What is stock market implied rate of growth for reoi

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Reference no: EM131491144

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?

Reference no: EM131491144

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