Financial Statement Analysis & Audit Report of Starbucks

This report provides an analysis of Starbucks' financial statements for the year 2016, focusing on discrepancies between the company's annual report and its 10-K filing with the SEC. The analysis covers key financial statements, including the income statement and balance sheet, highlighting differences in reported figures for revenue, operating expenses, inventory, and property, plant, and equipment (PP&E). The report also discusses the impact of foreign currency exchange rates and depreciation methods on the financial statements. It points out potential material misstatements and the need for auditor verification of accounting practices. The report references external sources and concludes that there are discrepancies between Starbucks' annual report and SEC filings, suggesting the need for further investigation and correction.

0Report on Analysis of the Financial Statement of Starbucks
Report on Analysis of the Financial Statement of Starbucks
Name of the Student
Name of the University
Author Note

1Report on Analysis of the Financial Statement of Starbucks
Memorandum
To: Starbucks Corporation Manager
From: Auditor
Date: XXXX
Subject: To analysis the Audit report of Starbucks for the year 2016.
To analysis the 10K form of the Starbucks Corporations in-comparison to the Annual
report represented. The analysis is done for the 2016 10k form. Considering the Financial
Statement of 2016 analyzing the Income statement for 2016. Total revenue has increased by
$ -2153.2mn. The total operating expenses had increased by $1,650.60mn. This is due to
number of store increased by the company in 2015-16. Even the occupancy cost has
increased due to the yearly increment tin the lease amount (Sec.gov, 2019). The fluctuation of
foreign currency exchange has a great role in the revenue projections. Mentioned in the audit
report the expenses matches for 2016 and 2015 the item linked are as follow:
The earning before tax is represented by the US and Foreign revenue factor as shown below:

2Report on Analysis of the Financial Statement of Starbucks
The analysis of the Balance sheet for year 2016 includes change in inventory of $72.10 mn
whereas there is a misrepresentation in the audit 10 k form that the company has inventory of
$39.6 million as of October 2, 2016. They are showing the inventory misstatement because it
can affect the profitability of the business.
The Property, plant and equipment for the year 2016 have a difference of $ 445.50
Mn. The P,P&E are shown below with differentiation. The net disposition charges of $25.1
million and $12.5 million for 2016 and 2015. Net impairment charges of $24.1 million and
$25.8 million fiscal 2016 & 2015. The nature of the underlying asset that is impaired or
disposed of will determine the operating expense line on which the related impact is recorded
on our consolidated. The impairment is based on the judgement of the management that may
not be true as per auditor. The management has followed straight line method of depreciation
for the assets but same needs to be accessed by the auditor whether the accounting practice is
accurate or not as per the nature of the business.
The effect of the exchange rate on the cash and cash equivalent is in negative of -$3.5
mn. The Change in the year 2016 to 15 show an increment of $598.70 mn. The period of
recording the exchange rate needs to which is followed by the management as a minor

3Report on Analysis of the Financial Statement of Starbucks
change in the exchange rate can lead to material misstatement in the balance sheet of the
financial statements (Campbell et al 2016). The amount generated by proceeds from issuance
of common stock was $160.7 mn which is less than what was gained in 2015 around $ 190
mn. Cash out flow is majorly shown in Cash dividends paid and Repurchase of common
stock to be around (1,178.0) and (1,995.6) respectively.
The Account payable is increasing by $46.6 mn which is matching with the annual
report posted by the company on their corporate website. The auditor needs to check the
invoice so the sale and purchase can be to understood the credit sales and purchases are
appropriate or not (Dyreng et al. (2016). This analysis puts light on the annual report of the
company having some material misstatement in comparison to the SEC 10 k form and the
Annual report of the company on the corporate website.

4Report on Analysis of the Financial Statement of Starbucks
Reference
Campbell, K., & Helleloid, D. (2016). Starbucks: Social responsibility and tax avoidance.
Journal of Accounting Education, 37, 38-60.
Dyreng, S. D., Hoopes, J. L., & Wilde, J. H. (2016). Public pressure and corporate tax
behavior. Journal of Accounting Research, 54(1), 147-186.
Sec Gov (2019).
https://www.sec.gov/Archives/edgar/data/829224/000082922416000083/sbux
1022016x10xk.htm#s92F29087F8CFADEB9B3232657B89E306 [Accessed 18 Feb.
2019].