In: Accounting
Accounting
Of the risks Starbucks Corporation discloses, you must identify at least one risk at Starbucks store level and connect it to a financial statement, explaining its adverse financial statement outcomes if it were to materialize. Demonstrate your understanding by showing an effect one on at least one of the ratios.
At the store level, identifying risk is more challenging than at the company level. Apply your understanding financial reporting concepts you learned but take it a step further to incorporate your understanding of various assets and liabilities. You must analyze risks talking like an accountant, not a marketer or strategic manager. In this deliverable, it is expected that you integrate many different accounting concepts and demonstrate your understanding of what you have read in the textbook applies to what you see in a store.
Risks
Financial Statements
As given above each of the risks can be connected to financial statement in one way or the other.
Below are given afew of the risks and the impact of the relevant risk to the financial statments
1.Risk: Our success depends substantially on the value of our brands and failure to preserve their value, either through our actions or those of our business partners, could have a negative impact on our financial results.
IMPACT ON FINANCIAL STATEMENT:
Brand Name is an Intangible Asset of the Company which is not reported in the financial statement but surly have a huge effect on the financial statement. If it is reported in the financial statement then the asset would decrease when it gets harmed as the net worth of the company would deteriorate. And this would result in decrease in the profit and/or increase in loss for the company in the financial statement.
2.Risk: We are highly dependent on the financial performance of our Americas operating segment.
IMPACT ON FINANCIAL STATEMENT:
When an organisation is hugely dependent on a specific geographical location for its financial performance in the segment reporting on the geographical basis then there is a big risk as if anything uncertain or unfavourable occurs in that particular geographical location then the financial statement may face a huge change as it will reduce the operating profit of the most significant financial performing segment of the company and the overall financial statements would decrease because of it.
Eg: During the outbreak of corona virus the all of America is shut down under national emergency.
3.Risk: 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 and financial results.
IMPACT ON FINANCIAL STATEMENT:
When the cost of the raw material would increase the gross profit for the company would decrease and would result in an impact on the assets of the company.