Running head: FINANCIAL ANALYSIS 1 Financial Analyis of Starbucks Hailey L. Kauffman Southern New Hampshire University
FINANCIAL ANALYSIS 2 Financial Analyis of Starbucks Operating over 30,000 locations worldwide, Starbucks is a billion-dollar company that is known for making and selling high quality coffee and coffee related products as well as snack items and baked goods. Starbucks has set a standard for not only being a financially sound corporation but a corporation that is committed to giving back to its employees and the communities they serve. In order to determine if their business model is a successful model that Coffee Connection can learn from, I will be conducting an analysis on the 2018 annual K-10 financial report from Starbucks. This assessment will help in analyzing the competition and developing benchmarks for the purpose of both improving profitability and expanding operations. In order to determine the financial status of Starbucks, I will first be completing a horizontal and vertical analysis of Starbucks financials. Horizontal analysis examines the percentage of change within financial statements. Computing a horizontal analysis includes computing the change over a year-to-year period and dividing it by the prior period amount. The importance of this analysis is that it measures the financial health of a company from year-to year, and examines the total revenues for the company. Vertical analysis allows you to express each item as a percentage of the base. Using the net sales and total asset figures you can examine the costs of operations and financial health over time and asses for any changes. During this analysis I will focus solely on the company’s accounts receivable, assets and debt financing. I will then be conducting an analysis of Starbucks’ financial performance of using financial ratios. Ratio analysis involves evaluating the performance and financial health of a company by using data from the current and historical financial statements. This data is used to compare a company's performance over time to assess whether the company is improving or deteriorating,
FINANCIAL ANALYSIS 3 to compare a company's financial standing with the industry average, or to compare a company to other companies in the same industry. Finally, I will discuss the rules of financial reporting. I will address the reporting of control procedures, segment information, estimates, investments/fair value, and leases in accord with Starbucks. After analyzing these components, I will summarize the financial standing of Starbucks. Vertical and Horizontal Analysis Accounts Receivable Accounts Receivable are created when a customer has received a product but has not yet paid for that product. Companies record accounts receivable as assets on their balance sheets since the customer is legally obligated to pay this debt in a short time period (less than one year).
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- Fall '17