Financial Analysis : Krispy Kreme

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Financial Summary

Krispy Kreme uses a fiscal year, which ends on the Sunday closest to January 31st. For fiscal year 2015, the year ended on February 1, 2015 and the year had 52 weeks. It is important to note that the 2013 tax year had 53 weeks and should be taken into account when comparing financial data from 2013 fiscal year. The following company information is from the 2015 Krispy Kreme annual report.
Krispy Kreme has 111 domestic company stores. They have a total of 876 franchise stores both domestic and international. Of the 876 total franchise stores, 709 are international. The top three international countries with the most franchises are Mexico, Saudi Arabia and South Korea. Mexico has 136 total stores of the 709.
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However, simply looking at a decrease or increase in liabilities is not enough information to assess the financial health of a company. An important ratio to analyze is the current ratio. The current ratio is important because it will give an investor an idea of a company’s ability to pay short-term debt. The current ratio for 2014 is 2.75. The current ratio for 2015 is 2.56. Although the current ratio has decreased in 2015, overall the company has a strong liquidity position and will be able to meet current obligations. It is also good to compare a company with their competitors in the same industry. Dunkin’ Brands is a good company to compare with Krispy Kreme as they are both in the same industry and both sell doughnuts. The current ratio for Dunkin’ Brands was 1.25 based on their 2014 annual report. This shows that Krispy Kreme has a stronger liquidity ratio than that of Dunkin’ Brands and is more likely to pay their short-term liabilities.
Now, let’s look at another ratio which is key to investors, the Return on Equity Ratio. The return on equity ratio gives an idea of profitability of owner investment and the performance of a company’s management team. Net Income for 2015 fiscal year was $30,060,000. The average common stockholder’s equity in 2015 is $266,439,500. The Return on Equity or ROE for 2015 is 11.28%. Net income in 2014 was $34,256,000. Average common stockholder’s equity in 2014 was $255,762,500. The ROE for 2014 was
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