mba 503 final project starbucks financial statement analysis years 2017 to 2018

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

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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:

ï‚· Analyze the financial condition of companies by accurately interpreting basic financial information used for informing business decisions

ï‚· Determine the importance of accounting regulations and reporting requirements in the preparation of financial reports

ï‚· 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 profitability 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.