Horizontal and Vertical Analysis

Horizontal and Vertical Analysis

For this assignment, due 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?

Specifically, the following critical elements must be addressed:

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’ 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.

Rubric

Guidelines for Submission: Milestone One should adhere to the following formatting requirements: 2–3 pages (not including cover page or appendix), doublespaced, using 12-point Times New Roman font and the most current guidelines for APA formatting. Include all calculations in an Excel document.

STARBUCKS’ VERTICAL AND HORIZONTAL ANALYSIS

…………………Answer preview…………………….

The fixed assets at Starbucks are carried at their purchase cost less the accumulated depreciation. Cost, in this case, is a sum of all the expenses incurred in the acquisition of the fixed assets and preparation for its use.  The company uses the straight-line method for computing depreciation of its fixed assets. They estimate that the useful life of equipment ranges from 2-25 years while that of buildings ranges from 30-40 years……………………

APA

612 words