I need help with my Final Project. Please see attachments below.

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% Starbucks' Analysis for the fiscal years 2014 and 2015 Horizontal Analysis Accounts receivables The following is an extract of Starbucks' balance sheet: 2015 Accounts receivable, net 2014 $719,000,000 $631,000,000 From the look at the extract, the net accounts receivables increased in the fiscal year ending 2015 by $88,000,000 ($719,000,000-$631,000,000). This represents an increase by 13.95% on net accounts receivables. Reported on September 27, 2015 and September 28, 2014, the allowance for doubtful accounts was $10,800,000 and $6,700,000, respectively. Allowance for doubtful debts increased in 2015 by 6.12%. This implies that more products were sold on account in the fiscal year ending September 27, 2015 than in the preceding fiscal year. This also implies that the company's risk increased as the number of accounts receivables increase. Fixed assets Starbucks Balance sheet extract (Amounts in million $) Long-term investments Equity and cost investments Property, plant and equipment, net Deferred income taxes, net Other long-term assets Other intangible assets Goodwill Non-current assets $ 2015 2014 312.5 352.0 4,088.3 828.9 415.9 520.4 1,575.4 318.4 514.9 3,519.0 903.3 198.9 273.5 856.2 8,093.4 $ 6,584.2 From the above extract, it can be observed that Starbucks' fixed assets increased in the fiscal year ending September 2015, by $569,300,000 ($4,088,300,000-$3,519,000,000). This means that more fixed assets were acquired during the financial year ending 2015. Debt financing Starbucks Balance sheet for the years ending 2015 and 2014 (extract) (Amounts in millions $) Long-term debt 2015 2014 2,347.5 2,048.3 Starbucks' debt financing increased in the year 2015 by $298,200,000 ($2,347,500,000$2,048,300,000) an increase of 14.65%. This mean that the firm is riskier that it were in 2014 due to additional debt because of the commitment to service debt has increased. Vertical Analysis Accounts Receivables We will use asset total as the baseline for the vertical analysis of accounts receivable. From the 10-K report, Starbucks' total assets in the fiscal year ending September 2015, is $12,446,100,000. There was a slight decline in gross accounts receivable from 5.93% in 2014 to 5.86% in 2015. Allowance for doubtful debts increased by 0.03% in 2015. For analysis, we express the firms' accounts receivables as a percentage of total assets. 2015 Accounts receivable, net % of total assets $719,000,000 6% This shows that about 6% of the total assets is the amount of accounts receivables. Fixed Assets Just like accounts receivables, fixed assets is expressed as a percentage of total assets. Fixed assets is the amount represented by PPE. From the 10-K report, Starbucks' total assets in the fiscal year ending September 2015, is $12,446,100,000. 2015 Property, plant and equipment, net % of total assets 4,088,300,000 33 This shows that in the total assets, about 33% is fixed assets. Asset Acquisition, Depreciation, and Amortization: Horizontal Analysis Starbucks' Gross fixed assets increased in the fiscal year ending September 2015, by 12.36%. Accumulated depreciation also increased by 9.72%. Net fixed assets reported in 2015 increased by 16.17% as well. It means that the company expanded its investment in the fiscal year ending September 27, 2015 by 12.36%. Vertical Analysis Using the total assets as a baseline, gross fixed assets are 77.47% of total assets in 2015, which represents a drop relative to that of 2014 (79.80%). Accumulated depreciation of fixed assets dropped from 47.08% in the fiscal year ending 2014 to 44.62 in 2015. Net fixed assets on the other hand increased from 32.73% in 20114 to 32.85% in 2015. Implications on financial statements Straight line method of depreciation The company depreciates its assets by using straight line method. This method of depreciation accounts for depreciation uniformly over the class life of the asset. Since we have the same amount of expense in depreciated each year, Starbucks will receive a stable cost recovery, with no increase in depreciation expense in any year. Acquisition of assets Recording of assets acquired at cost will facilitate the recording of the acquired assets and the accompanying depreciation in the balance sheet and income statement respectively. The cost of leases increases expenses on the income statement. Leasing will also impact on depreciation expenses, maintenance expenses, other costs and ratios on income statement. Debt financing Here the amount of debt financing is expressed as a percentage of total assets. Fixed assets is the amount represented by PPE. Debt financing dropped from 19.05% in the fiscal year ending 2014 to 18.87% in the fiscal year ending 2015. This drop represents -0.18%. The reduction in debt is negligible. 2015 Long-term debt % of total assets 2,347,500,000 19% This shows that about 19% total assets, is financed by long-term debt. Methods of accounting Accounts Receivables Accounts Receivable are reported when a customer has received a product but has not paid for that product. This ensures that the amount of accounts receivable recorded in the balance sheet has taken into consideration any losses that might occur as a result of advancing credit to customers. Bad debts actually incurred during the period are reported in the income statement of the company. Starbucks Corp.'s receivables are primarily consisting of receivables for product as well as equipment sales to and royalties from the company's licensees, as well as receivables from Price George and foodservice business customers. It calculates allowance for doubtful accounts based on historical understanding, client credit risk and use of the specific identification method. Debt financing Starbucks Corp. sources its capital requirements for new restaurant construction. It sources its cash and investment balance as well as cash flows from operations and debts. The company uses both long-term financing to fund its growth. References Last10K.com. (n.d.). STARBUCKS CORP (SBUX) 10-K and 10-Q SEC Filings :: Last10K.com. Retrieved April 2, 2016, 7from https://www.last10k.com/sec-filings/sbux US SEC. (2015, September 27). Form 10-K; Starbucks. Retrieved from file:///C:/Users/pc/Downloads/STARBUCKSCORP_10K_20151112.pdf Attached Excel Ratio Analysis Ratio analysis is the process of identifying the financial strengths & weaknesses of the enterprise by logically establishing relationship between the items of balance sheet or income statement or both & interpreting the results thereof in order to derive meaningful conclusions. Ratio analysis establishes the cause & effect relationship. The following ratios are important for reviewing the financial position of the business. Liquidity Ratios Liquidity ratios and solvency ratios explain the financial position of a business. 1) Current Ratio: Current ratio has been defined as the relation between the current assets and current liabilities. Ideal current ratio is 2:1 which means 2 times current assets are enough to pay 1 time current liabilities. This ratio is important because it tells the ability of the company to pay the current liabilities. The ratio of Starbucks for the year 2015 is 1.19 whereas it was 1.37 in 2014. This showed that the financial condition of the company is slightly decreasing. 2) Quick ratio: Quick ratio has been defined as the relation between the Quick assets and current liabilities. Ideal Quick ratio is 1:1 which means 1 times Quick assets are enough to pay 1 time current liabilities. This ratio is important because it tells the ability of the company to pay the current liabilities from the most liquid assets. The ratio of Starbucks for the year 2015 is .74 whereas it was .92 in 2014. This showed that the financial condition of the company is slightly decreasing. Solvency Ratio Solvency ratios explain the financial position of a business. 1) Debt to assets Ratio: Debt ratio explains the relationship between total liabilities and total assets. This ratio is important because it tells how much money has been used to finance the assets. If the ratio is higher it indicates that the major portion of the assets has been financed by the debt. This is not considered good for the firm because the firm has to pay a large portion of their income as interest on the debt. Debt to assets ratio for 2015 is .57 and for 2014 is .49 which indicates that the company is using more debt for financing its assets in 2015 as compared to 2014. This is not considered good for the company because Starbuck's has to pay a higher amount of interest on it. 2) Number of times interest charges earned : this ratio explains the relationship between the earnings before interest and tax and interest expense. Interest coverage ratio for 2015 is 51.08 times as compared to 48.07 times in 2014 which indicates that the company's 2015 EBIT can cover 51.08 times interest expense. 3) Debt to Equity Ratio: Debt to equity ratio explains the relationship between total liabilities and Average equity. This ratio is important because it tells how much money has been used to finance the assets. If the ratio is lower it indicates that the business is more financially stable. Debt to equity ratio for 2015 is 1.20 and for 2014 is 1.12 which indicates that the company is using more debt for financing its assets in 2015 as compared to 2014. This is not considered good for the company because it has to pay a higher amount of interest on it. Profitability Ratios: Profitability ratio tells the ability of a company to earn profit for its owners. It provides basis for measurement of efficiency of managers, depicts the solvency position to creditors and estimates the earning of an organization for prospective investors. Following are the profitability ratios which have been calculated for analysis. 1) Profit Margin: profit margin ratio explains the relationship between the profit and net revenues. The higher the ratio, the higher the profitability of firm. This ratio is important because it measures the business efficiency, profit generation capacity and sufficiency of selling price. Net profit margin ratio for 2015 is 14.39% and for 2014 is 12.57% which is considered good and it showed that the operating expenses have not increased in the same proportion as the increase in sales. 2) Return on Assets: It shows the net income produced by total assets during a period of time. It measures how well the company is using its net assets to generate sales. Higher ratios are favorable. Ratio for 2015 is greater than 2014 which indicates that the company is using its assets more efficiently as compared to 2014 in generating the net income. 3) Return on Equity: It shows the net income produced by using shareholders' funds during a period of time. It measures how well the company is using its shareholder's funds to generate sales. Higher ratios are favorable. Ratio for 2015 is greater than 2014 which indicates that the company is using its equity more efficiently in 2015 as compared to 2014 in generating the net income. Conclusion: At the end it can be concluded that the company's financial position is sound .Most of the ratios of Starbucks Company are favorable. If company manages its current assets well then it can improve the future performance of the company. Company must take steps to improve the liquidity position as well as reduce the debt burden. References: https://www.sec.gov/Archives/edgar/data/829224/000082922415000038/sbux9272015x10k.htm https://www.sec.gov/Archives/edgar/data/829224/000082922414000041/sbux9282014x10k.htm Starbucks Company A. Liquidity Ratios 2015 Current ratio Quick ratio 2014 4352.7 3653.5 4168.7 3038.7 1.19 1.37 2712.1 3653.5 2792.2 3038.7 0.74 0.92 6626.3 11599.5 5479.2 11134.8 0.57 0.49 6626.3 5545 5479.2 4876.1 1.20 1.12 3601 70.5 3081.1 64.1 51.08 48.07 2757.4 19162.7 2068.1 16447.8 14.39% 12.57% B. Solvency Ratios Debt to assets ratios Debt to Equity ratios Interest Coverage ratios C. Profitability Ratios Net profit ratio Return on equity Return on Assets 2757.4 5545 2068.1 4876.1 49.73% 42.41% 2757.4 11599.5 2068.1 11134.8 23.77% 18.57% STARBUCKS ANNUAL REPORT ANALYSIS 1 Annual reports of the companies usually disclose audited information intended to be used by many stakeholders. The content of the report are usually guided by various authorities such as the stock market authorities, government, Generally Accepted Accounting Principles, International accounting standards, management principles as well as General Assumptions and principles based on conceptual framework of accounting and the proved accounting theories. This is an analysis of the Starbucks company 2014 report. To start with, disclosure on the controls and procedures are actually designed to ensure that rules of the company and the segregation of the duties are followed. Reasons for the disclosure of the controls and procedures are to satisfy the requirement of the Securities Exchange Act of 1934. Another reason for the disclosure of the controls and procedure is to ensure that the records, processes and the functionality of the outlined control system is reported to the executives for the appropriate decisions to be taken. The informational content of the report include the responsibility of the management for establishing and maintaining of the adequate internal controls over financial reporting. This is for management to ensure that the financial reporting is reliable through verification of the generally accepted accounting principles, verification that the internal accounting standards for recording transactions are followed and the presentation of the financial statements the same. Also in this case the issue of the segregation of the duties is also verified and disclosed. Segment information is also disclosed. According to IAS 14 segment information is the disclosure of the company's operations, activities of the company and report about the geographical area of the operation. The requirement of the IAS 14 and IFRS 8 is for companies to disclose segment information. STARBUCKS ANNUAL REPORT ANALYSIS2 The 2015 Starbucks report discloses four items which are the geographical area coverage, operating company stores, revenues disclosure and the segment financial information. The segment financial information discloses income contribution of the geographical areas which includes the Americas 73%, EMEA 8%, CAP 7%, Channel Developments 9% and all other segments 3%. Company operated stores accounted for 79% of the total revenue during 2014, company states that the retail objective is to be the leading retailer and the brand coffee and tea in each of its targeted markets disclosure of the investments and fair values. On the company investments the requirement of the securities exchange market to disclose. Starbucks Company in 2014 disclose the net revenues from the licensed stores and the CPG, food service and the other. More investments in stores increased revenue by 1.6 billion in 2014 as compared to 2013 representing an increase of 11% The second last required disclosure is the estimates and assumptions in order to estimate effect of the matters that are inherently uncertain, the management of the company and the International accounting standards requires the use of the requires the assumptions based on the accounting principles .The company considers the financial reporting and the disclosure practices and the accounting policies quarterly to ensure correct provisions of the estimate based on the accounting principles. For example equity and investments are valued for impairments annually and when the circumstances indicate that the carrying value of such investments may not recover the reviewing of the factors such as the financial condition and mostly impairment charge is recorded as the debit to retained earnings. The property and equipment is estimated at its cost less depreciation. STARBUCKS ANNUAL REPORT ANALYSIS3 References Company of Proprietors of the Grand Western Canal. (1833). Grand Western Canal Company: Report of the Committee to the General Annual Assembly. England: publisher not identified. Holmes, G., Sugden, A., & Gee, P. (2008). Interpreting company reports and accounts. Harlow, England: Financial Times Prentice Hall. Roth, M. (2004). Analysing company accounts. Milton, Qld: Wrightbooks. Stanko, B., & Zeller, T. L. (2003). Understanding corporate annual reports: A user's guide. Hoboken, NJ: Wiley. Starbucks Horizontal and Vertical Analysis A. Accounts Receivables Horizontal Analysis Horizontal Analysis-Accounts Receivable Twelve Months Ending 9/27/2015 $719,000,000 10,800,000 729,800,000 Accounts Receivables net Allowance for bad debts Accounts Receivables gross 9/28/2014 631,000,000 6,700,000 637,700,000 Vertical Analysis Twelve Months Ending Percentage of Vertical Analysis-Accounts Receivable 27-Sep-15 current assets Accounts Receivables gross Allowance for bad debts Accounts Receivable Net: Total Assets 729,800,000 10,800,000 719,000,000 $12,446,100,000 28-Sep-14 5.86% 637,700,000 0.09% 6,700,000 5.78% 631,000,000 100% 10,752,900,000 B. Fixed Assets Horizontal Analysis Property Plant and Equipmnet Gross Accumulated Depreciation Property Plant and Equipmnet Net Twelve Months Ending 27-Sep-15 9,642,000,000.00 5,554,000,000 4,088,000,000.00 28-Sep-14 8,581,000,000 5,062,000,000 3,519,000,000 Vertical Analysis Vertical Analysis-Fixed assets Property Plant and Equipmnet Gross Accumulated Depreciation Property Plant and Equipmnet Net Total Assets Twelve Months Ending Percentage of 27-Sep-15 Total assets 28-Sep-14 9,642,000,000.00 77.47% 8,581,000,000 5,554,000,000 44.62% 5,062,000,000 4,088,000,000.00 32.85% 3,519,000,000 $12,446,000,000 100% 10,753,000,000 C. Debt Financing Horizontal Analysis Twelve Months Ending 27-Sep-15 28-Sep-14 Long-term debt 2,348,000,000 2,048,000,000 Vertical Analysis Vertical Analysis-Debt Financings Long-term debt Total Assets Twelve Months Ending Percentage of 27-Sep-15 Total assets 28-Sep-14 2,348,000,000 18.87% 2,048,000,000 $12,446,000,000 100% 10,753,000,000 Percentage change Change $88,000,000 4,100,000 92,100,000 Percentage of current assets 5.93% 0.06% 5.87% 100% 13.95% 6.12% 14.44% Percentage Increase/Decrease -0.07% 0.03% -0.09% Percentage Difference Change 1,061,000,000 12.36% 492,000,000 9.72% 569,000,000 16.17% Percentage of Percentage total assets Increase/Decrease 79.80% -2.33% 47.08% -2.46% 32.73% 0.12% 100% Difference Percentage Change 300,000,000 Percentage of total assets 14.65% Percentage Increase/Decrease 19 -0.18% 100% Annual Income Statement (values in 000's) Period Ending: Total Revenue Cost of Revenue Gross Profit 9/27/2015 $19,162,700 $7,787,500 $11,375,200 Operating Expenses Research and Development $0 Sales, General and Admin. $7,130,200 $0 $893,900 $3,601,000 Non-Recurring Items Other Operating Items Operating Income Add'l income/expense items $372,500 Earnings Before Interest and Tax Interest Expense Earnings Before Tax Income Tax Minority Interest $3,973,500 $70,500 $3,903,000 $1,143,700 ($1,900) Equity Earnings/Loss Unconsolidated Subsidiary $249,900 Net Income-Cont. Operations Net Income Net Income Applicable to Common Shareholders $2,946,200 $2,757,400 $2,757,400 9/28/2014 $16,447,800 $6,858,800 $9,589,000 S $6,086,800 ($20,200) $709,600 $3,081,100 $142,700 $3,223,800 $64,100 $3,159,700 $1,092,000 $400 $268,300 $2,336,400 $2,068,100 $2,068,100 Starbucks Inc. Annual Income Statement (values in 000's) Get Quarterly Data Period Ending: 9/27/2015 Current Assets Cash and Cash Equivalents $1,530,100 $81,300 Short-Term Investments Net Receivables $1,100,700 Inventory 9/28/2014 $1,708,400 $135,400 $948,400 $1,306,400 $1,090,900 $334,200 $285,600 Total Current Assets $4,352,700 Long-Term Assets Long-Term Investments $664,500 Fixed Assets $4,088,300 Goodwill $1,575,400 Intangible Assets $520,400 Other Assets $415,900 Deferred Asset Charges $828,900 $4,168,700 Other Current Assets Total Assets $12,446,100 Current Liabilities Accounts Payable $2,669,700 Other Current Liabilities $983,800 Total Current Liabilities $3,653,500 Long-Term Debt $2,347,500 Other Liabilities $625,300 Minority Interest $1,800 Total Liabilities $6,628,100 Stock Holders Equity Common Stocks $1,500 Capital Surplus Retained Earnings Treasury Stock Other Equity Total Equity Total Liabilities & Equity $833,300 $3,519,000 $856,200 $273,500 $198,900 $903,300 $10,752,900 $2,244,200 $794,500 $3,038,700 $2,048,300 $392,200 $1,700 $5,480,900 $41,100 $700 $39,400 $5,974,800 $0 ($199,400) $5,818,000 $5,206,600 $0 $25,300 $5,272,000 $12,446,100 $10,752,900 STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 Starbucks Financial Statements Analysis for Year September 27, 2015 Name of Student Class University Name of Professor STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 Introduction This paper deals with analysis of financial statements of Starbucks Inc., for the fiscal year ended on September 27, 2015 and comparison with financial statements of previous fiscal year ended on September 28, 2014. For the purpose of analysis, this paper considers horizontal and vertical analysis of balance sheet and income statement and ratio analysis of liquidity, solvency and profitability of company. This paper also deals with rules of financial reporting and will reach to conclusion regarding learning from company's financial statements and overall health of company and suggestions for financial improvements. Horizontal and vertical analysis Accounts Receivable The net accounts receivables increased in the fiscal year 2015 by $88,000,000 ($719,000,000$631,000,000) reflecting increase by 13.95% on net accounts receivables. The allowance for doubtful accounts was $10,800,000 and $6,700,000, respectively. Allowance for doubtful debts increased in 2015 by 6.12%. This indicates that on account sales increased in the fiscal year ending September 27, 2015 as compared to preceding fiscal year. This also implies that the company's risk increased as the number of accounts receivables increase. We have used asset total as the baseline for the vertical analysis of accounts receivable. From the 10-K report, Starbucks' total assets in the fiscal year ending September 2015, is $12,446,100,000. There was a slight decline in gross accounts receivable from 5.93% in 2014 to 5.86% in 2015. Allowance for doubtful debts increased by 0.03% in 2015. For analysis, we express the firms' accounts receivables as a percentage of total assets. STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 Accounts Receivables are reported when a customer has received a product but has not paid for that product. This ensures that the amount of accounts receivable recorded in the balance sheet has taken into consideration any losses that might occur as a result of allowing credit to customers. Bad debts actually incurred during the period are reported in the income statement of the company. Starbucks Corp.'s receivables are primarily consisting of receivables for product as well as equipment sales to and royalties from the company's licensees, as well as receivables from Price George and foodservice business customers. It calculates allowance for doubtful accounts based on historical understanding, client credit risk and use of the specific identification method. Assets Acquisition, Depreciation and Amortization It is observed that Starbucks' fixed assets increased in the fiscal year ending September 2015, by $569,300,000 ($4,088,300,000-$3,519,000,000). This implies that more fixed assets were acquired during the financial year ending 2015. Starbucks' Gross fixed assets increased in the fiscal year ending September 2015, by 12.36%. Accumulated depreciation also increased by 9.72%. Net fixed assets reported in 2015 increased by 16.17% as well. It means that the company expanded its investment in the fiscal year ending September 27, 2015 by 12.36%. Using the total assets as a baseline, gross fixed assets are 77.47% of total assets in 2015, which represents a drop relative to that of 2014 (79.80%). Accumulated depreciation of fixed assets dropped from 47.08% in the fiscal year ending 2014 to 44.62 in 2015. Net fixed assets on the other hand increased from 32.73% in 20114 to 32.85% in 2015. STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 Just like accounts receivables, fixed assets is expressed as a percentage of total assets. Fixed assets are the amount represented by PPE. From the 10-K report, Starbucks' total assets in the fiscal year ending September 2015, is $12,446,100,000. The company depreciates its assets by using straight line method. This method of depreciation accounts for depreciation uniformly over the class life of the asset. Since we have the same amount of expense in depreciated each year, Starbucks will receive a stable cost recovery, with no increase in depreciation expense in any year. Recording of assets acquired at cost will facilitate the recording of the acquired assets and the accompanying depreciation in the balance sheet and income statement respectively. The cost of leases increases expenses on the income statement. Leasing will also impact on depreciation expenses, maintenance expenses, other costs and ratios on income statement. Debt Financing Starbucks' debt financing increased in the year 2015 by $298,200,000 ($2,347,500,000$2,048,300,000) an increase of 14.65%. This mean that the firm is riskier that it were in 2014 due to additional debt because of the commitment to service debt has increased. Here the amount of debt financing is expressed as a percentage of total assets. Debt financing dropped from 19.05% in the fiscal year ending 2014 to 18.87% in the fiscal year ending 2015. This drop represents -0.18%. The reduction in debt is negligible. Starbucks Corp. sources its capital requirements for new restaurant construction. It sources its cash and investment balance as well as cash flows from operations and debts. The company uses both long-term financing to fund its growth. STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 Ratio Analysis Liquidity Ratios Current Ratio: Usual standard current ratio is 2:1 which means 2 times current assets are enough to pay 1 time current liabilities. This ratio is important because it tells the ability of the company to pay the its short term obligations. The ratio of Starbucks for the year 2015 is 1.19 whereas it was 1.37 in 2014. This showed that the financial condition of the company is slightly decreasing. Quick ratio: Usual standard of Quick ratio is 1:1 which means 1 times Quick assets are enough to pay 1 time current liabilities. This ratio is important because it tells the ability of the company to pay the current liabilities from the most liquid assets. The ratio of Starbucks for the year 2015 is .74 whereas it was .92 in 2014. This showed that the financial condition of the company is slightly decreasing. Solvency Ratios Debt to assets Ratio: Higher debts to assets ratio indicates that the major portion of the assets has been financed by the debt. This is not considered good for the firm because the firm has to pay a large portion of their income as interest on the debt. Debt to assets ratio for 2015 is .57 and for 2014 is .49 which indicates that the company is using more debt for financing its assets in 2015 as compared to 2014. The ratio indicates that half of total assets are funded from debts and other half from owners' equity. The company has used very balance approach. Number of times interest charges earned: Interest coverage ratio for 2015 is 51.08 times as compared to 48.07 times in 2014 which indicates that the company's 2015 EBIT can cover 51.08 STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 times interest expense. Higher the ratio, better ability to pay interest expenses. The ratio of company is very high indicating that company is comfortable with expenses of interest. Debt to Equity Ratio: Debt to equity ratio for 2015 is 1.20 and for 2014 is 1.12 which indicates that the company is using more debt for financing its assets in 2015 as compared to 2014. This is not considered good for the company because it has to pay a higher amount of interest on it. Profitability Ratios Profit Margin: Net profit margin ratio for 2015 is 14.39% and for 2014 is 12.57% which is showing increase in profitability of company and indicating that the operating expenses have not increased in the same proportion as the increase in sales. Return on Assets: Ratio for 2015 is greater than 2014 which indicates that the company is using its assets more efficiently as compared to 2014 in generating the net income. Return on Equity: ROE has increased in 2015 to 49.73 from 42.41 of 2014 indicating that value of stock of company is increasing and investment in stock of company is profitable. It also indicates that company is using equity more efficiently in 2015 as compared to 2014 in generating the net income. Rules of Financial Reporting Annual reports of the companies usually disclose audited information intended to be used by many stakeholders. The content of the report are usually guided by various authorities such as the stock market authorities, government, Generally Accepted Accounting Principles, STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 International accounting standards, management principles as well as General Assumptions and principles based on conceptual framework of accounting and the proved accounting theories. This is an analysis of the Starbucks company 2014 report. To start with, disclosure on the controls and procedures are actually designed to ensure that rules of the company and the segregation of the duties are followed. Reasons for the disclosure of the controls and procedures are to satisfy the requirement of the Securities Exchange Act of 1934.Another reason for the disclosure of the controls and procedure is to ensure that the records, processes and the functionality of the outlined control system is reported to the executives for the appropriate decisions to be taken. The informational content of the report include the responsibility of the management for establishing and maintaining of the adequate internal controls over financial reporting. This is for management to ensure that the financial reporting is reliable through verification of the generally accepted accounting principles, verification that the internal accounting standards for recording transactions are followed and the presentation of the financial statements the same.Also in this case the issue of the segregation of the duties is also verified and disclosed. Segment information is also disclosed. According to IAS 14 segment information is the disclosure of the company's operations, activities of the company and report about the geographical area of the operation. Therequirement of the IAS 14 and IFRS 8 is for companies to disclose segment information. The 2015 Starbucks report discloses four items which are the geographical area coverage, operating company stores, revenues disclosure and the segment financial information. The segment financial information discloses income contribution of the geographical areas which STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 includes the Americas 73%, EMEA 8%, CAP 7%, Channel Developments 9% and all other segments 3%.Company operated stores accounted for 79% of the total revenue during 2014, company states that the retail objective is to be the leading retailer and the brand coffee and tea in each of its targeted markets disclosure of the investments and fair values. On the company investments the requirement of the securities exchange market to disclose. Starbucks Company in 2014 disclose the net revenues from the licensed stores and the CPG, food service and the other. More investments in stores increased revenue by 1.6 billion in 2014 as compared to 2013 representing an increase of 11% The second last required disclosure is the estimates and assumptions in order to estimate effect ofthe matters that are inherently uncertain, the management of the company and the International accounting standards requires the use of the requires the assumptions based on the accounting principles .The company considers the financial reporting and the disclosure practices and the accounting policies quarterly to ensure correct provisions of the estimate based on the accounting principles. For example equity and investments are valued for impairments annually and when the circumstances indicate that the carrying value of such investments may not recover the reviewing of the factors such as the financial condition and mostly impairment charge is recorded as the debit to retained earnings. The property and equipment is estimated at its cost less depreciation. Conclusion On the basis of above horizontal and vertical analysis and ratios analysis of company it can be concluded that company is highly profitable and investment in stock of company is safe. The worth of investors' money is increasing. Solvency position of company is very strong and STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 company has adopted sound policy of owners fund and outsiders' funds. Liquidity position of company is not as strong as expected but also not a matter of worry. The company will be able to pay its short term obligations as and when due. The investment in stock of company is profitable and safe. As current ratio is below 2, company may face crises of working capital. The company should make efforts to improve its liquidity by fast collection of accounts receivables to avoid any shortage of working capital. STARBUCKS FINANCIAL STATEMENTS ANALYSIS FOR YEAR SEPTEMBER 27, 2015 References 1. https://www.sec.gov/Archives/edgar/data/829224/000082922415000038/sbux9272015x10k.htm 2. https://www.sec.gov/Archives/edgar/data/829224/000082922414000041/sbux9282014x10k.htm 3. Company of Proprietors of the Grand Western Canal. (1833). Grand Western Canal Company: Report of the Committee to the General Annual Assembly. England: publisher not identified. 4. Holmes, G., Sugden, A., & Gee, P. (2008). Interpreting company reports and accounts. Harlow, England: Financial Times Prentice Hall. 5. Roth, M. (2004). Analysing company accounts. Milton, Qld: Wrightbooks. 6. Stanko, B., & Zeller, T. L. (2003). Understanding corporate annual reports: A user's guide. Hoboken, NJ: Wiley