Prior to beginning work on this assignment,
- Read Chapter 4 in the Foundations of Financial Management textbook. Block, S. B., Hirt, G. A., & Danielsen, B. R. (2022).
- Review the current financial statements of Starbucks through Yahoo! Finance https://finance.yahoo.com/quote/SBUX/?err=1
or the EDGAR | Company Filings https://www.sec.gov/edgar/browse/?CIK=829224&owner=exclude
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.
Review the Financial Forecasting Template (see attached)
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.
· You may also download and refer to the Home Depot Inc. example (attached)
In the Financial Forecasting project,
- Complete the Income Statement and Balance Sheet on the appropriate tabs in the Financial Forecasting Template, 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.