KKD Financial Analysis
Krispy Kreme Doughnuts Incorporation is a large company involved in the wholesaling and retailing of doughnuts. Apart from these, the company is also involved in the sale of sweets and beverages. Since the company is mostly involved in the production of doughnuts, it has also involved itself in the sale of complementary products like beverages. The financial analysis of this incorporation will involve the evaluation of the financial performance of the company. This will also involve a keen examination of the financial statements and the annual reports prepared by the company.
In the last financial period, the financial ratios of the company have been signifying excellent results in the international market. The current ratio of the company was 1.55, signifying that the current assets were more than the current liabilities. The liabilities in the company were therefore out matched by the assets. Moreover, the quick ratio was 1.19. The sales of the company were seen as a financial strength for the company based on the cash flow to sales ratio. The cash flow to sales ratio for the company was 6.0, signifying that the company received a lot of cash flows from the sales in the financial period of 2011.
The average returns of the company have shown that the company is yielding returns on equity and investments. The return on investment in the 2011 financial period was 24.26%. The returns on assets and investment were 12.01% and 15.52% respectively. This has shown that the company had earlier engaged itself in viable investments that are yielding huge returns. However, the average return on investments for the past five years is -10.91%. The profitability ratios of the company have helped a lot in the evaluation of the profitability of the company. The average operating margin for the past five years was 2.61%, indicating that the company’s profitability is in the right financial direction.
Conclusively, the debt ratios of the company show that the company has used debts to finance many of its operations. This is evidenced by the debt to equity ratio, which is 46.30% for the year 2011. More so, the long term debt to equity ratio was 43.01%. It is therefore recommended that the company should reduce its financial obligations by reducing the level of borrowing. It should seek other efficient methods of financing the operations and commitments of the company which will help in reducing the expenses of the company. Finally, the overall financial performance of this company is excellent since it has been ranked among the best in the food and beverage industry.
