Rules of Financial Reporting

Submit the Rules of Financial Reporting component of 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.

MBA 503 Milestone One Supporting Materials
You have been reading the textbook and have covered four chapters! If you have opened the most
recent annual report, you have noticed it is quite lengthy and detailed. There is a link to the financial
reports if you have not found them yet. You do NOT have to focus on all of it right now. Let’s start by
focusing on just what you need for this week. We will go further in future weeks, and you will be more
prepared.
Here is what you need to do this week:
 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:
Starbucks Investor Relations
These videos cover how to perform vertical and horizontal analysis.
Vertical and Horizontal Analysis (4:34)
Horizontal and Vertical Analysis (4:22)
These are articles about vertical and horizontal analysis.
Horizontal Analysis
Vertical AnalysisTo access additional supportive resources in your course click on the “Multimedia Library” button within
the MyAccountingLab menu bar. From here, search by resource type and chapter to access additional
videos, PowerPoints, text Learning Objectives you may be struggle on (Multimedia Textbook), and more.
Here are some helpful hints for what areas of the financial report to look at:
Important areas:
1. Consolidated statement of earnings: Depreciation and amortization expenses
2. Consolidated balance sheets: Accounts Receivable (net), Property, plant, and equipment (net),
Accrued liabilities, Long-term debt
3. Consolidated statements of cash flows: Investing (provides detail about fixed assets) and
Financing Activities (provides detail about debt financing)
4. Note 1: Summary of Significant Accounting Policies
o Receivables, net of allowance for doubtful accounts: Describes policies regarding
accounts receivable
o Property, plant, and equipment: Describes how the company used its fixed assets, such
as depreciation method used
5. Note 7: Supplementary Balance Sheet Information
o Property, Plant, and Equipment (net): Provides a breakdown of the fixed asset balance
found on the consolidated balance sheets
o Accrued Liabilities: Similar information found for property, plant, and equipment (net)
6. Note 9: Debt: Provides a breakdown of company financing

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