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Horizontal and Vertical Analysis: Accounts Receivable, Fixed Assets, and Debt Financing

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Horizontal and Vertical Analysis: Accounts Receivable, Fixed Assets, and Debt Financing

Here is what you need to do: Take the balance sheet and the income statement and separate them from everything else. Those are the only two documents you need for this assignment. You will perform a horizontal and vertical analysis on each of these documents. Below, you will find links to some videos and tutorials to assist you with this. Your book also has helpful information. If you have questions, your instructor is available to assist. Excel is an excellent program to use for this analysis. The written paper will include your observations based on your analysis. For instance, did accounts receivable increase? If so, did sales increase? Did plant, property, and equipment increase? If so, what does this tell you about the company? Did sales increase or decrease? What about cost of sales? If you were going to look further into the company, what would you want to investigate? Helpful Resources: Link to Starbucks financial statements: https://investor.starbucks.com/financial-information/annual-reports/default.aspx These videos cover how to perform vertical and horizontal analysis. https://www.youtube.com/watch?v=vPWzD7hRcrc https://www.youtube.com/watch?v=Ja-boNILdb8 These are articles about vertical and horizontal analysis. https://www.accountingtools.com/articles/2017/5/17/horizontal-analysis https://www.accountingtools.com/articles/2017/5/17/vertical-analysis 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’ 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. 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.

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