This case details Boston Chicken's franchise plan for developing its novel restaurant trade, and the resultingrelated accounting recordingproblems.
Consolidated Statements of Operations (Exhibit page 12) 1995
Consolidated Balance Sheet 1995
Consolidated Statements of Cash Flows (In thousands) 1995
1. Assume Boston Chicken’s growth for next year is exactly the same as this year, but that no new financing is raised. build and Present the Income Statement, Balance Sheet and Statement of Cash Flows for at the end of next year.
2. As Boston Chicken’s CEO, do you believe Boston Chicken is doing a good or excellent job of accurately reporting its performance and risks to investors?
3. Is your primary duty as CEO to existing shareholders or investors who might be considering buying stock? How might this change your view of its financial reporting?
4. What are Boston Chicken’s Key Success Factors? Make sure you stand in the customer’s shoes and revisit the Cash and Valuation Framework.
5. How well is Boston Chicken performing financially? Are the franchises moderately or extraordinarily profitable?