a. Given your knowledge of Starbucks’ key success and risk factors, use the note information presented above to evaluate Starbucks’ accounting quality.

b. If you believe that Starbucks’ accounting policy does not yield measurements of assets and liabilities that reflect economic reality and measurement of net income that is predictive of future earnings, suggest any changes that you would make to assets, liabilities, and earnings to improve accounting quality. (At this point in your learning process, if you do not have specific numerical adjustments to propose, at least describe potential journal entries you would make to change the financial statements if any, and what information you might need to make those entries.)

c. Evaluate whether your proposed adjustments are necessary for (1) credit analysis, (2) equity valuation, and (3) management evaluation.