Assignment
Your analysis should define the key problem(s), make a recommendation on how Krispy Kreme should address the problem, and explain or justify your recommendation with convincing evidence from the case. The reader should be able to make an informed decision based on the Executive Summary alone. Remember the reader is a senior executive with KK and, as such, knows the history of the firm, but may not be familiar with finance "lingo" so write plainly, clearly and in a non-technical way so that any bright KK executive will understand the problem and your recommended response to that problem.
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?
2. How can financial ratios extend your understanding of financial statements? What questions do the time series of ratios in exhibits 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?
4. In light of your answer to question 3, what accounts for the firm's recent share price decline?
5. What is the source of intrinsic investment value in this company? Does this source appear on the financial statement?