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Paper Topic:


A Case Study of Krispy Kreme Doughnuts Inc . Financial Statements

Krispy Kreme Doughnuts was formed in 1933 when Vernon Carver Rudolph bought a doughnut shop in Kentucky . By 1937 the business had branched into a wholesale operation , supplying local grocery stores . Today , the business is owned by Krispy Kreme franchises and there are approximately 449 factory stores throughout the world

Krispy Kreme first floated on the NASDAQ in 2000 and , with a share price of 40 .64 , immediately gained a market capitalization of 500 million . A year later they switched to the

NYSE where they now trade under the ticker symbol KKD

In to perform a financial analysis of Krispy Kreme we will utilize three main financial statements the income statement , the statement of cash flow and the balance statement . The Income Statement , or profit and loss statement , will allow us to observe how much profit has been generated by KKD and will allow us to observe how profitable the business is . Whereas the income statement reports the results from operating the business over a given period of time , the balance sheet provides a picture of the firm 's value at a snapshot period in time by presenting details of its assets , liability and owner equity . Whilst an income statement reports a company 's profits this is not actually the same as their cash flows . It is therefore important that we also look at this when analyzing the financial health and wellbeing of a company By looking at the free cash flows we are able to observe how much cash is available to the company after they have paid for their investments in operating capital and fixed assets . The free cash will be the amount that is available to redistribute to the owners and creditors

The financial reports for Krispy Kreme between the years 2005 and 2007 can be found in Appendix A . At first glance it is evident that a has been made over the last three years since their 2005 filing . This could be potentially attributed to their rapid growth and extension that has necessitated large investments in property , plant , equipment and investments in equity method franchises . The losses , however , have reduced from 7 .2 million in 3rd quarter 2006 to 798 in the 3rd quarter of 2007 that could indicate an improvement

The operating income , excluding the 21 .05 million in depreciation , of Krispy Kreme at the end of the 3rd quarter 2007 was 22 .11 . The company has reported an investment of 12 .63 that their annual report HYPERLINK "http /www .krisykreme .com " www .krisykreme .com ) attributed to the sale of property and the reacquisition of some of the franchises In addition to this KKD retired some of their long debt leading to a net loss of 15 .48 in financing activities

The statement of cash flows reveal a net credit to impairment and lease termination of 268 ,000 in the 3rd quarter of 2007 , a huge shift from the charge of 5 .4million of...

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