Refer to the Wendy’s financial statements in Appendix D. Review the balance sheet to determine how and where commitments and contingencies were reported.

Required

a. Read Note 10. Identify and discuss any unusual terms. Trace any numerical disclosures of commitments and contingencies in the notes to corresponding disclosures in the financial statements.

b. Discuss the underlying business reasons that may be justifying the recognition of these contingencies and commitments. How might these contingencies and commitments be viewed by financial analysts? Discuss how Wendy’s managers might view them.

c. Scan the remainder of Wendy’s notes to see if any additional business risks might justify additional disclosures. Do you notice any evidence of offbalance-sheet risks? If so, describe them and discuss the underlying business reasons supporting their use.

d. Discuss any other unusual concerns regarding Wendy’s business risks. What other related information might an external analyst require? Would a creditor prefer additional disclosures in these areas? Why?