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Financial Reporting And Analysis (MBA503) Starbucks Corporation Financial Analysis

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Sandra Watson
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Southern New Hampshire University

Financial Reporting and Analysis (MBA503)

Introduction
Starbucks was created by J. Baldwin, G. Bowker, and Z. Siegel in 1971. It is one of the world’s larger
coffeehouses and coffee retail chains. The corporation has stores in over 65 countries across North America, the
Asia Pacific, Europe, Middle East and Africa (EMEA), and Latin America. “Starbucks is known for purchasing,
roasting and selling whole bean coffees along with handcrafted coffee, tea beverages and a variety of fresh food
items. Starbucks also licenses its trademarks through other channels such as licensed stores, grocery and
national foodservice accounts (MarketLine Company Profile, 2019, Pg. 3)”. In 2018, Starbucks documented
that it made a total revenue of $24,719.5 billion, an 11.4 % increase from last year. This financial analysis will
demonstrate the increase and decrease of Starbucks’ finances, along with demonstrating how debt financing and
ratio analysis help show stockholders how healthy the corporation can be or can’t be.
Horizontal and Vertical Analysis for 2017 and 2018
Therefore, the method that demonstrates the modifications in the expanse of the financial statement items
over the years is called the horizontal analysis (Tuovila, 2019). It is also called the trend analysis. The
horizontal analysis uses two or more financial years to show the changes in dollars or percentage. “The earliest
financial year is the one usually used as the base period and the items on the statements for all later periods are
compared with items on the statements of the base period (Tuovila, 2019, Pg. 2).” Thus, the proportion of the
financial statement that shows the difference of other items is called the vertical analysis. Furthermore, line
items on the income statement can be shown as a increase or decrease in gross sales (Averkamp, 2019). Also,
line items on the balance sheet can be documented as a increase or decrease of total assets or liabilities. The
cash flow statement demonstrates how each cash flow or outflow as an increase or decrease of the amount of
cash flows.

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Financial Reporting And Analysis (MBA503) Starbucks Corporation Financial Analysis

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