Computing Return on Equity

Computing Return on Equity    (L04)

starbucks reports net income for 2012 of $1,383.8 million. its stockholders’ equity is $4,387.3 million and $5,114.5 million for 2011 and 2012, respectively.

a.       Compute its return on equity for 2012.

b.       starbucks repurchased over $501 million of its common stock in 2012. how did this repurchase affect starbucks’ rOe?

c.       Why do you think a company like starbucks repurchases its own stock?