Essay on "Analyzing the Financial Health of Krispy Kreme"

Essay 4 pages (1283 words) Sources: 0

[EXCERPT] . . . .

Financial Health of Krispy Kreme

In its latest 10-K, Krispy Kreme provides all the information needed for an investor or other interested party to analyze the company and make a determination of how successful it has been over the past three years. Using that information, how well the company will perform in the future can be speculated upon for those planning to invest with the company at a later date. There are five analyses that are important to address here. Those are the depreciation analysis, the company stock analysis, the cash flow statement analysis, the income statement trend analysis, and the management analysis. Information collected through each one of those types of analyses will provide insight into the true financial health of the company and its potential for success in the future. Using financial statements and various forms of analysis can not only reveal information regarding the health of the company, but can also indicate significant changes in the company's financial health from year to year. That information is significant to investors, and also to company management.

Depreciation Analysis

The depreciation analysis tells management whether the goods they own (machinery, buildings, etc.) are valuable, and how quickly that value is being lost. All items of that nature generally depreciate in value, but if they are doing so very rapidly, it is possible that there is a reason which can be addressed. Slowing the rate of depreciation would be beneficial to the company. There are different kinds of depreciation used, as well, and companies that use one kind can show very different figures from companies that use another kind. Because of the method of depreciation used by Krispy Kreme, management gets an accurate picture of the company's financial health in that area. Additionally, investors can get a better picture of the health of the company, because they can see the true value of the assets Krispy Kreme holds, instead of an adjusted value that may lack accuracy.

Company Stock Analysis

The stock of a company is also highly significant to investors. Is the stock going up, or has it gone down? How much fluctuation is seen, and does there appear to be a trend? The value of the stock also tells management a lot about the company, because companies in which people are investing will have stock that is stable or rising. That indicates good financial health, and Krispy Kreme seems to be doing well in that area. The sales at its stores and the profits that it makes are on the rise, and its stock value is also on the rise. That is an indication that company health is good, and that people want to buy into the company and be part of a sound investment opportunity. While Krispy Kreme is not likely to make an investor rich, it is quite possible that the company will be able to provide steady and growing dividends for any investor. Those who are looking for safe and secure investments would be making a good choice to invest in Krispy Kreme, because the company has the growth and stability that many investors look for when they consider a company.

Cash Flow Statement Analysis

Positive cash flow in a business is vital to its continued success. Companies that are losing money will simply not stay in business. That is simply basic economics. With Krispy Kreme, the length of time they have been in business is a good indicator of their cash flow, which continues to be positive. In the last three years, as indicated on their most current 10-K, their profits and sales have continued to rise. Interestingly enough, the highest number of sales are coming from grocery stores instead of convenience stores. Overseas markets are also growing rapidly, with these markets surpassing domestic markets in some cases. Whether that is strictly from demand… READ MORE

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