Essay Krispy Kreme’s Dilemma

The liquidity, profitability, and solvency ratios reveal some interesting points about Kudler Fine Food’s financial position. The liquidity ratios revealed that during 2002 and 2003, Kudler was having no trouble paying short-term debt. However, the current and acid-test (quick) ratios showed that during 2003 Kudler had an excess amount of cash that they were not investing properly. These ratios also showed that Kudler was collecting receivables and selling average inventory very quickly. The profitability ratios revealed that during 2002 and 2003, Kudler was using assets efficiently and making a decent profit. The profit margin ratio

Health care organisations do business on cash basis. They provide proper medical services to different people and they receive cash when operation ends and they don’t use any debt to finance their operating activities. The capital structure of this firm shows a zero inventory turnover and a huge amount of cash from the customers from which partially is used to pay current liabilities and the remaining is in the form of retain earning.

When looking at the 2004 DuPont analysis, you see that not only has profit margin increased every year, but it is more than 2% better than the industry average. That being said, Krispy Kreme does not utilize its assets as efficiently as its competitors. This potentially troubling because of the fact that they have gone through aggressive growth in stores recently. Is this an indication that these stores are not generating the sales necessary to justify the investment, or at least as well as its competitors might be able to? Finally the equity multiplier comes in below the industry average. To us this means that Krispy Kreme does not utilize its leverage as effectively as the competition. Perhaps it would be to Krispy Kreme’s benefit to increase leverage and invest in order to increase growth and earnings in a similar manner to its competition. Overall, we believe that Krispy Kreme is moderately

3-17. How many times has the company been sold? When and by whom to whom?

People love to drink coffee. Coffee shops, independently owned or chains are every corner. Statistics show that people are taking more coffee every day. It is a very profitable business.

Since there are significant changes in the company for the last 3 years such as descending trend in car and truck market in 1991, sale of one of their core electronics business, terminated Volvo agreement etc.; the company thinks that their financial value (equity and debt ratios and weights) and accordingly cost of capital is changed. Also company has free cash (derived from the sales of electronics

Net income is total revenues minus total expenses incurred to generate those revenues all within the same reporting period. Net income is calculated by the accrual accounting methodology meaning that the expenses incurred to generate revenues are reported at the same time the related revenues are reported. Both revenue recognition and expenses paid may not coincide with actual cash transactions. Net cash from operating activities, on the other hand, is not determined by accrual but by

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.

The third ratio is the CFO/CL ratio (short-term debt coverage), which shows what part of the company’s short-term liabilities can be payed by its most liquid asset – cash. GSK’s average meaning of the CFO/CL was 0,64 This is a good showing, because it proves that GSK uses its cash effectively, since if the company’s cash ratio equals 1 it means that company has too much cash in reserves During years 2005-2007 the CFO/CL ratio changed very slightly, but in 2008 ratio increased to 0,72, probably because GSK has faced increase in derivative financial instruments, inventories and receivables, which happened due to the strengthening of overseas currencies In

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

As Heineken Malaysia Berhad current ratio is 1.88:1, it actually have been exceed the ideal ratio for a company which is 1.5:1. This has shown that Heineken Malaysia Berhad have the ability to meet its short term liabilities. Other than that, as in 2014, the current ratio for Heineken Malaysia Berhad is 1.42:1, this has shown that they are operating their business well in general as in 2015, the current ratio has an improved from 1.42:1 to 1.88:1. Actually, the receivables, deposits and prepayment from current assets in 2014 is higher than the receivables, deposits and prepayment in 2015. This is because the amount due from a subsidiary in the receivable, deposits and prepayment section have a significant different between 2014 and 2015 for both trade and non-trade. The trade amount due from a subsidiary for 2014 is RM24,945,000 but in 2015, there is a zero trade amount due from a subsidiary for the year. Moreover, the non-trade amount due from a subsidiary also have a significant different of RM41,313,000 which because of amount in 2014 is 76,865,000 and the amount in 2015 is 35,552,000. Although, this can actually become a problem which can drag

KKD's business model provides the company three sources of revenue: (1) Sales at company-owned stores; (2) Royalties from franchised stores and franchise fees from new stores; and (3) Sales of doughnut mixes, customized doughnut-making equipment, and coffees to franchised stores.

From Exhibits 7 & 8, quick and current ratios grew steadily over the years reflecting ability for KKD to repay their short-term debt. These ratios when compared to their competitors were above the average. The leverage ratios were lower than most of the other companies showing that KKD did not have enough invested in long term debt.

Overall, we can say that Krispy Kreme has still a strong position in the market. Although it is a smaller company with less financial backing, it remains competitive as its breadth of products appeals across all major demographic groups (including age and income). Its doughnuts have also stirred a cult-like following. Yet its recent problems in strategies (over expansion, unethical accounting procedures) and management could

From the 2001 projections, the company`s sales revenues reached the 90.9 million mark in 2001 representing a 15 million rupees growth over the previous year. Despite this remarkable increase, there are a number of financial challenges that must be taken into account when evaluating the forecast. For example, based on the company`s total assets turnover which tells how efficient the company is using its assets to generate sales, Kota`s total assets turnover ratio is suboptimal. In 2000, the