submit both a horizontal and vertical analysis of Starbucks’ accounts receivable, fixed assets, and debt financing.Access the most current annual report (10-K).
QUESTION Submit both a horizontal and vertical analysis of Starbucks’ accounts receivable, fixed assets, and debt financing. Please be sure that you access the most current annual report (10-K), LINK GIVEN ABOVE
also here is some helpful information.
Starbuck’s presents A/R net of allowance for doubtful accounts – which is the contra asset that reduces A/R to Net Realizable value. This is the reserve for bad debt which is an estimate to accrue for potential bad debt expense on the Income Statement.
A/R is discussed in Starbuck’s 10k in Note 1: Summary of Significant Accounting Policies Under the heading “Receivables, net of Allowance for Doubtful Accounts”. Since A/R is presented net of the allowance for doubtful, you will have to refer to the footnote disclosure regarding the amount. It states that the 2017 amount was $9.8 million and the 2016 amount was $9.4 million.
Net A/R for 2017 is $870.4M and 2016 is $768.8M. To get gross A/R (since it is presented net of allowance for doubtful) we will need to add bad the allowance for doubtful figure.
A/R 2017 = $880.2M gross + ($9.8M Allowance for doubtful) = $870.4M Net A/R
A/R 2015 = $729.8M gross + ($10.8M Allowance for doubtful) = $719.0M Net A/R
Remember that the allowance for doubtful reserve is an estimate of expected bad debt and non -collectible A/R. It has increased from 2017 to 2016. Revenues have also increased from 2017 to 2016!