Financial Analysis of Starbucks: Accounts Receivable, Fixed Assets and Debt Financing

You have been reading the textbook and have covered four chapters! If you have opened the most recent annual report, you have noticed it is quite lengthy and detailed. There is a link to the financial reports if you have not found them yet. You do NOT have to focus on all of it right now. Let’s start by focusing on just what you need for this week. We will go further in future weeks, and you will be more prepared. 

Here is what you need to do this week: 

1.Take the balance sheet and the income statement and separate them from everything else. Those are the only two documents you need for this assignment. 

2.You will perform a horizontal and vertical analysis on each of these documents. Below, you will find links to some videos and tutorials to assist you with this. Your book also has helpful information. If you have questions, your instructor is available to assist. Excel is an excellent program to use for this analysis. 

3.The written paper will include your observations based on your analysis. For instance, did accounts receivable increase? If so, did sales increase? Did plant, property, and equipment increase? If so, what does this tell you about the company? Did sales increase or decrease? What about cost of sales? If you were going to look further into the company, what would youwant to investigate? 

Analyse the Starbucks’ accounts receivable, fixed assets, and debt financing. Use basic financial analysis to examine any horizontal and any vertical changes in Starbucks’ accounts receivable, fixed assets, and debt financing balances over time. Be sure also to discuss how Starbucks’ methods for accounting for receivables and evaluating uncollectible receivables, purchase of fixed assets, and methods of debt financing impact the recording process and presentation of financial statements (Critical Element II). In other words, what are this company’s methods for accounting for receivables and evaluating uncollectible receivables? What types of fixed assets are acquired, and what methods are preferred for debt financing? How do those affect how financial information is communicated?  Conduct horizontal and vertical analyses for the balance sheet and income statement accounts and report any significant observations for a two-year period. You should include a table of your calculations as an appendix to your analysis. Include all calculations in an Excel document. Specifically discuss the following categories: 

1.Accounts Receivable: 

1.Use basic financial analysis to examine any horizontal changes in Starbucks’ accounts receivable balances over time. 

2.Use basic financial analysis to examine any vertical changes in Starbucks’ accounts receivable balances over time. 

3.Analyze how Starbucks’ methods for accounting for receivables and evaluating uncollectible receivables impact the recording process and  presentation of financial statements. In other words, what are this company’s methods for accounting for receivables and evaluating  uncollectible receivables, and how do those affect how financial information is communicated? 

2.Asset Acquisition, Depreciation, and Amortization: 

1.Use basic financial analysis to examine any horizontal changes in Starbucks’ fixed assets, intangible assets, depreciation, and amortization over time. 

2.Use basic financial analysis to examine any vertical changes in Starbucks’ fixed assets, intangible assets, depreciation, and amortization over time. 

3.Analyze Starbucks’ methods for fixed asset and intangible asset acquisitions as well as depreciation and amortization, including asset categorization. How do these methods affect the balance sheet, income statement, and statement of cash flows? 

3.Debt Financing 

1.Use basic financial analysis to examine any horizontal changes in Starbucks’ short- and long-term debt over time. 

2.Use basic financial analysis to examine any vertical changes in Starbucks’ short- and long-term debt over time. 

3.Analyze Starbucks’ method of debt financing. In your analysis, you should address both current and long-term liabilities, including the  issuance of bonds.