Case study review
Read the following case study and answer the questions below. Crisp-Drinks is a California corporation headquartered in San Diego, California, United States. Crisp-Drinks common stock is registered with the Securities and Exchange Commission. Crisp-Drinks is engaged in the marketing, manufacturing, and distributing Crisp-Drinks beverages nationally. Historically, Crisp-Drinks has had three drinks representing the largest source of operating revenue. These are: YumCoffee, AlcalWater, and FuzJuice. Crisp-Drinks has consistently met or exceeded earnings expectations while achieving annual earnings per share growth rate of more than twice the average growth rate of the SP 500. Crisp-Drinks superior earnings performance has resulted in its common stock trading at a price to earnings multiple twice that of the SP 500s. In recent years, Crisp-Drinks has begun experiencing increased competition and a more difficult economic environment. Nevertheless, Crisp-Drinks continuously has issued press releases that its expected earnings per share will continue to grow between ten percent and twelve percent annually. For the purpose of generating additional revenues to meet both annual business plan and earnings targets, close to the fiscal year-end, Crisp-Drinks asked its bottlers to make additional purchases of YumCoffee and FuzJuice. Even though the bottlers knew that these additional purchases exceeded the forecasted demands for these drinks, the bottlers continued to purchase these drinks to preserve their relationship with Crisp-Drinks. This practice authorized and implemented by the companys management, effectively allowed Crisp-Drinks to meet
