Krispy Kreme Case Study Analysis

1398 Words6 Pages
Krispy Kreme Case Study Summary: This case study is concerned with Krispy Kreme, a major competitor in the restaurant industry, and how they quickly began to lose market share in 2004. Krispy Kreme was once dubbed the hottest brand in America and generated over 60% of revenues from one signature product. In an attempt to differentiate themselves from their competitors, Krispy Kreme factory stores allowed customers to see the production of doughnuts which offered customers an experience rather than a product during the purchase process. Unfortunately after a few years of aggressive growth and announcements of questionable accounting practices, financial analysts and investors were forced to revise their expectations about future growth for the company. Below is a summary of the most common financial ratios for Krispy Kreme and their competitors along with conclusions and recommendations. Financial Ratios: Liquidity A company’s ability to service short-term debt is analyzed through measures of liquidity. The first liquidity ratio is the quick ratio, which is an indicator of a company’s short-term liquidity. Krispy Kreme’s 2004 quick ratio is 2.72, meaning the company has $2.72 of liquid assets available to cover each $1 of current liabilities. The quick ratio for the company has increased year over year, from 1.05 to 2.72 over the course of 4 years signifying an improved liquidity situation for Krispy Kreme. In regards to other comparable companies included in the case

More about Krispy Kreme Case Study Analysis

Open Document