The Rules of Financial Reporting Assignment | Get Paper Help

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. Specifically, the following critical elements must be addressed: 1. Why is the reporting of control procedures required, and what information is disclosed about Starbucks’ control procedures? Justify your response. 2. Why is the reporting of segment information required, and what information is disclosed about Starbucks’ segment information? Justify your response. 3. Why is the reporting of estimates and assumptions required, and what information is disclosed about Starbucks’ reporting of estimates and assumptions? Justify your response. 4. 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. 5. Why is the reporting of leases required, and what information is disclosed about Starbucks’ lease structure? Justify your response. Guidelines for Submission: Milestone Three 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

Milestone one: Horizontal and Vertical Analysis

Nicole Driscoll

Southern New Hampshire University

Starbucks Company Financial Analysis

Observations

• Starbucks Corp.’s property, plant and equipment, net increased from 2018 to 2019.
• Starbucks Corp.’s accounts receivable, net increased from 2018 to 2019.
• Both Sales and cost of sales increased from 2018 to 2019.
• I would investigate the rate of growth. Revenue increased from 2018 to 2019 leading to an increase in the growth rate of 7.2%.

Financial analysis on:

1. Accounts receivable:  

• Horizontal analysis; accounts receivable increased from 2018 to 2019
• Vertical analysis; accounts receivable decreased from 2018 to 2019 when presented as a ratio to the net sales.

This implies that the firm is either improving their efficiency in collecting accounts receivables or they are improving their credit policies for retailers.

• Method used: Starbucks finance department is using Days Sales Standing method to account for the accounts receivable. This method is used to measure the change and effects of the account’s receivables in the balance sheet.

2. Asset Acquisition, Depreciation, and Amortization:

• Investments decreased from 2018 to 2019 at the annual rate of 17.8%, equity investments and plant and equipment and deferred income taxes increased from financial year 2018 to 2019, intangible assets decreased from 2018 to 2019 at the annual rate of 25%.
• Depreciation and amortization increased from 2018 to 2019 when compared as a percentage of total liability.
• The methods used by Starbucks make sure that that the entries are accurately recorded in the various books.

3. Debt Equity:

The company depends on debt as the source if finance to run the operations. The company uses the debt to buy shares. The funds raised from debts is used in developing the company.

References

Bragg, S. (2019, January 4). Horizontal analysis. Retrieved May 1, 2020, from https://www.accountingtools.com/articles/2017/5/17/horizontal-analysis

Bragg, S. (2019, January 23). Vertical analysis. Retrieved May 1, 2020, from https://www.accountingtools.com/articles/2017/5/17/vertical-analysis

Financial Data. (n.d.). Retrieved May 1, 2020, from https://investor.starbucks.com/financial-data/annual-reports/default.aspx

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