STARBUCKS CORPORATIONCONSOLIDATED BALANCE SHEETS(in millions, except per share data)Sep 30,2018Oct 1,2017ASSETSCurrent assetsCash and cash equivalents8,756.3 $2,462.3181.5Short-term investments228.6Accounts receivable, net693.1870.4Inventories1,400.51,364.0Prepaid expenses and other current assets1,462.8358.1Total current assets12,494.25,283.4Longterm investmentsEquity and cost investmentsProperty, plant and equipment, netDeferred income taxes, net267.7542.3334.7481.65,929.14,919.5795.4134.7412.2362.8Other longerm assctsOther intangible assetsGoodwillTOTAL ASSETS1,042.2441.41.539.23,541.624.156.414,365.6LIABILITIES AND EQUITYCurrent liabilities1,179.3 SAccounts payableAccrued liabilities782.52,298.41,934.5Insurance reserves213.7215.2Stored value card liability and current portion of deferred revenueCurrent portion of long-term debtTotal current liabilitics1,642.91,288.5349.94,220.75,684.2Long-term debtDeferred revenue9,090.23,932.66,775.74.4Other longtem liabilities1,430.5750.9Total liabilities22,980.68,908.6Shareholders' equity:Common stock (S0.001 par value)-authorized, 2,400.0 shares; issued andoutstanding, 1,309.1 and 1,431.6 shares, respectively1314Additional paid-in capitalRetained carmings41.141.15,563.21,457.4Accumulated other comprehensive lossTotal shareholders' equity(330.3)1,69.5(155.6)S,450.1Noncontrolling interestsTotal equity6.36.91,175.85,457.024,156.4TOTAL LIABILITIES AND EQUITY14,365.6 STARBUCKS CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEin millionsSep 30,2018Oct 1,2017Oct 2,2016Fiscal Year EndedNet earnings including noncontrolling interests$2,884.9 $2,818.94,518.0Other comprehensive income/(loss), net of tax:Unrealized holding gains/(losses) on available-for-sale securities(7.0)(9.5)3.5Tax (expense)/benefit1.92.9(1.3)(109.6)Unrealized gains/(losses) on cash flow hedging instruments24.453.2Таx (еxpense)benefit(6.5)(12.6)27.5Unrealized gains/(losses) on net investment hedging instruments7.820.1Таx (еxpense)benefit(2.2)(7.4)Translation adjustment and other(220.0)(38.3)85.5Таx (еxpense) benefitReclassification adjustment for net (gains)/losses realized in netearnings for available-for-sale securities, hedging instruments, andtranslation adjustment(2.4)3.419.024.7(67.2)78.2Tax expense/(benefit)(1.2)14,0(11.8)91.0Other comprehensive income/(loss)(174.7)(47.2)Comprehensive income including noncontrolling interests4,343.32,837.72,909.9(0.3)Comprehensive income/(loss) attributable to noncontrolling interests0.21.2Comprehensive income attributable to Starbucks4,343.6 $2,837.5 $2,908.7See Notes to Consolidated Financial Statements

Question
Asked Oct 21, 2019
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conduct horizontal and vertical analyses for the balance sheet and income statement accounts and report any significant observations for a two-year period.

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.
STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
Sep 30,
2018
Oct 1,
2017
ASSETS
Current assets
Cash and cash equivalents
8,756.3 $
2,462.3
181.5
Short-term investments
228.6
Accounts receivable, net
693.1
870.4
Inventories
1,400.5
1,364.0
Prepaid expenses and other current assets
1,462.8
358.1
Total current assets
12,494.2
5,283.4
Longterm investments
Equity and cost investments
Property, plant and equipment, net
Deferred income taxes, net
267.7
542.3
334.7
481.6
5,929.1
4,919.5
795.4
134.7
412.2
362.8
Other longerm asscts
Other intangible assets
Goodwill
TOTAL ASSETS
1,042.2
441.4
1.539.2
3,541.6
24.156.4
14,365.6
LIABILITIES AND EQUITY
Current liabilities
1,179.3 S
Accounts payable
Accrued liabilities
782.5
2,298.4
1,934.5
Insurance reserves
213.7
215.2
Stored value card liability and current portion of deferred revenue
Current portion of long-term debt
Total current liabilitics
1,642.9
1,288.5
349.9
4,220.7
5,684.2
Long-term debt
Deferred revenue
9,090.2
3,932.6
6,775.7
4.4
Other longtem liabilities
1,430.5
750.9
Total liabilities
22,980.6
8,908.6
Shareholders' equity:
Common stock (S0.001 par value)-authorized, 2,400.0 shares; issued and
outstanding, 1,309.1 and 1,431.6 shares, respectively
13
14
Additional paid-in capital
Retained carmings
41.1
41.1
5,563.2
1,457.4
Accumulated other comprehensive loss
Total shareholders' equity
(330.3)
1,69.5
(155.6)
S,450.1
Noncontrolling interests
Total equity
6.3
6.9
1,175.8
5,457.0
24,156.4
TOTAL LIABILITIES AND EQUITY
14,365.6
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STARBUCKS CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share data) Sep 30, 2018 Oct 1, 2017 ASSETS Current assets Cash and cash equivalents 8,756.3 $ 2,462.3 181.5 Short-term investments 228.6 Accounts receivable, net 693.1 870.4 Inventories 1,400.5 1,364.0 Prepaid expenses and other current assets 1,462.8 358.1 Total current assets 12,494.2 5,283.4 Longterm investments Equity and cost investments Property, plant and equipment, net Deferred income taxes, net 267.7 542.3 334.7 481.6 5,929.1 4,919.5 795.4 134.7 412.2 362.8 Other longerm asscts Other intangible assets Goodwill TOTAL ASSETS 1,042.2 441.4 1.539.2 3,541.6 24.156.4 14,365.6 LIABILITIES AND EQUITY Current liabilities 1,179.3 S Accounts payable Accrued liabilities 782.5 2,298.4 1,934.5 Insurance reserves 213.7 215.2 Stored value card liability and current portion of deferred revenue Current portion of long-term debt Total current liabilitics 1,642.9 1,288.5 349.9 4,220.7 5,684.2 Long-term debt Deferred revenue 9,090.2 3,932.6 6,775.7 4.4 Other longtem liabilities 1,430.5 750.9 Total liabilities 22,980.6 8,908.6 Shareholders' equity: Common stock (S0.001 par value)-authorized, 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively 13 14 Additional paid-in capital Retained carmings 41.1 41.1 5,563.2 1,457.4 Accumulated other comprehensive loss Total shareholders' equity (330.3) 1,69.5 (155.6) S,450.1 Noncontrolling interests Total equity 6.3 6.9 1,175.8 5,457.0 24,156.4 TOTAL LIABILITIES AND EQUITY 14,365.6

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
in millions
Sep 30,
2018
Oct 1,
2017
Oct 2,
2016
Fiscal Year Ended
Net earnings including noncontrolling interests
$
2,884.9 $
2,818.9
4,518.0
Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale securities
(7.0)
(9.5)
3.5
Tax (expense)/benefit
1.9
2.9
(1.3)
(109.6)
Unrealized gains/(losses) on cash flow hedging instruments
24.4
53.2
Таx (еxpense)benefit
(6.5)
(12.6)
27.5
Unrealized gains/(losses) on net investment hedging instruments
7.8
20.1
Таx (еxpense)benefit
(2.2)
(7.4)
Translation adjustment and other
(220.0)
(38.3)
85.5
Таx (еxpense) benefit
Reclassification adjustment for net (gains)/losses realized in net
earnings for available-for-sale securities, hedging instruments, and
translation adjustment
(2.4)
3.4
19.0
24.7
(67.2)
78.2
Tax expense/(benefit)
(1.2)
14,0
(11.8)
91.0
Other comprehensive income/(loss)
(174.7)
(47.2)
Comprehensive income including noncontrolling interests
4,343.3
2,837.7
2,909.9
(0.3)
Comprehensive income/(loss) attributable to noncontrolling interests
0.2
1.2
Comprehensive income attributable to Starbucks
4,343.6 $
2,837.5 $
2,908.7
See Notes to Consolidated Financial Statements
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STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME in millions Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 Fiscal Year Ended Net earnings including noncontrolling interests $ 2,884.9 $ 2,818.9 4,518.0 Other comprehensive income/(loss), net of tax: Unrealized holding gains/(losses) on available-for-sale securities (7.0) (9.5) 3.5 Tax (expense)/benefit 1.9 2.9 (1.3) (109.6) Unrealized gains/(losses) on cash flow hedging instruments 24.4 53.2 Таx (еxpense)benefit (6.5) (12.6) 27.5 Unrealized gains/(losses) on net investment hedging instruments 7.8 20.1 Таx (еxpense)benefit (2.2) (7.4) Translation adjustment and other (220.0) (38.3) 85.5 Таx (еxpense) benefit Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, hedging instruments, and translation adjustment (2.4) 3.4 19.0 24.7 (67.2) 78.2 Tax expense/(benefit) (1.2) 14,0 (11.8) 91.0 Other comprehensive income/(loss) (174.7) (47.2) Comprehensive income including noncontrolling interests 4,343.3 2,837.7 2,909.9 (0.3) Comprehensive income/(loss) attributable to noncontrolling interests 0.2 1.2 Comprehensive income attributable to Starbucks 4,343.6 $ 2,837.5 $ 2,908.7 See Notes to Consolidated Financial Statements

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Expert Answer

Step 1
  1. Use basic financial analysis to examine any horizontal changes in Starbuck’s short- and long-term debt over time.
Horizontal Analysis
Sept 30, 2018 Oct 1, 2017 Change in dollars Change in %
(in S)
(in S)
(in S)
Short-term debt:
Accounts payable
Accrued liabilities
Insurance reserves
1,179
2,298
214
51%
19%
783
397
364
1,935
215
-2
-1%
Stored value card
liability and current portion
of deferred revenues
1,289
1,643
354
28%
Current portion of long-
term debt
Total short-term debt
350
350
0%
5,684
4,221
1,464
35%
Long-term debt:
Deferred revenue
Other long-term liabilities
Total long-term debt
9,090
6,776
3,933
131%
5,158
169275%
4
6,771
1431
751
680
919%
17.296
4,688
12,609
269%
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Horizontal Analysis Sept 30, 2018 Oct 1, 2017 Change in dollars Change in % (in S) (in S) (in S) Short-term debt: Accounts payable Accrued liabilities Insurance reserves 1,179 2,298 214 51% 19% 783 397 364 1,935 215 -2 -1% Stored value card liability and current portion of deferred revenues 1,289 1,643 354 28% Current portion of long- term debt Total short-term debt 350 350 0% 5,684 4,221 1,464 35% Long-term debt: Deferred revenue Other long-term liabilities Total long-term debt 9,090 6,776 3,933 131% 5,158 169275% 4 6,771 1431 751 680 919% 17.296 4,688 12,609 269%

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Step 2

Note:

(Change in dollars)
Balance of short-term debt
as of Oct 1, 2017
Change in of short-term debt=.
(Change in dollars)
Balance of long-term debt
as of Oct 1, 2017
Change in % of long-term debt=
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(Change in dollars) Balance of short-term debt as of Oct 1, 2017 Change in of short-term debt=. (Change in dollars) Balance of long-term debt as of Oct 1, 2017 Change in % of long-term debt=

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Step 3
  1. Use basic financial analysis to examine any horizontal changes in Starbuc...
Vertical Analysis
Sept 30, 2018
(in S)
Change in %
Short-term debt:
Accounts payable
20.75%
40.43%
1,179.3
Accrued liabilities
2,298.4
Insurance reserves
213.7
3.76%
Stored value card
liability and current portion
of deferred revenues
28.90%
1,642.9
Current portion of long-
term debt
Total short-term debt
6.16%
349.9
5.684.2
24.73%
Long-term debt:
Deferred revenue
Other long-term liabilities
Total long-term debt
Total Assets
52.56%
39.17%
8.27%
75.26%
9,090.2
6,775.7
1,430.5
17,296.4
22,981.0
100.00%
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Vertical Analysis Sept 30, 2018 (in S) Change in % Short-term debt: Accounts payable 20.75% 40.43% 1,179.3 Accrued liabilities 2,298.4 Insurance reserves 213.7 3.76% Stored value card liability and current portion of deferred revenues 28.90% 1,642.9 Current portion of long- term debt Total short-term debt 6.16% 349.9 5.684.2 24.73% Long-term debt: Deferred revenue Other long-term liabilities Total long-term debt Total Assets 52.56% 39.17% 8.27% 75.26% 9,090.2 6,775.7 1,430.5 17,296.4 22,981.0 100.00%

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