The long-term suppliers of capital provide the cash for the long-term assets (i.e., the productive capacity). Who are the suppliers of long-term financing for SBUX and how much is each providing at September 27, 2015?

Sep 27, 2015 ASSETS Current assets Cash and cash equivalents Short-tem investments Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes, net 1,530.1 S 81.3 719.0 1,306.4 334.2 381.7 4,352.7 312.5 352.0 4,088.3 828.9 415.9 520.4 1,575.4 2,446.1 S Total current assets Long-tem investments Equity and cost investments Property, plant and equipment, net Deferred income taxes, net Other long-term assets Other intangible assets Goodwill TOTAL ASSETS LIABILITIES AND EQUITY Current liabilities: 684.2 S Accounts payable Accrued liabilities Insurance reserves Stored value card liability 1,760.7 224.8 983.8 3,653.5 2,347.5 625.3 6,626.3 Total curment liabilities Long-tem debt Other long-term liabilities Total liabilities Shareholders' equity Common stock ($0.001 par value)- authorized, 2,400.0 shares; issued and outstanding, 1,485.1 and 1,499.1 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income/(loss) 41.1 5,974.8 (199.4) 5,818.0 Total shareholders' equity Noncontrolling interest Total equity 5,819.8 TOTAL LIABILITIES AND EQUITY 2,446.1 S

Answer 1

Long term suppliers are financial institutions ( like banks etc.) who provide term loan to finance long term assets (i.e. productive capacity). They provide loan by cheque in the name of the supplier of machinery or other productive items.

Hence financial institutions (like banks etc ) are the long term suppliers for financing SBUX.

They are providing at September 2015 for financing capital following amount:-

Long term supplier i.e. financial institution provides $ 2347.5 and for financing the current assets section of balance sheet includes:-

Accrued Liability i.e. municipalities and power companies had provide their service but their dues still outstanding provides $ 1760.7.

Account payable include those supplier who supplies their goods to SBUX but their payment has not been paid hence it provides $684.2.

Store value card are smart card –based or alternative to cash. SVCs contain a chip which stores currency and processes transactions. SVCs can verify and perform financial transactions in an "offline" mode, versus traditional debit/credit cards. Hence customer provides their SVC to SBUX for delivering our product or services therefore it provides $ 983.8.