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Assume the role of a senior financial analyst who has been assigned to complete a thorough and detailed review for a company of Starbucks. Access the company quarterly financial statements (10-Q) for...

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Assume the role of a senior financial analyst who has been assigned to complete a thorough and detailed review for a company of Starbucks. Access the company quarterly financial statements (10-Q) for the past two quarters on EDGAR.

In your thorough and detailed review, analyze the company’s quarterly financial statements (10-Q) for the past two most current quarters and perform the following:

  • Prepare a balance sheet and income statement horizontal analysis for the last two quarters.
  • Prepare a balance sheet and income statement vertical analysis for the last two quarters.
  • Prepare a liquidity analysis by computing and using the appropriate ratios to assess liquidity.
    • Compute a minimum of three ratios and show your supporting calculations.
  • Prepare a solvency analysis by computing and using the appropriate ratios to assess solvency.
    • Compute a minimum of three ratios and show your supporting calculations.
  • Prepare a profitability analysis by computing and using the appropriate ratios to assess profitability.
    • Compute a minimum of three ratios and show your supporting calculations.
  • Analyze the methods and tips provided in the textbook,Warren Buffet Accounting,to address the following questions:
    • What is your company’s primary revenue, secondary revenue, and gains?
    • What is your company’s primary expenses, secondary expenses, financial activity generated expenses, and losses?
    • What is the revenue trend? Does the 10-K or 10-Q discuss primary revenues, as well as other revenue types?
    • What do the accounting policies say in the annual report (footnotes) regarding the cost of revenue? What are the drivers to the cost of revenue and the trends?
    • Are there any trends in sales and marketing expenses or research and development? Are these amounts reasonable for the type of business?
    • Compare general and administrative expenses to similar companies. Are they reasonable?
    • What is the ratio of net interest income (expense) to income from operations? Is this a safe ratio for the company? Why or why not?
    • What is the income taxes trend? Is the effective tax rate reasonable over time?

Formulate your analysis on the above requirements to discuss the financial health, performance, strengths, and weaknesses of the company, as well as any identified positive or negative trends.

In addition, include the company’s

  • financial health,
  • performance strengths and weaknesses, and
  • identified positive or negative trends.

Must be six pages double-spaced pages in length (not including title and references, supporting calculation of the horizontal analysis, vertical analysis or ratio calculations)


Answered Same Day Jul 11, 2021

Solution

Tanmoy answered on Jul 17 2021
103 Votes
Sta
ucks – Financial Analysis
    Horizontal Balance Sheet Sta
ucks
    Liabilities
    March 29, 2020
    December 29, 2019
    Assets
    March 29, 2020
    December 29, 2019
    Cu
ent liabilities:
     
     
    Cash & Cash Equivalents
    2572.3
    3040.5
    Accounts payable
    997.7
    1085.6
    Short term investments
    52.9
    68.4
    Accrued liabilities
    1539
    1637.8
    Account receivable, net
    941
    908.1
    Accrued payroll and benefits
    596.1
    578.5
    Inventories
    1492.2
    1408.7
    Income taxes payable
    86.7
    1414
    Prepaid expenses and other cu
ent assets
    691.5
    474
    Cu
ent portion of operation lease liability
    1253.5
    1268.9
    Total cu
ent assets
    5749.9
    5899.7
    Store value card liability and cu
ent portion of defe
ed revenue
    1436.3
    1694.1
    Long term investments
    198.8
    199.8
    Short term debt
    1107.1
    497.9
    Equity investments
    420.9
    411.3
    Cu
ent portion of long term debt
    1249.4
    498.7
    Property, plant & equipment, net
    6387
    6390.9
    Total cu
ent liabilities
    8265.8
    8675.5
    Operating lease, right-of-use asset
    8260.8
    8358.5
    Long term debt
    11658.7
    10653.2
    Defe
ed income taxes, net
    1709.7
    1731.4
    Operating lease liability
    7650.4
    7711.7
    Other long-term assets
    580.1
    484.7
    Defe
ed revenue
    6685.5
    6748.8
    Other tangible assets
    678.7
    739.1
    Other long term liabilities
    751.4
    701.2
    Goodwill
    3493
    3515.9
    Total liabilities
    35011.8
    34490.4
     
     
     
    Shareholders' equity/ (deficit)
     
     
     
     
     
    Common stock ($0.001 par value) - authorized 2400 shares, issued and outstanding, 1174.5 and 1184.6 shares respectively
    1.2
    1.2
     
     
     
    Additional paid in capital
    41.1
    41.1
     
     
     
    Retained earnings/ (deficit)
    -7050.6
    -6414.8
     
     
     
    Accumulated other comprehensive loss
    -521.8
    -387.4
     
     
     
    Total shareholders' equity/ (deficit)
    -7530.1
    -6759.9
     
     
     
    Non controlling interests
    -2.8
    0.8
     
     
     
    Total equity/ (deficit)
    -7532.9
    -6759.1
     
     
     
     
    27478.9
    27731.3
     
    27478.9
    27731.3
    Vertical Balance Sheet Sta
ucks
    March 29, 2020
    December 29, 2019
    Assets
     
     
    Cash & Cash Equivalents
    2572.3
    3040.5
    Short term investments
    52.9
    68.4
    Account receivable, net
    941
    908.1
    Inventories
    1492.2
    1408.7
    Prepaid expenses and other cu
ent assets
    691.5
    474
    Total cu
ent assets
    5749.9
    5899.7
    Long term investments
    198.8
    199.8
    Equity investments
    420.9
    411.3
    Property, plant & equipment, net
    6387
    6390.9
    Operating lease, right-of-use asset
    8260.8
    8358.5
    Defe
ed income taxes, net
    1709.7
    1731.4
    Other long-term assets
    580.1
    484.7
    Other tangible assets
    678.7
    739.1
    Goodwill
    3493
    3515.9
    TOTAL ASSETS
    27478.9
    27731.3
    Liabilities and Shareholders' Equity/ (Deficit)
     
     
    Cu
ent liabilities:
     
     
    Accounts payable
    997.7
    1085.6
    Accrued liabilities
    1539
    1637.8
    Accrued payroll and benefits
    596.1
    578.5
    Income taxes payable
    86.7
    1414
    Cu
ent portion of operation lease liability
    1253.5
    1268.9
    Store value card liability and cu
ent portion of defe
ed revenue
    1436.3
    1694.1
    Short term debt
    1107.1
    497.9
    Cu
ent portion of long term debt
    1249.4
    498.7
    Total cu
ent liabilities
    8265.8
    8675.5
    Long term debt
    11658.7
    10653.2
    Operating lease liability
    7650.4
    7711.7
    Defe
ed revenue
    6685.5
    6748.8
    Other long term liabilities
    751.4
    701.2
    Total liabilities
    35011.8
    34490.4
    Shareholders' equity/ (deficit)
     
     
    Common stock ($0.001 par value) - authorized 2400 shares, issued and outstanding, 1174.5 and 1184.6 shares respectively
    1.2
    1.2
    Additional paid in capital
    41.1
    41.1
    Retained earnings/ (deficit)
    -7050.6
    -6414.8
    Accumulated other comprehensive loss
    -521.8
    -387.4
    Total shareholders' equity/ (deficit)
    -7530.1
    -6759.9
    Non controlling interests
    -2.8
    0.8
    Total equity/ (deficit)
    -7532.9
    -6759.1
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/ (DEFICIT)
    27478.9
    27731.3
    Ratio Analysis
    Liquidity Ratio
    
    March 29, 2020
    December 29, 2019
    Cu
ent ratio
    Cu
ent Assets/...
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