Friday, February 22, 2019
Krispy kreme doughnuts, inc. Essay
This expression considers the sudden and very large drop in the market rate of equity for Krispy Kreme Doughnuts, Inc., associated with a series of announcements made in 2004. Those announcements caused investors to revise their expectations astir(predicate) the future growth of Krispy Kreme, which had been one of the most rapidly growing Ameri elicit corporations in the new millennium. Your task is to evaluate the implications of those announcements and to assess the pecuniary wellness of the company. This case provides an early exercise in financial statement abbreviation and lays the foundation for two important financial themes the concept of financial health, and the financial-economic exposition of value and its determinants.Suggested Questions for Advance Assignment1.What are the definition and aspiration of an income statement, as shown in case border 1? What are the definition and purpose of a balance sheet as shown in case Exhibit 2? How are the two statements relat ed? In answering the questions above, cotton up some of the following accounting choices and sources of variation in reported results in (i) Cash and cash equivalents, (ii) Accounts receivables, (iii) Inventories, (iv) Property, plant, and equipment, (v) Goodwill and other intangibles, (vi) Revenues, and (vii) Expenses2.Are Krispy Kremes financial statements film? Does management have any discretion over how those accounts are estimated?3.What can the historical income statements (case Exhibit 1) and balance sheets (case Exhibit 2) tell you about the financial health and current condition of Krispy Kreme Doughnuts, Inc.? Clues Discuss Krispy Kremes growth DuPont psychoanalysis liquidity, leverage, and profitability and peer comparisons (Refer case Exhibits 7, 8 and 9)4.How can financial ratios surpass your understanding of financial statements?5.Is Krispy Kreme financially healthy at year-end 2004? condition your assessment of Krispy Kremes health, why did its stock price drop b y 80% between 2003 and 2004?6.What is the source of intrinsic investment value in this company? Does this source appear on the financial statements?7.Review the events since the date of the case. dupe the companys Web site for updates on its financial culture (http//www.krispykreme.com).