Question

1. Of the 15 risks that Starbuck's management discloses, which one do you think could most adversely affect the balance sheet and why? 2. Of the 15 risks that Starbuck's management discloses, which one do think could most you adversely affect the income statement and why? 3. Of the 15 risks that Starbuck's management discloses, which one do you think could most adversely affect the Cash Flow Statement and why? 4. Risk number 10 above states "Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business andfinancial results." Which ratios would be adversely affected if increases in cost or supply chain disruptions occurred for arabica beans? Explain why 5. Compare your readings of management's assertions and your findings of your vertical, horizontal, ratio and chart analysis. Discrepancies may ex indicating and what management is telling you. Is management telling the public one thing, but the financial information indicates another? Explain to the best of your ability between what the ratios are To help you answer this question read the following. Form 10-Ks normally follow specific patterns. It is important to read all three years (2016, 2017 and 2018) to see how management modifies its discussion from year to year. The specific narrative in each section generally does not change too much unless new disclosure requirements or other laws/policies/procedures are enacted. This is often a company's achilles heel. If management is telling the public a similar narrative each year, the charts should show a 17

Answer 1

1. "4TH " STATEMENT COULD EFFECT THE BALANCE SHEET AS WHEN ALL THE CONFIDENTIAL INFORMATION WOULD BE LEAKED THE BUSINESS WOULD NO LONGER BE ABLE TO GENERATE BUSINESS AND IT WOULD IMPACT THE GOODWILL(INTANGIBLE ASSETS) OF THE BUSINESS.

2. "11TH " STATEMENT WOULD EFFECT THE INCOME STATEMENT AS WHEN THE SUPPLY CHAIN IS NOT WORKING PROPERLY THE REVENUE WOULD BE LOW ON ONE SIDE AND THE PURCHASE ON THE OTHER SIDE.

3. "3RD" STATEMENT WOULD ADVERSELY EFFECT THE REVENUES OF THE FIRM IN BOTH SHORT AND LONG TERM. THERE BY REDUCING THE SALES AND THE CASH COLLECTION FORM OUTLET SALES.

4. A)PRODUCT MIX RATIOS WOULD BE EFFECTED AS IF HIGH QUALITY ARABICA COFFEE BEANS ARE NOT AVAILABLE IT WOULD BE SUBSTITUTED BY ANOTHER INPUT.

B) PROFITABILITY RATIO WOULD BE EFFECTED AS COST OF INPUT WOULD INCREASE.