Term Paper on "Financial Health"
Term Paper 4 pages (1186 words) Sources: 3 Style: APA
[EXCERPT] . . . .
Financial HealthGeneral Financial Health of Krispy Kreme Doughnuts
Krispy Kreme Doughnuts is a chain of doughnut stores founded in 1937 and based in Winston-Salem, North Carolina. The company has been met with both success as well as shortages, but along the years has managed to stay on top and became an international brand. "Krispy Kreme's greatest asset is their image and brand name. These are essential for attracting new customers and retaining old ones. Krispy Kreme's competition is limited to non-existent because they have been successful at differentiating themselves from all other doughnut retailers" (Diab, 2002). The company's annual reports present a strong company with strong financial highlights.
A significant way to approach a company from a financial stand point is that of looking at the corporation's depreciation costs. In this particular instance, Krispy Kreme's depreciation costs are following an ascendant trend, increasing from a value of $3,586,000 in February 1998 to a value of $7,959,000 by February 2002; this implies a growth over 120% in four years. However this increase is rather high, to get an objective view one must correlate it with the growth rate of corporate sales. As such, the company's sales have increased from $203,439,000 in February 1998 to $621,665,000 in February 2002 - a growth rate of 205% (Krispy Kreme 2002 Form 10-K). This means that the depreciations do not pose a threat for Krispy Kreme and from this point-of-view, the company remains a strong one.
The stock analysis is also an important tool to measure the corporate strength. The value of the stock can be analyzed from three different a
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2.32 per share, which is a false measurement of the true value of Krispy Kreme's business whose most valuable assets are its brand name and relationship with its customers. Using a Multi-Stage Growth Model: P0 = 5-yr growth at 27.33% ke = 11.06% Long-Term Growth Rate = 8.00% =(26.4*1.2733)/1.1106^1 + (33.616*1.2733)/1.1106^2 + (42.80*1.2733)/1.1106^3 + (54.50*1.2733)/1.1106^4 + (69.40*1.2733)/1.1106^5 + P2007 which is (95.44/(.1106 -.08))/1.1106^6 = 1185.43/54.1 million shares = $21.91 a share" (Diab, 2002).
The consolidated statements of income present once again a strong company. To prove this, take the 342% increase in net income from 2000 up to 2003. (Krispy Kreme 2002 Form 10-K) the continuously ascendant trend in both cash flow as well as income reveals that the company conducts successful business and has increase possibility of retrieving financial results form their operations. Also, Krispy Kreme is capable of paying up their debts.
The management at Kripsy Kreme is formed of highly skilled executives who are extremely committed to supporting the organization reach its overall financial as well as non-financial goals.
All the above mentioned analyzes, including the high quality of the managerial act at Krispy Kreme Doughnuts reveal a strong company which is following a continuously ascendant trend and implementing a balanced financial model (Krispy Kreme 2002 Form 10-K). The basic changes felt by the international company refer to a sustained growth which allows the organization to fulfill their five step growth strategy, composed from their desire to: expand the store base, improve the on-premise sales within the existing stores, increase off-premise sales, expand internationally, expand the… READ MORE
Quoted Instructions for "Financial Health" Assignment:
To access Krispy Kreme*****s Management Discussion and Analysis for the year ending February 3,2002:
o Go to www.krispykreme.com
o In the menu on the left, place your mouse over the Krispy Kreme hyperlink.
o Click on Investor Relations on the menu that pops up.
o Click on SEC Filings from the selections on the bar in the middle of the page.
o Under the Quick Links heading, click on the link for 10-K.
o Open the 10-K report filed 05/07/02. Open the Microsoft® Word or .pdf version.
· In the Table of Contents of the Microsoft® Word version, click on EX-13 (Annual
Report to Security Holders).
· In the Table of Contents of the .pdf version, click on EX-13 (Annual Report to
Security Holders).
o In either version, scroll down to the section titled Management*****s Discussion and
Analysis of Financial Condition and Results of Operations.
· Write a 1,050- to 1,250-word paper on the general financial health of Krispy Kreme
based on the an*****s conducted throughout this course. Be sure your paper covers the
following points:
o Discuss the importance of each of the five an*****s you covered throughout the
course: depreciation analysis, company stock analysis, cash flow statement analysis,
income statement trend analysis, and management analysis. In each case, explain
what the information conveys to management. Talk about how you used each of
these tools as you analyzed Krispy Kreme*****s financial statements. What do they
reveal about the financial health of the company?
o Discuss any significant changes observed in the results of your year to year financial
an*****s. What are some possible causes for those changes? What are the financial
implications of these changes for the company?
o Answer questions 1 and 2 of BTN 18-1 as part of your final paper.
BTN 18-1
1.Access and read Krispy Kreme*****s Management Discussion and Analysis (MD&A) section in either its annual report or its 10-K for the year ended February 3, 2002 [KrispyKreme.com]. What risks do Krispy Kreme*****s shareholders face as management and employees work to position the company for long-term success?
2. What are the managerial accountants***** responsibilities in evaluating risk?
· Format your paper according to APA guidelines.
· Post as an attachment.
How to Reference "Financial Health" Term Paper in a Bibliography
“Financial Health.” A1-TermPaper.com, 2008, https://www.a1-termpaper.com/topics/essay/financial-health-general/6519451. Accessed 5 Oct 2024.
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