### Interpret the changes in starbucks risk ratios during

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##### Reference no: EM131118259

Exhibit 5.26 presents risk ratios for Starbucks for 2006 and 2007. Exhibits 1.26, 1.27, and 1.28 in Chapter 1 present the financial statements for Starbucks.

Required

a. Compute the values of each of the ratios in Exhibit 5.26 for Starbucks for 2008. Starbucks had 735.5 million common shares outstanding at the end of 2008, and the market price per share was \$14.17. For days accounts receivable, use only specialty revenues in your calculations, because accounts receivable are primarily related to licensing and food service operations, not the retail operations. Use cost of sales, including occupancy costs, in the numerator of the GMI in the Beneish earnings manipulation model.

b. Interpret the changes in Starbucks risk ratios during the three-year period, indicating areas of concern.

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