Question

Why Operating Cash Flow is best tool to evaluate Starbucks Company? Describe on 2 Paragraphs with 1 reference.

Answer 1

Reasons are :

1. Cash flow from operating activities depicts the cash generation from core business of company. Operating income statement is nothing but the net income statement of day to day operation of company. Cash flow statement helps to keep a track on exact figures of cash inflows and outflows from various operating activities carried out by company.

So as the starbucks almost 90% of income is from day to day operation at various locations of countries , it is best flow statement.

2. Another one is the primary activities are in retail coffee and snack stores. And the daily maintenance of inventory as it is the most important part of such company , operating cashflow is best for evaluating starbucks.

3. One can refer operating activities statement Annual Cahflow and draw the conclusion about the operating cashflow evaluation advantage