THERE ARE 3 TABS WITHIN THE TEMPLATE-ONLY NEED TO WORK ON THE FIRST 2 TABS
Read Chapter 4 in the Foundations of Financial Management textbook.
Review the current financial statements of Starbucks through Yahoo! FinanceLinks to an external site. or the EDGAR | Company FilingsLinks to an external site. database in the Filings and Forms page. You can access the financial statements by going to the Yahoo! Finance webpage, typing in the stock symbol of Starbucks, and then clicking on the “Financials” tab.
ATTACHED-Review the Financial Forecasting Template
Reviewing the previous quarter’s financial statements will provide you with data to construct pro forma financial statements for Starbucks and make some basic projections. This week, your task will be to construct two pro forma financial statements and address some questions about your projections. The two financial statements will include an Income Statement and Balance Sheet.
ATTACHED-To begin your assignment, download the Financial Forecasting Template
Use the EDGAR | Company FilingsLinks to an external site. or Yahoo! FinanceLinks to an external site. database to download the last 10-Q from Starbucks into Excel.
In the Financial Forecasting project,
- Complete the Income Statement and Balance Sheet on the appropriate tabs in the Financial Forecasting Template, (THERE ARE 3 TABS WITHIN THE TEMPLATE-ONLY NEED TO WORK ON THE FIRST 2 TABS) using the downloaded data.
- Calculate the expenses to determine what will change and what will remain the same.
- Summarize your rationale, within each line item expense.
Assume that sales will increase for the next quarter by the same percentage increase from the previous quarter to the last reported quarter. For example, if sales increased 8% from the last quarter to the current reported quarter, you will use 8% as the sales increase for your pro formas.
Note: Not all costs are associated with the cost of sales. It will be up to you to determine which line items need to be increased and which ones need to be left alone. This will require you to distinguish between fixed and variable costs. For a reminder of the difference between fixed and variable costs, please review the Business Costs (Fixed Costs and Variable Costs) Explained video.
HOME DEPOT EXAMPLE IS ALSO ATTACHED
Pro Forma Income Statement
| PRO FORMA INCOME STATEMENT |
Pro Forma Balance Sheet
| PRO FORMA BALANCE SHEET |
Variance Analysis
| VARIANCE ANALYSIS | ||||||||||||
| Cells E6 and F6 have prepopulated formulas and will calculate automatically for you. | ||||||||||||
| EXAMPLE | LINE ITEM | Q4, 20NN Kevin Kuznia: This colum is the budget. In reality we know it is the previous quarter, but for this scenario we willl pretend it is the budgeted amount. |
Q1, 20NN Kevin Kuznia: This column are the actual results. In other words, it is the final amount that was reported. |
AMOUNT | PERCENT VARIANCE Webster, Amanda: This is variance. It is how much in a percent you are over or under. |
POTENTIAL RATIONALE FOR VARIANCE Webster, Amanda: Explain the plausiable reasons why there is a variance. |
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| Interest Expense | $ (25.90) | $ (75.00) Kevin Kuznia: This amount is in millions of dollars. Note that this is negative. This is because it appers as a credit on the income statement. In other words, the company made money on interest expenses rather than paying money on interest. Be sure to carefully review if an item is a credit or debit. |
$ (49.10) | 189.58% | Due to raising interest rates, the company was able to earn more money from interest bearing investments. | |||||||
| ASSIGNMENT | LINE ITEM | Q4, 20NN Kevin Kuznia: This colum is the budget. In reality we know it is the previous quarter, but for this scenario we willl pretend it is the budgeted amount. |
Webster, Amanda: This is variance. It is how much in a percent you are over or under. | Q1, 20NN Kevin Kuznia: This column are the actual results. In other words, it is the final amount that was reported. |
Webster, Amanda: Explain the plausiable reasons why there is a variance. | AMOUNT | PERCENT VARIANCE Webster, Amanda: This is variance. It is how much in a percent you are over or under. |
POTENTIAL RATIONALE FOR VARIANCE Webster, Amanda: Explain the plausiable reasons why there is a variance. |
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| Enter your line item | 0 | ERROR:#DIV/0! | ||||||||||
| End of Variance Analysis worksheet and end of workbook |
