Horizontal and vertical analysis excel

Overview

You will submit the following in both a horizontal and vertical analysis of the company Starbucks’: 2015 and 2014 financial year

· Accounts Receivable

· Fixed Assets

· 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?

***** More specifically below, the following critical elements must be addressed in your analysis of the company Starbucks’: *****

Critical Element 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.

Paper Format Guidelines for Submission:

Milestone one should adhere to the following formatting requirements:

· 2–3 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.

Here are some helpful hints for what areas of the financial report to look at:

Important areas:

1. Consolidated statement of earnings—page 46: Depreciation and amortization expenses

2. Consolidated balance sheets—page 48: Accounts Receivable (net), Property, plant, and equipment (net), Accrued liabilities, Long-term debt

3. Consolidated statements of cash flows—page 49: Investing (provides detail about fixed assets) and Financing Activities (provides detail about debt financing)

4. Note 1: Summary of Significant Accounting Policies o Receivables, net of allowance for doubtful accounts—page 54: Describes policies regarding accounts receivable o Property, plant, and equipment—page 55: Describes how the company used its fixed assets, such as depreciation method used

5. Note 7: Supplementary Balance Sheet Information o Property, Plant, and Equipment (net)—page 73: Provides a breakdown of the fixed asset balance found on the consolidated balance sheets on page 48 o Accrued Liabilities—page 73: Similar information found for property, plant, and equipment (net) 6. Note 9: Debt—pages 75–76: Provides a breakdown of company financing