What can the historical income statements and balance sheets tell you about the financial health and current condition of KK Doughnuts? Are there items in the financials that would concern investors?

Krispy Kreme case analysis

The Krispy Kreme case analysis (done in group) focuses on financial ratio analysis and financial statement analysis for a firm that expanded too quickly which consequently hurts its financial health.

Discussion Questions:

1. 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 KK Doughnuts? Are there items in the financials that would concern investors?
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?
3. Is Krispy Kreme financially healthy at year-end 2004? If yes, what else accounts for the firm’s recent share price decline? If no, which part of the firm’s financial fundamentals mainly explains the recent share price decline?
4. What recommendation would you like to provide to the senior managers in Krispy Kreme?