Final answer:
The supply and price of raw and finished inputs impact a company's financial results due to production cost changes. Key input cost increases and market-driven price adjustments can influence a firm's ability to maintain profits. The price elasticity of demand further affects whether these costs can be passed on to consumers.
Step-by-step explanation:
The risk associated with the supply and/or price of other industrial raw and finished inputs and related services is crucial for a company's financial results because fluctuations in these factors directly affect the cost of production. If the cost of a key input rises and the firm is unable to control it, this can significantly impact their operational costs, and consequently their profits. For instance, if petroleum prices spike for a chemical company, it raises their production costs; similarly, if a coffee shop experiences increased world market prices for coffee, their primary raw material becomes more expensive.
One must also consider the price elasticity of demand when evaluating how these cost changes might transfer to consumers through price adjustments. If demand is elastic, consumers are sensitive to price changes, and firms may not be able to pass on increased costs without losing sales. Conversely, if new, less expensive production methods are developed, firms might be able to retain the benefits in the form of higher profits or be pressured by the market to pass on savings to consumers through lower prices. Hence, the supply and price volatility of inputs and services is a significant risk factor for a company's financial outcomes.