Krispy Kreme’s Financial Health Looking at the financial reports of a company for the first time can be overwhelming if not intimidating. Analyzing the financial reports to determine the health of a company is much that same but different aspect must be looked at properly in order to predict and assess the health and wellness of a company. The different aspect in assessing the health of a company include the depreciation analysis, stock analysis, cash flow statement analysis, income statement trend analysis, management analysis, significant changes and possible reasons for the changes and implications of change.
To begin the analysis on Krispy Kreme, the first analysis is that of the depreciation analysis. There are three different
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By taking the net amount for 2002, which was a total of $112,577,000, and dividing it by the gross amount ($156,484,000), the percent of original cost would total 80.1%. Using the same equation for 2003, the percent of original cost would total 71.9%. The next analysis to assess the health of Krispy Kreme would be stock analysis. Stocks are what shareholders (investors) purchase to give them part ownership within a specific company such as Krispy Kreme. Stock analysis is the study of treasury stocks, preferred stocks, common stocks and earnings per shares (EPS) (Larson, Wild, & Chiappetta, 2005). After studying the consolidated balance sheet of Krispy Kreme, the company has not listed any shares of treasury stock and although Krispy Kreme’s shareholders have authorized preferred stocks totaling 10,000,000 for both 2002 and 2003, there were none issued or outstanding for either year. As for common stocks, Krispy Kreme has common stocks with no par value. In 2002, 100,000,000 common stocks were authorized and in 2003, 300,000,000 common stocks were authorized. Out of all authorized common stocks (100,000,000) in 2002, 54,271,000 stocks were issued and outstanding and for 2003, 56,295,000 stocks out of the 300,000,000 authorized stocks were issued and outstanding. The weighted average for common shares in 2002 was 53,703,000 and in 2003, the weighted average for common shares was 55,093,000. The company’s income statement
Krispy Kreme executives no longer rush to implement new plans before the time is right. They carefully study each geographical location to make sure its market will support a full-scale doughnut operation. Also, management spends time checking out sites for individual stores. Potential franchisee and employees are required to maintain certain standards and are thoroughly screened.
Abstract : Analysis of financial statement of a company is an important because it is useful to obtain Information
Krispy Kreme is a branded specialty retailer and manufacturer of premium quality doughnuts. Its principal business is to own and franchise Krispy Kreme doughnut stores in the U.S. and internationally. The main product is the Hot Original Glazed, a one-of-a-kind doughnut with an established brand. Each outlet also sells over 20 other varieties of doughnuts and coffee products. Product quality and consistency has provided the Company with a very loyal customer base.3
$10,644,800 / $2,271,400 = 4.69 Times Return on Common Stockholders’ Equity (2002) $647,645 / $1,928,960 = 33.58% Return
As the financial analyst of the company, this report is written in respect to how the financial position of the company can be improved. This report is aimed for the senior management team.
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
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
This paper reviews the Cash Flow Statements of Yum Brands, Inc., Panera Bread, and Starbucks documented by case study 10-10 in our textbook for the purpose of analyzing financial health based on cash flow data. (Gibson, 2013).
According to Pamberton’s President, the company should be focused on leveraging resources and expertise to develop products with sustainable competitive advantage. The flat crackers that Krispy Natural have produced do are not outstanding compared to competitors. There is more potential growth in the “Crackers with Filling” (annual growth expected to be 10-14%) market than there is in the “All Other” market (6-7% annual growth). The top companies that are holding the most market share in the “Crackers with Filling” are losing more market share than in the other market (Kraft went from 34.7 to 32.7 and Lance went from 31.5 to 29.9). Overall there is more potential to make the Krispy Natural brand stand out in the “Crackers with Filling” market.
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.
In order to conduct the strategic analysis of the external environment of Dunking Donuts we will use some of the tools from among the nine commonly used strategic analysis
As you know Thailand has many brand of donut and last year have new brand come to Thailand it is Krispy Kreme Doughnut. First time that they promote everyone interesting and exciting about that. Now it not interesting like beginning period. So, our group would like to study about customer preference and want to know about customer satisfaction with price, place, taste and location of Krispy Kreme Doughnut.
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
KKD divested Montana Mills chain of 28 bakery stores acquired in January 2003 for $40 million in stock. They would take a charge of $35 to $40 million in the 1st quarter. Also closing 3 new KKD “hot doughnut and coffee shops” resulting in a charge of $7 to $8 million. After these issues came to light, KKD’s shares closed down 30%, at $22.51 a share. Also in this time the SEC announced an informal investigation which caused KKD’s shares to fall another 15%, closing at $15.71 a share. The SEC filings were complete and KKD revised their financial statements. By the end of the next day the stock price was less than $10 a share.