accounting assignment
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assessment_5.docxAssessment 5
The company:
The company selected for analysis under assessment 5 was Starbucks Corporation and analysis was conducted using the 10K filing for the year 2015.
Assets, liabilities, and owners' equity:
Total assets for the company at the end of FY 2015 were USD 12,446.1 million whereas the total liabilities and equity were USD 6,626.3 and USD 5,819.8 million respectively.
Liquidation:
If the company were to liquidate they may not receive the exact amount shown in owner’s equity section of the balance sheet. This is based on the fact that upon liquidation the proceeds received are first used to pay off all the debt holders and only the remaining funds are available to equity providers. Hence the exact amount received will depend on the liquidation proceeds received and the debts to be repaid.
Non-current liabilities:
The non-current liabilities of the company at the end of year 2015 were USD 2972.8 million.
Current Ratio:
Current ratio of the company calculated as the ratio of company current assets to current liabilities of the year ended 2015 was 1.19 (4352.7/ 3,653.50).
Cash flow analysis:
The company has a net cash outflow for the year ended 2015 which was partially as a result of an outflow from investing activities of USD 1,520.3 million.
The cash flow from operations on the other hand for the same time period was USD 3,749.1 million. The figure differs from operating profits based on the fact that income statement is prepared using accrual basis of accounting and cash flow statement records actual movement of cash.
Revenue recognition:
Revenues for the company are recognized in terms of the principals laid down under US GAAP revenue recognition. Further, revenues are recognized net of intercompany eliminations, discounts, returns, allowances and sales incentives, including coupon redemptions and rebates.
Selling, general and administrative expenses:
The selling, general and administrative expenses as a percentage of sales are presented below.
|
|
2015 |
2014 |
2013 |
|
SG&A Expense |
1,196.70 |
991.3 |
937.9 |
|
Sales |
19,162.70 |
16,447.80 |
14,866.80 |
|
% |
6.24% |
6.03% |
6.31% |
|
Change in % |
0.22% |
-0.28% |
N/A |
Asset Turnover:
Asset turnover for the company for FY 2015 was 1.65 (19,162.7 / AVERAGE (12461, 10752.9)). The measure is an indication of the company’s efficiency in utilization of its assets in generating revenues.
Prepaid expenses and other current assets:
Prepaid expenses and other current assets balances for the year ended 2015 were USD 334.2 million and were obtained from the face of company’s balance sheet.
Deferred rent and other liabilities:
Accrued liabilities for the company were USD 1,760.7 million out of which occupancy costs were USD 137.2 million. The figures were obtained from notes to the financial statements.
Deferred and prepaid rent:
Deferred rent occurs when a tenant is given free rent in one or more period. Prepaid rent is rent which has not yet been incurred but has been paid. This is recorded as an asset in the financial statements.
Accrued liabilities:
Accrued liabilities are liabilities which are a reflection of an income statement expense which has been incurred but not yet paid for by the business.
Interest income:
Interest income is recovered when a company makes investments in short or long term debt instruments such as marketable securities.
EPS and Gross Profit:
|
|
2015 |
2014 |
2013 |
|
Gross Profit (Sales - COS) |
11,375.20 |
9,589.00 |
8,484.5 |
|
Sales |
19,162.70 |
16,447.80 |
14,866.80 |
|
GP Margin |
59.36% |
58.30% |
57.07% |
|
Change in GP margin |
1.06% |
1.23% |
NA |
|
EPS |
1.84 |
1.37 |
0.01 |
The change in gross profit margin indicates that the company was able to control its cost of sales as it experienced the increase in sales.
Cash and receivables:
|
|
2015 |
2014 |
2013 |
|
Account Receivable |
719.00 |
631.00 |
561.40 |
|
Change in Receivables |
14% |
12% |
NA |
|
Cash and cash equivalent |
1,530.00 |
1,708.40 |
2,575.70 |
References:
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