Question: Reverse Engineering for Starbucks Corporation (Medium) In January 2008, the 738.3 million outstanding shares of Starbucks Corporation traded at $20 each. Analysts; consensus earning-per-share estimates of $1.03 for the fiscal year ending September 30, 2008, gave the firm a forward PIE of 19.4. The firm reported earnings per share for 2007 of $0.90, up from $0.74 a year earlier. The following information was garnered from the firm financial statements (in millions):
a. From these statements, calculate the following for 2007 (with beginning-of-period balance sheet numbers in denominators where applicable):
( 1) Core operating profit margin
(2) Core return on net operating assets (core RNOA)
(3) Asset turnover
( 4) Growth rate for net operating assets
b. Using these numbers and a required return of9 percent, forecast residual operating income (ReOI) for fiscal year 2008.
c. What is the stock market implied rate of growth for residual operating income after 2008?