Hello I am going to attach my previous papers for this assignment as well as the rubric. Overall in the rubric I need assistance writing part 5 the conclusion. please give the best answer after reviewing the other papers and submit an effective and concise conclusion for the papers. Also can you put all of the previous together with the conclusion I am submitting them as one assignment.

Answer Starbucks Corporation Formula Sept. 27, 2015 Ratio A 1 2 Description Liquidity Ratios Current Ratio Quick Ratio Current Assets/Current Liabilities Quick Assets / Current Liabilities 1.19 0.64 B 1 2 Solvency ratios Debts to Equity Equity Multiplier Total Liabilities/ Equity Total Assets / Equity 1.14 2.14 C 1 2 Profitability Ratios Net Profit Margin Return On Equity (ROE) Net Income/ Sales Net Income/Equity 18.14% 47.38% Times Times Times Times RATIO ANALYSIS STARBUCKS CORPORSTION FOR 2015 Ratio Analysis Starbucks Corporation Johnathan Gulston MBA 503 RATIO ANALYSIS STARBUCKS CORPORSTION FOR 2015 Ratio Analysis Ratios for liquidity, solvency and profitability are calculated and analyzed for Starbuck Corporation for the fiscal year ended on September 27, 2015. Liquidity Ratios Current Ratio: 1.19 Times Current ratio is indicator of liquidity position of company and indicates about payment of short term obligations of company as and when due. Current ratio of company for year 2015 is 1.19. The usual standard of this ratio is 2. Current ratio of company is below usual standard of this ratio. Although it is below usual standard but as it is above 1 so it can be considered safe and company will be able to pay its short term obligations as and when due. Quick Ratio: 0.64 Times Quick ratio is also indicator of liquidity position of company and indicates about payment of short term obligations of company as and when due. Quick ratio of company for year 2015 is 0.64. The usual standard of this ratio is 1. Quick ratio of company is below usual standard of this ratio. Although it is below usual standard, but it can be considered safe and company will be able to pay its short term obligations as and when due. Solvency Ratios Debts to Equity: 1.14 Times A debt to equity ratio is also called financial leverage and indicates that what is ratio of total liabilities to stockholders equity. Too high ratio indicates the dependence of company on RATIO ANALYSIS STARBUCKS CORPORSTION FOR 2015 borrowed funds and too low ratio indicates that company is not able to take benefit of tax on interest on debts. The debts to equity ratio of company are 1.14 times which can be considered ideal and long term financial position of company is sound. Equity Multiplier: 2.14 Times The equity multiplier is ratio of total assets to stockholders equity. It indicates share of investors in total assets of company. Equity multiplier of Starbucks is 2.14 times which indicates that total assets of company are appx. Double of equity and long term financial position of company is strong. Profitability Ratios Net Profit Margin: 18.14% Net profit margin ratio is indicator of profitability of company and is percentage of net income to sales revenue. Net profit margin of company is 18.14% which is on higher side and indicates that company is earning high profits. Investment in stock of company is profitable. Return on Equity (ROE): 47.38% Return on equity is indicator of return on stock of common stockholders. ROE of company is 47.38% which is very high. It indicates that value of stock and wealth of investors is increasing. It is return giving investment in company's stock and price of shares of company will increase in future. RATIO ANALYSIS STARBUCKS CORPORSTION FOR 2015 Reference: http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsannual MBA 503 Final Project Guidelines and Rubric Overview There are two summative assessments for this course. For your first assessment, you will be objectively assessed by your completion of a series of MyAccountingLab homework assignments throughout the course. These will measure your understanding of how to communicate the financial performance of companies and how to prepare basic financial statements. For your final project, you will complete a financial analysis of a particular company's financial statements. You will assume the role of an analyst in a fictional company that is looking to glean what it can from the methods and business decisions used at this company. In determining the overall financial health of the company, you will demonstrate an understanding of both the financial calculations that go into financial statements as well as the meaning behind the numbers. Basic accounting skills and knowledge are critical to effective management in today's business environment. Future business leaders need an understanding of the process and rules related to creating financial accounting statements and the meanings behind their individual components in order to make informed business decisions. To demonstrate these skills, you will need to analyze this accounting information in terms of a company's performance and financial health within its industry. This will ultimately help develop your skills as a business leader who is better prepared to manage effectively and make informed management decisions. This final project addresses the following course outcomes: Analyze the financial condition of companies by accurately interpreting basic financial information used for informing business decisions Determine the importance of accounting regulations and reporting requirements in the preparation of financial reports Conduct basic financial analysis that accurately utilizes horizontal, vertical, and ratio techniques to determine the overall financial health of companies The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Four, Six, and Eight. Your final submission, the financial analysis, will be submitted in Module Ten. Prompt You are an analyst for Coffee Connection, a coffee shop located in the Midwest. You have been marginally successful as a company. You are now tasked with analyzing the competition and developing benchmarks for the purpose of both improving profitability and expanding operations. You have identified Starbucks as your most similar competitor. Your job now is to use multiple tools to analyze Starbucks' performance and offer well-researched observations concerning the success and challenges faced by Starbucks. You should include an Excel spreadsheet with all calculations. Specifically the following critical elements must be addressed: I. Introduction: Provide a concise, professional introduction explaining the purpose of your analysis to your executive. II. Horizontal and Vertical Analysis: In this section, you will 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: A. 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? B. 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? C. 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. III. Ratio Analysis: Analyze and discuss the financial performance of Starbucks using financial ratios. Include your calculations and amounts in a table in the appendix of your paper. Be sure to show your calculation for each ratio. A. Liquidity Ratios 1. Accurately present and calculate two liquidity ratios for Starbucks. 2. Discuss what the liquidity ratios reveal about Starbucks, including any description of benchmarks, standard measurements, or other types of analysis used once the ratio amount is known. B. Solvency Ratios 1. Accurately present and calculate two solvency ratios for Starbucks. 2. Discuss what the solvency ratios reveal about the company, including any description of benchmarks, standard measurements, or other types of analysis used once the ratio amounts are known. C. Profitability Ratios 1. Accurately present and calculate two solvency ratios for Starbucks. 2. Discuss what the profitability ratios reveal about the company, including any description of benchmarks, standard measurements, or other types of analysis used once the ratio amounts are known. IV. Rules of Financial Reporting: Consider the following governmental and GAAP reporting requirements for what is mandated that Starbucks include in its financial statements: A. Why is the reporting of control procedures required, and what information is disclosed about Starbucks' control procedures? Justify your response. B. Why is the reporting of segment information required, and what information is disclosed about Starbucks' segment information? Justify your response. C. Why is the reporting of estimates and assumptions required, and what information is disclosed about Starbucks' reporting of estimates and assumptions? Justify your response. D. Why is the reporting of investments and fair value required, and what information is disclosed about Starbucks' investments and fair value reporting? Justify your response. E. Why is the reporting of leases required, and what information is disclosed about Starbucks' lease structure? Justify your response. V. Conclusion: Provide a concise, professional conclusion to your executive detailing the findings of your analysis. What can you learn from Starbucks' financial statements and performance about determining the overall health of companies? Include general suggestions for financial improvements. Milestones Milestone One: Horizontal and Vertical Analysis: Accounts Receivable, Fixed Assets, and Debt Financing In Module Four, you will submit both a horizontal and vertical analysis of 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? Your analysis should be in the form of a 2-3-page paper. Include all calculations in an Excel document. This milestone is graded with the Milestone One Rubric. Milestone Two: Ratio Analysis In Module Six, you will submit the Ratio Analysis portion of the final project. For this milestone, you will be analyzing the financial performance of Starbucks using the financial ratios of liquidity, solvency, and profitability (Critical Element III). Include your calculations and amounts in a table in the appendix of your paper. Be sure to show your calculations for each ratio. You will also discuss what each ratio and ratio category tells the user about the financial health of the company, including stating appropriate methods for comparison such as benchmarking and trend analysis. Your analysis should be in the form of a 2-3-page paper. Include all calculations in an Excel document. Note: To calculate the ratio amounts you may use the document Key Financial Ratios Explained and Set Up in Excel. This Excel document may also be used for your final project. This milestone is graded with the Milestone Two Rubric. Milestone Three: Rules of Financial Reporting In Module Eight, you will submit the Rules of Financial Reporting component of your financial analysis (Critical Element IV). In this milestone, you will consider the following governmental and GAAP reporting requirements for what is mandated that Starbucks include in its financial statements: Why is the reporting of control procedures required, and what information is disclosed about Starbucks' control procedures? Why is the reporting of segment information required, and what information is disclosed about Starbucks' segment information? Why is the reporting of estimates and assumptions required, and what information is disclosed about Starbucks' reporting of estimates and assumptions? Why is the reporting of investments and fair value required, and what information is disclosed about Starbucks' investments and fair value reporting? And last: Why is the reporting of leases required, and what information is disclosed about Starbucks' lease structure? Justify your response to each question. This milestone should be submitted as a 2-3-page paper. This milestone is graded with the Milestone Three Rubric. Final Submission: Financial Analysis In Module Ten, you will submit your 10-12-page final financial analysis. It should be a complete, polished artifact containing all of the critical elements of the final project, including the Introduction (Critical Element I), which will be a concise, professional introduction explaining the purpose of your analysis to your executive, and the Conclusion (Critical Element V), which will be a concise, professional conclusion to your executive detailing the findings of your analysis. Your conclusion should also answer the following question: What can you learn from Starbucks' financial statements and performance about determining the overall health of companies? Include general suggestions for financial improvements. Your financial analysis should reflect the incorporation of feedback gained throughout the course. This final submission will be graded using the Final Project Rubric. Deliverables Milestone One Two Three Deliverable Horizontal and Vertical Analysis: Accounts Receivable, Fixed Assets and Debt Financing Ratio Analysis Rules of Financial Reporting Final Submission: Financial Analysis Module Due Four Grading Graded separately; Milestone One Rubric Six Graded separately; Milestone Two Rubric Eight Graded separately; Milestone Three Rubric Ten Graded separately; Final Project Rubric Final Project Rubric Guidelines for Submission: Your financial analysis should adhere to the following formatting requirements: 10-12 pages (not including cover page or appendix), double-spaced, using 12-point Times New Roman font and the most current guidelines for APA formatting. Include all calculations in an Excel document. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Introduction Exemplary (100%) Meets \"Proficient\" criteria, and explanation expertly balances key detail with brevity for corporate audience Proficient (90%) Provides a concise introduction explaining the purposes of analysis for a corporate audience Analysis: Accounts: Horizontal Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret horizontal changes in accounts receivable balances over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret vertical changes in accounts receivable balances over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how financial methods impact the recording process and presentation of financial statements Uses basic financial analysis to examine any horizontal changes in Starbucks' accounts receivable balances over time Analysis: Accounts: Vertical Analysis: Accounts: Methods Uses basic financial analysis to examine any vertical changes in Starbucks' accounts receivable balances over time Analyzes how Starbucks' methods for accounting for receivables and evaluating uncollectible receivables impact the recording process and financial statement presentation Needs Improvement (70%) Provides an introduction explaining the purposes of analysis for a corporate audience, but presentation is not concise or is missing key details Uses basic financial analysis to examine any horizontal changes in Starbucks' accounts receivable balances over time, but with gaps in accuracy or relevant detail Uses basic financial analysis to examine any vertical changes in Starbucks' accounts receivable balances over time, but with gaps in accuracy or relevant detail Analyzes how Starbucks' methods for accounting for receivables and evaluating uncollectible receivables impact the recording process and financial statement presentation, but with gaps in logic or detail Not Evident (0%) Does not provide an introduction explaining the purposes of analysis for a corporate audience Value 5.5 Does not use basic financial analysis to examine any horizontal changes in Starbucks' accounts receivable balances over time 3.5 Does not use basic financial analysis to examine any vertical changes in Starbucks' accounts receivable balances over time 3.5 Does not analyze how Starbucks' methods for accounting for receivables and evaluating uncollectible receivables impact the recording process and financial statement presentation 4 Analysis: Asset: Horizontal Analysis: Asset: Vertical Analysis: Asset: Methods Analysis: Debt: Horizontal Analysis: Debt: Vertical Analysis: Debt: Method Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret horizontal changes in fixed assets, intangible assets, depreciation, and amortization over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret vertical changes in fixed assets, intangible assets, depreciation, and amortization over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how financial methods impact the balance sheet, income statement, and statement of cash flows Uses basic financial analysis to examine any horizontal changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret horizontal changes in short- and long-term debt over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how to interpret vertical changes in short- and long-term debt over time Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how financial methods impact financial statements Uses basic financial analysis to examine any horizontal changes in Starbucks' short- and longterm debt over time Uses basic financial analysis to examine any vertical changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time Analyzes Starbucks' methods for fixed asset and intangible asset acquisitions as well as depreciation and amortization for how they affect the balance sheet, income statement, and statement of cash flows Uses basic financial analysis to examine any vertical changes in Starbucks' short- and long-term debt over time Analyzes Starbucks' method of debt financing, addressing current and long-term liabilities and the issuance of bonds Uses basic financial analysis to examine any horizontal changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time, but with gaps in accuracy or relevant detail Uses basic financial analysis to examine any vertical changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time, but with gaps in accuracy or relevant detail Analyzes Starbucks' methods for fixed asset and intangible asset acquisitions as well as depreciation and amortization for how they affect the balance sheet, income statement, and statement of cash flows, but with gaps in logic or detail Uses basic financial analysis to examine any horizontal changes in Starbucks' short- and longterm debt over time, but with gaps in accuracy or relevant detail Uses basic financial analysis to examine any vertical changes in Starbucks' short- and long-term debt over time, but with gaps in accuracy or relevant detail Does not use basic financial analysis to examine any horizontal changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time 3.5 Does not use basic financial analysis to examine any vertical changes in Starbucks' fixed assets, intangible assets, depreciation, and amortization over time 3.5 Does not analyze Starbucks' methods for fixed asset and intangible asset acquisitions as well as depreciation and amortization for how they affect the balance sheet, income statement, and statement of cash flows Does not use basic financial analysis to examine any horizontal changes in Starbucks' short- and long-term debt over time 4 Does not use basic financial analysis to examine any vertical changes in Starbucks' short- and long-term debt over time 3.5 Analyzes Starbucks' method of debt financing, addressing current and long-term liabilities and the issuance of bonds, but with gaps in logic or detail Does not analyze Starbucks' method of debt financing, addressing current and longterm liabilities and the issuance of bonds 4 3.5 Ratio: Liquidity: Calculate Ratio: Liquidity: Discuss Ratio: Solvency: Calculate Ratio: Solvency: Discuss Ratio: Profitability: Calculate Ratio: Profitability: Discuss Rules: Control Procedures Meets \"Proficient\" criteria and demonstrates a nuanced understanding of ratio techniques used for financial analysis Meets \"Proficient\" criteria and demonstrates a nuanced understanding of what is revealed about the financial condition of companies through key ratios Meets \"Proficient\" criteria and demonstrates a nuanced understanding of ratio techniques used for financial analysis Meets \"Proficient\" criteria and demonstrates a nuanced understanding of what is revealed about the financial condition of companies through key ratios Meets \"Proficient\" criteria and demonstrates a nuanced understanding of ratio techniques used for financial analysis Meets \"Proficient\" criteria and demonstrates a nuanced understanding of what is revealed about the financial condition of companies through key ratios Meets \"Proficient\" criteria, and justification demonstrates a nuanced understanding of the importance of rules and regulations in accounting to financial reporting Accurately presents and calculates two liquidity ratios for Starbucks Comprehensively discusses what liquidity ratios reveal about Starbucks Accurately presents and calculates two solvency ratios for Starbucks Comprehensively discusses what solvency ratios reveal about Starbucks Accurately presents and calculates two profitability ratios for Starbucks Comprehensively discusses what profitability ratios reveal about Starbucks Determines why reporting of control procedures is required and what information is disclosed, justifying response Presents and calculates two liquidity ratios for Starbucks, but with gaps in accuracy, or chosen ratios are not appropriate Discusses what liquidity ratios reveal about Starbucks, but with gaps in logic or detail Does not present and calculate two liquidity ratios for Starbucks 3.5 Does not discuss what liquidity ratios reveal about Starbucks 4 Presents and calculates two solvency ratios for Starbucks, but with gaps in accuracy, or chosen ratios are not appropriate Discusses what solvency ratios reveal about Starbucks, but with gaps in logic or detail Does not present and calculate two solvency ratios for Starbucks 3.5 Does not discuss what solvency ratios reveal about Starbucks 4 Presents and calculates two profitability ratios for Starbucks, but with gaps in accuracy, or chosen ratios are not appropriate Discusses what profitability ratios reveal about Starbucks, but with gaps in logic or detail Does not present and calculate two profitability ratios for Starbucks 3.5 Does not discuss what profitability ratios reveal about Starbucks 4 Determines why reporting of control procedures is required and what information is disclosed, justifying response, but determination contains inaccuracies or justification is lacking in logic or key details Does not determine why reporting of control procedures is required and what information is disclosed, justifying response 6 Rules: Segment Information Meets \"Proficient\" criteria, and justification demonstrates a nuanced understanding of the importance of rules and regulations in accounting to financial reporting Determines why reporting of segment information is required and what information is disclosed, justifying response Rules: Estimates Meets \"Proficient\" criteria, and justification demonstrates a nuanced understanding of the importance of rules and regulations in accounting to financial reporting Determines why reporting of estimates and assumptions is required and what information is disclosed, justifying response Rules: Investments and Fair Value Meets \"Proficient\" criteria, and justification demonstrates a nuanced understanding of the importance of rules and regulations in accounting to financial reporting Determines why reporting of investments and fair value is required and what information is disclosed, justifying response Rules: Leases Meets \"Proficient\" criteria and justification demonstrates a nuanced understanding of the importance of rules and regulations in accounting to financial reporting Determines why reporting of leases is required and what information is disclosed, justifying response Meets \"Proficient\" criteria and demonstrates a nuanced understanding of how financial analysis leads to determinations of the overall financial health of companies Provides a concise, professional conclusion detailing what can be learned from Starbucks' financial statements and performance based on financial analysis Conclusion Determines why reporting of segment information is required and what information is disclosed, justifying response, but determination contains inaccuracies or justification is lacking in logic or key details Determines why reporting of estimates and assumptions is required and what information is disclosed, justifying response, but determination contains inaccuracies or justification is lacking in logic or key details Determines why reporting of investments and fair value is required and what information is disclosed, justifying response, but determination contains inaccuracies or justification is lacking in logic or key details Determines why reporting of leases is required and what information is disclosed, justifying response, but determination contains inaccuracies or justification is lacking in logic or key details Provides a conclusion detailing what can be learned from Starbucks' financial statements and performance based on financial analysis, but is lacking key details or is not concise or professional Does not determine why reporting of segment information is required and what information is disclosed, justifying response 6 Does not determine why reporting of estimates and assumptions is required and what information is disclosed, justifying response 6 Does not determine why reporting of investments and fair value is required and what information is disclosed, justifying response 6 Does not determine why reporting of leases is required and what information is disclosed, justifying response 6 Does not provide a conclusion detailing what can be learned from Starbucks' financial statements and performance based on financial analysis 4 Articulation of Response Submission is free of errors related to citations, grammar, spelling, syntax, and organization and is presented in a professional and easy-to-read format Submission has no major errors related to citations, grammar, spelling, syntax, or organization Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Total 5 100% Johnathan Gulston MBA 503 Milestone Three Why is the reporting of control procedures required, and what information is disclosed about Starbucks' control procedures? The control procedures are required according to the Securities Exchange Act of 1934 (SEA), which is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America, through the Security Exchange Commission. This information in the report is engaged with the several rules stated in the SEA and it is required for companies which keep securities in a public market in order to provide clearances about internal control procedures.Starbucks discloses information regarding its control procedure in the Item 9A of the Fiscal 2015 Annual Report (form 10-K). The company has informed about the evaluation of the effectiveness and design of their operation and procedures, carried out in the last part of 2015 (not including the newly acquisition in Japan). The evaluation concluded as satisfactory. Starbuck also informed about other internal control changes, especially over financial reporting, Why is the reporting of segment information required, and what information is disclosed about Starbucks' segment information? Segment information is a mandatory data in the financial reporting according to the Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information issued by the Financial Accounting Standards Board. The objective of requiring disclosures about segments of an enterprise and related information is to provide information about the different types of business activities in which an enterprise engages. Starbucks includes in its annual report four different operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/Asia Pacific ("CAP"); 3) Europe, Middle East, and Africa ("EMEA") and 4) Channel Development. There are other small segments, such as Teavana, Seattle's Best Coffee, Evolution Fresh, and our Digital Ventures business, as well as certain developing businesses such as the Starbucks Reserve Roastery & Tasting Room, which are combined and referred to as All Other Segments. The annual report also describes financial information came from all those segment and financial highlight by the type of product the company offers (such as beverage, food, packaged and single-serve coffees and teas, etc.). Why is the reporting of estimates and assumptions required, and what information is disclosed about Starbucks' reporting of estimates and assumptions? This information is required by the SEC according to the SEC Financial Release No. 72, Commission Guidance Regarding Management's Discussion and Analysis of Financial Condition and Results of Operations (FR-72). Accounting estimates and assumptions are those that are most important to the financial statement presentation and that require the most difficult, subjective and complex judgments. They help accounting-user to understand the information given in financial reports and also to know recent accounting policies made by the company. Starbucks, in order to fulfill both SEC's requirement and also Generally Accepted Accounting Principal in the United States of America ("GAAP") disclose estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. For the Fiscal 2015 annual report the company has informed that there are some important policies that lead to estimates and assumption. Those policies apply to Property, Plant and Equipment and Other FiniteLived Assets, Goodwill and Indefinite-Lived Intangible Assets and Income Taxes. Why is the reporting of investments and fair value required, and what information is disclosed about Starbucks' investments and fair value reporting? This information is required as stated in the ASC 820 - Fair Value Measurements and Disclosures. It applies to those organizations that use U.S. GAAP and it requires or permit fair value measurements or disclosures. Starbucks discloses information about basis to determine fair value for assets and liabilities value, which implies three (3) levels, depending on the liquidity, the trading capacity or the internally-developed valuation model. Why is the reporting of leases required, and what information is disclosed about Starbucks' lease structure? The SEC request more information from registrants regarding their involvement with leases, if material, under the standard of the ASC 840-20 - Operating Leases. The governmental organization is able ask companies to expand or clarify their disclosures in order to better describe the terms and conditions of their leases and how such they affect lease classification and the recognition of lease expense or lease income. In this case, Starbucks revels the term or conditions of both operating and financial leases (including the purpose of them), the total rent expense under operating lease agreements, subleases related to certain operating leases and their subsequent revenues, the gross carrying value of assets related to build-to-suit lease arrangements. REFERENCES Financial Accounting Standard Board (FASB) (2006). ASC 820 - Fair Value Measurements and Disclosures. Retrieved from http://cpaclass.com/gaap-accountingstandards/codification-800/asc-codification-topic-820.htm Financial Accounting Standard Board (FASB) (1997). Statement of Financial Accounting Standards No. 131. Disclosures about Segments of an Enterprise and Related Information. Retrieved from http://www.fasb.org/jsp/FASB/Document_C/ DocumentPage?cid=1218220124541&acceptedDisclaimer=true Financial Accounting Standard Board (FASB) (1976). ASC 840-20 - Leases. Retrieved from http://accountinginfo.com/financial-accounting-standards/asc-800/84020-operating-leases.htm Securities Exchange Act of 1934. Amended through P.L. 112-158, August 10, 2012. Retrieved from https://www.sec.gov/about/laws/sea34.pdf Securities Exchange Commission (2014). SEC Comments and Trends: An analysis of current reporting issues. Retrieved from http://www.ey.com/publication/vwluassetsdld/ seccommentstrends_cc0398_23september2014/$file/seccommentstrends_cc0398_23sep tember2014.pdf?OpenElement Running head: STARBUCKS ANALYSIS Starbucks Analysis Johnathan Gulston MBA 503 STARBUCKS ANALYSIS 2 Starbucks History Starbucks is a company which was founded in 1971 in Seattle, the state of Washington. It specializes in beverages, whole coffee beans, pastries, and coffee- related retail items. Starbuck's has expanded from 55 stores in 1989 to 2,200 stores currently distributed in major cities globally. The original owners of the company sold the chain to Howard Schultz in 1987. Schultz rebranded his own coffee outlets as Starbucks. Starbucks in that year its first locations outside Seattle and these locations include Illinois and Chicago in U.S., B.C. and Vancouver in Canada. He also opened the first location of the company outside of North America in Tokyo, Japan in 1996. The locations of this company serve cold and hot beverages, pastries and snacks, full-leaf teas, microground instant coffee and whole bean coffee. There are also evening locations that offer a variety of wines, beers as well as appetizers after 4 pm. The company also sell and promote films, music and books (Schultz & Gordon, 2011). Starbucks Facts The company opens an average of two locations every day. The company is the biggest coffee house in the world. It has 1,324 locations in Canada, 13, 279 locations in the United States and just under 20,900 stores in 64 nations. There was a net increase in the deferred income taxes from $97.3 to $967.0, and this implies a 893.8% increase in a year. As of September 29, 2012 and September 29, 2013, the valuation allowance was primarily or mainly related to net operating losses as well as other deferred tax assets of consolidated foreign subsidiaries. For the years ended September 30, 2012 and September 29, 2013, the net change in the total valuation allowance had an increase of $16.8 and $6.3 respectively. On the other hand, long-term investments reduced from $116.0 to $58.3 and this represented a 49.7% drop (Schultz & Yang, STARBUCKS ANALYSIS 3 1997). As per the summary notes, the company's gross unrealized losses and gains on investments were not seen as of September 30, 2013 and September 29, 2012. This depreciated the long-term investments' overall value. There was an increase in the long-term debt from $549.6 to $1299.4. This represented a 136.4% increase. The company, in September 2013, issued $750 of ten-year 3.85% senior notes in registered public offering and this is due in October 2023. The company got into forward-starting interest rate swap agreements linked to this debt issuance. This as effectively locked in the benchmark interest rate and it resulted in a 2.86% effective borrowing cost. The company's carrying value as of September 29, 2013 was $1.299.4. There was an increase in additional paid-in capital from $39.4 to $282.1. This represented a 616.0% increase (Schultz & Gordon, 2011). Horizontal Analysis Horizontal analysis is a method used for comparing financial statements of a company over a given number of accounting periods. In other words, it is a kind of trend analysis. For instance, it can be used to compare the debt financing, fixed assets or accounts receivable in 2014 to the ones in 2014 so that percentage change can be obtained. Consequently, if the fixed assets for the company in 2013 are equivalent to 30000, while the same fixed assets are 40000 in 2014, then the variance is 40000-30000, which comes to 10000. The percentage change from this will be 10000/30000*100%=33%. 2014 can also be compared to the base year of 2013 and this will give 40000/30000*100%=133%. The company-operated revenues increased from $10534.5 to $11793.2 and this was driven or caused by a rise in comparable store sales. The higher product sales as well as royalty revenues obtained from Starbucks licensees led to a rise in licensed stores revenue. All these STARBUCKS ANALYSIS 4 were brought about by the improved comparable store sales as well as opening of 404 new licensed stores within one year. The Starbucks total net revenue rose from $13299.5 to $14892.2 and this represented a 12% increase. This was caused by the rise in the China/Asia Pacific total net revenues in 2013. These total net revenues for China/Asia pacific rose by 27$ or $196. The rise in revenues from Company-operated stores contributed $183 and the opening of 240 new stores within one year contributed about $129 while comparable store sales contributed about $43. There was an increase in General and administrative expenses by 17.1% and this was mainly driven by rise in the costs for supporting the overall company growth as well as costs linked to the Global Leadership Conference that the company had in October. The company was, in 2013, charged $2794.1 and this led to a 100% increase in the company's litigation charge. The company was also ordered on November 12, 2013 by an arbitrator to pay $2227.5 to Kraft in damages as well as attorney's fees and prejudgment interest. The company estimated prejudgment interest and attorney's fees to be about $556.6(Jayaraman, 2016). Consequently, a $2,784.1 litigation charge reflecting the accrual Starbucks recorded because of the conclusion of the settlement with Kraft was placed. Included in this charge is $2,227,5 which was in form of damages as well as $556.6 in attorney's fees and estimated interest. There was a decrease in short-term investments from 10.3% to 5.7%. This consisted mainly of US Agency securities, corporate bonds, commercial paper and US Treasury securities. The certificates of deposit, which was placed via an account registry service was also included in the company's short-term investment portfolio. These had maturities that ranged from ninety one days to one year. There was a decrease in inventory from 15.1% to 9.6% and this was caused by a drop in the purchase of unroasted coffee beans. Starbucks, as of September 29, 2013 had committed to buying green coffee, which totaled to $588 and this was to be done under fixed- STARBUCKS ANALYSIS 5 price contracts. It had also committed to buying $294 under price-to-be-fixed contracts (Jayaraman, 2016). There was an increase in other intangible assets from 1.7% to 2.4% mainly because of the indefinite-lived intangibles. There was an increase in long-term debt from 6.7% to 11.3%. There was a decrease in the cost of sales, which included occupancy costs from 43.7% to 42.9% and this was caused by low commodity costs that came about due to a drop in coffee costs. There was an increase in other operating expenses from 0.3% to 3.1%. However, when taken as the percentage of total net revenues, this represented a decrease. This drop was mainly occasioned by increased sales leverage. There was a $192 increase in total operating expenses. This was mainly due to rise in expenses due to acquisition of Teavana (Schultz & Gordon, 2011). Vertical Analysis Vertical analysis on the other hand for each year indicates each line item as a percentage of another line item, which is the base line item. For example if total assets is taken as the base item, then the vertical analysis for each year will be calculated for example as debt financing / total assets, fixed assets / total assets and accounts receivable / total assets. Despite the fact that the litigation charge that the company had with Kraft had an impact on the 2013 financial statement of Starbucks as a whole, the Starbucks can still be considered as a good company. This is because it has recorded an increase in its assets. It has for instance acquired Teavana as well as many new locations. In fact the company opens two new stores per day. Another factor is the excellent sales that the company realized in Asian Pacific (Simon, 2009). STARBUCKS ANALYSIS 6 Conclusion Considering the ratio analysis, the company's current ratio, which measures the ability to pay short term debt, the company recorded a 0.89 decrease in the same. On the other hand, the acid test ratio, which is used for measuring the short term liquidity, it is observed that Starbucks can liquefy 0.4 times lower than the previous year. The company's receivables turnover ratio, which measures the company's liquidity of receivables, decreased in the last year by 0.5. References: Schultz, H., & Gordon, J. (2011). Onward: How Starbucks fought for its life without losing its soul. West Sussex [England: Wiley & Sons. Schultz, H., & Yang, D. J. (1997). Pour your heart into it: How Starbucks built a company one cup at a time. New York, NY: Hyperion. Simon, B. (2009). Everything but the coffee: Learning about America from Starbucks. Berkeley: University of California Press. Bussing-Burks, M. (2009). Starbucks. Santa Barbara, Calif: Greenwood Press. Jayaraman, S. (2016). Forked: A new standard for American dining