![]() ![]() Comparing the average life of 11.76 years with the average age of 6.46 years, Starbucks should anticipate replacing older assets in the next five year. The average age of assets in the Starbucks Financial Statements is 6.46 years (Table 1). As Leasehold Improvements depreciate over extended periods of 20-30 years, it makes sense that Starbucks Asset average life is 11.76 years (Table 1). Just over 50%, or $7.9M, Starbucks reflects for PPE is in Leasehold Improvements (Starbucks 2020). Starbucks PPE includes Land, Building, Leasehold Improvements, Store Equipment, Roasting Equipment, and Furniture and Fixtures (Starbucks, 2020). ![]() Property, Plant and Equipment (PPE) contains various assets depending on the type of business one is reviewing. (2018). Using financial accounting information: The alternative to debits and credits (10th ed.). Ideally, reducing that number would lead to more current cash and more time in the market for investing that cash for future company returns. This ratio when converted to days makes the suggestion that Six Flags turns over their accounts receivable into cash at a pace of roughly 37 days on average. The ratio can be converted into days by dividing an assumed 360 day calendar period by the above accounts receivable turnover ratio of 9.69 leaving an assumed 37.15 day turnover ratio of accounts receivable. Six Flags theme parks carry high overhead both in infrastructure and labor, leaving the company the need to think ahead in terms of revenue streams.Īccounts Receivable Turnover ratio can be calculated using net credit sales of 1,053,281,000 divided by the average accounts receivable of $108,679,000 giving a ratio of 9.69. Showing that these assets are designed with the intent on providing future far reaching income streams versus more immediate income during the current calendar year. When taking into account the average life and average age of these assets, it colors in our picture. Without context, it shows that the average total assets cost almost twice as much as the company is generating annually in net sales. A return of $0.52 in strictly revenue compared to a dollar of investment in assets is not impressive at its surface. The above ratios assist in giving context to the revenue documenting asset turnover ratio. When calculating the average life, we divide the PPE by the accumulated depreciation, leaving us with a ratio of 2.21 years.Īverage age can be calculated using accumulated depreciation as referenced above at $1,061,287,000 divided by depreciation expense of $118,230,000 leaving the average age ratio of 8.98 years.įinally, asset turnover ratio can be calculated using net sales of $1,487,583,000 divided by the average total assets of $2,882,540,000 giving a ratio of 0.52 or $0.52 annual return on every invested asset dollar. PPE (Property, Plant, & Equipment) is referenced at 2,345,283,000 with accumulated depreciation of $1,061,287,000. To properly calculate the average life and average age ratios for Six Flags, we must reflect onto their Consolidated balance sheet from their most recent (2019) 10-K filing. They are Andrew Magistri and Lisa Schreiner ![]() Continue to monitor the discussion forum until Day 7 and respond with robust dialogue to anyone who replies to your initial postīelow are two classmates with discussion that need response. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum. Support your position by using information from the week’s readings. Each response should have a minimum of 100 words and be respectful of others’ opinions and beliefs that differ from your own. ![]() Guided Response: Respond to at least two of your fellow students’ or instructor posts in a substantive manner and provide information or concepts that they may not have considered. ![]()
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