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.? According to the historical income statements, we can tell that Krispy Kreme has made rapid improvement during the past 5 years . Total revenues have been increased from $220 million to $666 million, and net income has grown from about $6 million to $57 million from the fiscal year of 2000 to 2004.
Obviously, the business of Krispy Kreme was doing very well. The balance sheet of Krispy Kreme looks very well as income statement. The total assets have been increased constantly. In the fiscal year of 2000, the total assets were only around 105 millions, and total assets were around 662 millions in the fiscal year of 2004. 2. How can financial ratios extend your understanding of financial statements? What questions do the time series of ratios in case Exhibit 7 raise?
What questions do the ratios on peer firms in case Exhibits 8 and 9 raise? The financial ratios will help me know more details about the financial situation, and help evaluate if the financial ealth is good or not as they provide a useful way to identify and compare relationships across the items of financial statements. The time series of ratios in case exhibit 7 raise questions as follows: Was the financial performance of Krispy Kreme healthy or not during the past five years?
The ratios on peer firms in case Exhibits 8 and 9 raise questions as follows: What the financial performance of Krispy Kreme was comparing other similar firms? 3. 1s Krispy Kreme financially healthy at year-end 2004? Krispy Kreme was not financially healthy at year-end 2004 as they lost money. . 1n light of your answer to question 3, what accounts for the firm’s recent share price decline? 5. What is the source of intrinsic investment value in this company?
Does this source appear on the financial statements? Cash and cash equivalents:. Accounts receivables: Inventories: Property, plant, and equipment: Goodwill and other intangibles: Revenues: Expenses: Student discussion will uncover a number of concerns about Krispy Kreme’s well- being: Growth: Case Exhibit 1, DuPont Analysis: Liquidity, leverage, and profitability: Peer Comparisons: Investors’ reactions to the news