Liquidity Ratio Essay

In this nerve study, our important purpose is to analyze the family financial statements and investigate the effect of financial analysis announcements on the commonplace price from 2000 to 2004. Besides that, we concerned about the financial management or strategy in the community and how are they sustaining their company growth and expected earnings in the stock market. We also discuss about the company financial analysis and competition in the industry. 2. 0Case Study Summary Krispy Kreme Doughnut operation was started in 1937 when the chip in of Kripsy Kreme, Vernon Rudolph began making doughnuts from a special recipe he bought from a cut chef.Then, Krispy Kreme was so well-known and it expanded from a wholesale usher inprise to an add-on of Krispy Kremes retail trading operations and franchising. Rudolph focused on excellent fiber of doughnuts and customer service. The result was always good when it was under the control of Rudolph. by and by Rudolphs death, Krispy Kreme was acquired by Beatrice Foods and its priority was to earn profit. Beatrice encouraged additions to the menu and changed the passe-partout recipe and logo of Krispy Kreme to cut cost. Unfortunately, the business went down Beatrice decided to allot it.In 1982, the new owner of Krispy Kreme, Joseph McAleer bought Krispy Kreme by using leverage. Joseph maintained natural covering the original logo and recipe of Krispy Kreme. One of the priorities of Joseph and Krispy Kreme focused on naughty and fresh doughnut. In 1989, Kripsy Kreme was free 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. afterwards going public, the bow window was planning aggressively to increase 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 distribut ion of product mix and machinery and franchise royalties and fees. In whitethorn 2004, Krispy Kreme announce three major adverse results for the eldest time as a public company. Firstly, the company suffered loss overdue to the trend of low-carbohydrate diet. Secondly, it be after to divest Montana Mills and would be charged. Thirdly, the company planned to mingy three of its new Hot Doughnut and Coffee Shops. These announcements made the shares disagreeable down by 30%. In year 2003, southward announced that Kripsy Kreme was too aggressive in acquiring franchise.The practice of Krispy Kreme acquiring nautical mile franchise was so wrong. The company recorded the interest income on past-due give from Michigan as immediate profit and the purchase cost on Michigan as intangible asset and did not pay off. In the same time, the company was being charged due to the quitting of the Michigans top executive. The shares of Krispy Kreme fell for an otherwise 15% due to the announceme nt from SEC. SEC published another report stated that Krispy Kreme was facing the problem of outgrowth too fast and the company was too rely on the lettuce made from manufacturing and distribution of franchise equipment.Strengths Krispy Kreme is a well-established and long running company. It has a strong and consistent consumer base in United State and abroad.Krispy Kreme is a nationally well known consumer brand because the company offers product that is sulfur 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 foreign countries. Krispy Kreme gains the most popularity in grocery, convenience stores and retail outlets due to easy accessibility to the product. The corporation offers more than 20 different types of doughnuts and other menu items including of coffee and bakery items.They are also selling those due me morabilia such as mugs, hats and toys. Besides that, Krispy Kreme introduced the neon sign of Hot Doughnuts right away because it offers variety of freshly made doughnuts with high quality everyday. Krispy Kreme is also the first corporation that cut a hole in its factorys 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 supply chain operation. They produce doughnuts in a cost strong manner because of the using of an accelerated approach.Thus, Krispy Kreme has a high capacity of mathematical product 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 religious offering customers an experience to see the production of doughnuts. 3. 1. 2Weaknesses Krispy Kreme has the following weaknesses which is the low inventory doll ar volume ratio. If not attended to quickly the firms supply line will slip by to cost more money and reduce future profits. Next, the financial motive of Krispy Kreme is better compared to its competitors but does have some areas that need improvement.Krispy Kremes unsalted management is showing that they want to be alert and have apply an almost zero tolerance policy regarding debt. Poor management or financial practices hurt reputation and stock prices of this company. Limited amount of fit menu selections, limited non-breakfast menu items 3. 1. 3Opportunities International expansion gives better returns to company. Krispy Kreme bay window grab the chance to expand its business and enter into new markets bid Asia countries because Asians love sweet goods and they are open to trying foreign foods. The popularity of horse opera brands in these markets is quiet high.