Starbuck's Capm and Sources for Capital Essay

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Starbuck’s CAPM and Sources for Capital

Module 3 SLP
FIN301: Principles of Finance
Dr. Sharifzadeh
August 31, 2011

Starbuck’s CAPM and Sources for Capital By definition beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns (Investopedia, 2011). According to Wikipedia (2011), in finance, CAPM is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to an already well-diversified portfolio, given that asset's non-diversifiable
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That way I can build a diversified portfolio (Yahoo Finance, 2011). When examining the structure and activities in Starbucks organization and identifying two projects or events that required an investment; other than normal operating expenses, cash requirements for the remainder of fiscal 2011 are expected to consist primarily of capital expenditures for remodeling and refurbishment of, and equipment upgrades for, existing company-operated stores, systems and technology investments in stores and in the support infrastructure, and new company-operated stores. Total capital expenditures for fiscal 2011 are expected to range from $550 million to $600 million. Starbucks expect to use their cash and short-term investments, including any potential future borrowings under the credit facility and our commercial paper program, to invest in our core businesses, including product innovations and related marketing support, and other new business opportunities related to our core businesses. Starbucks believe that future cash flows generated from operations and existing cash and short-term investments will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for the foreseeable future. Starbucks may use their available cash resources to make proportionate capital contributions to our equity method and cost method investees. They may also seek strategic acquisitions to leverage existing capabilities and further

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