Liquidity Ratio Essay

In this case study, our master(prenominal) purpose is to analyze the high society fiscal statements and investigate the effects of financial compend announcements on the stock price from 2000 to 2004. anyhow that, we concerned about the financial way or strategy in the association and how are they sustaining their troupe growth and expect earnings in the stock market. We in addition discuss about the fol offset financial analysis and competition in the industry. 2. 0Case learning Summary Krispy Kreme Doughnut operation was started in 1937 when the founder of Kripsy Kreme, Vernon Rudolph began making doughnuts from a supernumerary recipe he bought from a excommunication chef.Then, Krispy Kreme was so salutary-known and it expanded from a wholesale commemorateprise to an addition of Krispy Kremes retail operations and franchising. Rudolph focused on excellent role of doughnuts and customer service. The expiry was always good when it was under the function of Rudolph. After Rudolphs death, Krispy Kreme was acquired by Beatrice Foods and its precedence was to earn profit. Beatrice encouraged additions to the menu and changed the superior recipe and logotype of Krispy Kreme to cut live. Unfortunately, the vocation went down Beatrice decided to sell it.In 1982, the wise owner of Krispy Kreme, Joseph McAleer bought Krispy Kreme by use leverage. Joseph brinytained back the original logo and recipe of Krispy Kreme. One of the priorities of Joseph and Krispy Kreme focused on hot and rattling doughnut. In 1989, Kripsy Kreme was extra from debt and began to expand. In 1996, doughnuts and added branded coffee were their main focus. In year 2000, Kripsy Kreme went public and the initial share price reached $40. 63. After waiver public, the pile was planning aggressively to summation the number of stores and enter international markets. The revenues of Krispy Kreme Doughnuts were generated from n-premises sales, off-premises sales, manufacturing and dispersion of intersection point mix and machinery and privilege royalties and fees. In May 2004, Krispy Kreme proclaimed three major adverse results for the first time as a public corporation. Firstly, the company suffered evil referable to the trend of low-carbohydrate diet. Secondly, it planned to take Montana Mills and would be supercharged. Thirdly, the company planned to close three of its new Hot Doughnut and Coffee Shops. These announcements make the shares closed down by 30%. In year 2003, SEC announced that Kripsy Kreme was too aggressive in acquiring franchise.The practice of Krispy Kreme acquiring Michigan franchise was so wrong. The company recorded the pertain income on past-due loan from Michigan as immediate profit and the purchase cost on Michigan as impalpable asset and did not pay off. In the same time, the company was being charged due to the quitting of the Michigans height executive. The shares of Krispy Kreme fell for few other 15% due to th e announcement from SEC. SEC published another report stated that Krispy Kreme was facing the trouble of growing too fast and the company was too rely on the mesh made from manufacturing and distribution of franchise equipment.Strengths Krispy Kreme is a well-established and long running company. It has a untouchable and consistent consumer base in join State and abroad.Krispy Kreme is a nationally well known consumer brand because the company offers product that is second to none regarding on the taste, freshness and the finest ingredients. The company has consistent expansion and growth. Currently, the corporation has 395 stores with the presence in 40 states in United State and in 16 external countries. Krispy Kreme gains the most popularity in grocery, public lavatory stores and retail outlets due to easy availability to the product. The corporation offers more than 20 distinct types of doughnuts and other menu items including of coffee and bakery items.They are excess ively selling those collectable memorabilia such as mugs, hats and toys. Besides that, Krispy Kreme introduced the atomic number 10 sign of Hot Doughnuts Now because it offers sorting of freshly made doughnuts with high quality everyday. Krispy Kreme is also the first corporation that cut a hole in its pulverizations wall to sell its fresh doughnuts directly to the customers. Krispy Kreme is a vertically intergrated company with three business units which are company store operations, franchise operations and provision chain operation. They heighten doughnuts in a cost effective manner because of the victimisation of an accelerated approach.Thus, Krispy Kreme has a high power of production because each factory stores could produce 4000 dozen to 10000 dozen of doughnuts in a single day. In addition, Kripsy Kreme also differentiated itself with the others by offering customers an fuck to see the production of doughnuts. 3. 1. 2Weaknesses Krispy Kreme has the following weaknesse s which is the low inventory turnover ratio. If not attended to quickly the firms supply line forget continue to cost more currency and reduce future profits. Next, the financial agree of Krispy Kreme is better compared to its competitors but does have some areas that need improvement.Krispy Kremes young worry is showing that they want to be alerting and have employed an almost zero(a) tolerance policy regarding debt. Poor instruction or financial practices hurt record and stock prices of this company. Limited amount of well-grounded menu selections, limited non-breakfast menu items 3. 1. 3Opportunities outside(a) expansion gives better returns to company. Krispy Kreme can snap fastener the chance to expand its business and enter into new markets like Asia countries because Asians love sweet-smelling goods and they are open to trying foreign foods. The popularity of Western brands in these markets is quiet high.