Krispy Kreme Financial Ratios

The company has been sold several times. First, in 1935 Ishmael Armstrong sold Krispy Kreme to Vernon Rudolph’s father Plumie Rudolph. Second, in 1976 due to Vernon Rudolph’s death, the company was then sold to Beatrice Foods of Chicago. Third, in 1982 Joseph A McAleer Sr. who led a group of Krispy Kreme franchisee bought back Krispy Kreme from Beatrice Foods. Finally, Krispy Kreme Inc. became a publicly traded company in 2000 by joining the NASDAQ as well as joining NYSE in 2001.

For example, is there a bottleneck operation in your production process that you can expand cheaply? What is the effect of adding another oven? How much would you be willing to pay to rent an additional oven?

Overall regards to liquidity ratios, the higher the number the better; however, a too high also indicates that the firms were not using their resources to their full potential. Current ratio of 1.0 or greater shows that a company can pay its current liabilities with its current assets. JWN’s ratio increased from 2.06 in 2007 to 2.57 in 2010, and slightly decreased to 2.16 in 2011. JWN’s cash ratio increased significantly from 22% in 2007 to 80% in 2010. JWN has a cash ratio of 73% in 2011, which is useful to creditors when deciding how much debt they would be willing to extend to JWN. In addition, JWN also has moderate CFO ratio of 46%, indicating the companies’ ability to pay off their short term liabilities with their operating cash

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

The historical financial statements can tell us a lot about the financial health and condition about Krispy Kreme or any other company. By utilizing some key financial ratios we can determine how the company compares year over year as well as against competitors in many ?different dimensions. These dimensions include short term solvency, or its ability to meet its immediate obligations, long term solvency, or its ability to manage debt leverage, asset management, or its ability to

KRISPY KREME, one of the successful companies in the food-service industry, began as a single doughnut shop in the early 20ths. The rapid expansion of its business scale made the corporation suffer its first economic crisis by the early 1980s. A group of franchisees later took charge of the heavily-debt company bringing new management ideas which helped the KRISPY KREME find way back to the game and become the role model in the industry. KK generated revenues through four primary sources: on-premises retail sales, off-premises sales, product mix and

Liquidity In analyzing liquidity of the company, the current ratio is not very telling of a falling company. The company increased its ratio throughout the period of the income statement thus building upon its company assets and allowing for a 6-1 ratio of assets over its liabilities. This implies the company is still able to operate sufficiently even though it did not make its optimum current ratio of about 8-1. However, when one takes the inventory out of the equation with the quick ratio, the numbers show the true strength of short term liquidity. The numbers are still good, and do not indicate failure – but are

Leverage and liquidity ratios in respect to the O.M Scott & Sons Company vary widely. The overall liquidity of the company does not indicate that lack of cash will impede their operational ability. Although the current ratio increases to a high of 4.2999 in 1960, their ability to meet short-term obligations should not be affected. However, it may indicate that there is too much inventory or cash could be better spent in other areas of the business. The financial leverage ratio increases from a low of .5335 in 1957, to a high of 1.3928 in 1961. This change shows that the company is becoming more dependent on using debt to finance its assets.

The balance sheet of Krispy Kreme looks very similar to the income statement. The majority of line items have experienced great growth. On the asset side of the balance sheet Krispy Kreme has eliminated their long-term investments and its tangible assets have increased from $0 to $176M. The increase of intangible assets was due to their aggressive accounting treatment for franchise acquisitions.

As Wall Street Journal stated, Krispy Kreme grew too quickly and diluted its cult status by selling its doughnut in too many outlets. They could not anticipate when the demand decreased due to low-carbohydrate diet trend issues. It can be seen clearly that interest expenses also increased for the year ended Feb 2, 2003 to the year ended Feb 1, 2004 as the debt increased.

Kristen 's Cookie Company is a good example where the success or failure of the company depends directly on the process planning adopted by the company, i.e., the company can maximize its productivity by utilizing its resources effectively. One major aspect of process analysis is to identify the major bottlenecks in the process and trying to mitigate their effects with least possible level of costs and resources. The following flowchart shows the overall process adopted by the company: (Exhibit 1)

The quick ratio reflects on a company’s ability to meet its current liabilities without liquidating inventories that could require markdowns. It is a more stringent test of liquidity than the current ratio and may provide more insight into company liquidity in some cases. For Colgate-Palmolive, the quick ratio has declined from 0.73 in 2008 to 0.58 in 2010. While this does not necessarily mean a problem, a higher current ratio and quick ratio analysis will mean that the company will not have difficulty in meeting its short-term obligations from its operations and not by liquidating its assets.

In year 2007 quick ratio reached dangerous point – 1,02, company’s ability to pay its short-term obligations was badly influenced by the increase in short-term liabilities In 2008 meaning of the ratio grew up, because of the factors listed above. In year 2009 both ratios fell, since company took more liabilities than in 2008: its short-term borrowings, current tax and short-term provisions increased Average showings on AstraZeneca Quick ratio during the period was 1,13, while GSK – 1,22 which again proves that GSK was more liquid during the analysed period.

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.

A shift in consumer demand to want healthier fast-food options has hit the industry hard. Dunkin’ Donuts and Starbucks have combated this shift by offering healthier menu items, something Krispy Kreme has failed to do. Dunkin’ Donuts offers healthy breakfast sandwiches and