The company was growing with an higher rate of the industry even if was the market leader (9% vs 5%) b. the operating margin was in line with the industry, that highlights that the company was not leveraging the bigger scale to increase profitability (2-4%). c. The company substituted the CEO, but only 8 Seniors Executives over 30 and no middle manager maintaining the structure of the firm d. Indeed analyzing the 10-k and the DG report we can see that most of the improvement came from operational efficiency 2) What was KKR investment thesis? DG dollar have a leading position in the convenience store market and did not extract all the value from operational efficiency. We can extract more value focusing on maximizing store performance and investing in new technologies to reduce OPEX. Additionally interest rates for store relocation was forecasted to go down since we were on the verge of a crisis 3) Key area of operational efficiency?
Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not. TARGET has very weak liquidity. Currently, the Quick Ratio is 0.45 which clearly shows a lack of ability to cover short-term cash needs. The company’s liquidity has decreased from the same period last year. During the same period, stockholders’ equity (“net worth”) has increased by 7.12% from the same quarter last year.
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? Financial ratios show a company’s financial performance, strengths and problem areas. The time series ratios shows successive times, sales forecast, and I think that Krispy Kreme was a financially healthy company the last 5 years according to Exhibit 7.
The income statement’s total revenues doubled in two years due to their unusual growth. The problem to behind income statement and balance sheets stems from their company owned and franchised factories; instead of selling the donuts, the company sold machinery to make their products. The goodwill and required franchise rights doubled each year until 2004 which raised questions and concerns as to whether Krispy Kreme improperly implemented accounting treatments. Compared to the industry, Krispy Kreme was apparently a very high performing company, but we questioned the performance data. First problem we encountered were the current and quick ratios were unusually high due to the amount of cash, receivables and short term investments that Krispy Kreme held.
As Jones sales growth rate is high than sustainable rate, so its net earning could not support increased account receivable and inventory. Then the company need bank loan to finance the increase business. 2004 2005 2006 First Quarter 2007 collection period 42.0 days 44.0 days 43.0 days 43.9 days payables period 10.1 days 10.0 days 24.1 days 37.4 days 3.Is Nelson Jones’s estimate that a $350,000 line of credit is sufficient for 2007 accurate? What will happen to Jones’s financing needs beyond 2007? Jones currently has $203,000 of accounts payable.
A CRO industry publication listed 18 top players in North America with total contract research revenues of 1,7 billion. The top 5 public companies comprised in 1,5 billion in revenues in 1996. Kendle is still able to keep up with the main industry peers. Its CAGR revenue and net income growth rate is 71.8% and 39.1% respectively compared to the 46.8% and 12.9% total CAGR revenues and net income of the largest 6 companies. Kendle Net Income margin of 5.3 % in 1996 is much higher than 1.6% of the Quintiles which is considered to be the “golden standard” of the industry and more than double more than 2.2% net income margins average.
Mr. Fastow generated companies that were designed to absorb any of Enron’s financial losses. This allowed Enron to appear to be doing much better financially than it really was (Madsen & Vance, 2009). By August of 2000 Enron’s stock was trading at $90.00 per share. This was an all time high for the company. However, by November of 2001 Enron’s stock had plunged to $1.00 per share.
Service providers, when classified as agents, are able to report trading and brokerage fees as revenue, although not for the full value of the transaction. Although trading firms such as Goldman Sachs and Merrill Lynch used the conventional "agent model" for reporting revenue (where only the trading or brokerage fee would be reported as revenue), Enron instead elected to report the entire value of each of its trades as revenue. This "merchant model" approach was considered much more aggressive in the accounting interpretation than the agent model. Enron's method of reporting inflated trading revenue was later adopted by other companies in the energy trading industry in an attempt to stay competitive with the company's large increase in revenue. Between year 1996 to 2000, Enron's revenues increased by more than 750%, rising from $13.3 billion in 1996 to $100.8 billion in 2000.
These independent bottlers buy their product exclusively from CCL. In the past, CCL has recognized revenue at the point when the water is shipped to these bottlers. On November 29, 2000, one month prior to the fiscal year end, CCL announced that the price of its water would increase commencing in the new year. As a result, the bottlers made very heavy purchases of water in the month of December 2000. Historically, December sales represented only 3% of yearly sales, but this year they mushroomed to over 25% of yearly sales.
B&L must improve their disposable lens market only by a 5% margin in order to regain the market share held by Johnson & Johnson. The company suffer a (14.8) loss in earnings from continuing operations, however those losses are shown from the R&D Expenses which show a ($108.1) million dollar difference from 1992 to 1993 due to the increase in R&D. (Harvard Business School-Bausch & Lomb, Inc. 9-101-010 Exhibit 3 p. 7) The net sales were up from 1992 to 1993 to show a net gain of $ 163.1 gain in their optics division. My recommendation: Re-development of their distribution process for their conventional lens product, extending the credit line of so many distributors by more than a 25% increase has placed B&L into unaccredited worthy placement if more than 5% of their distributors fail. B&L can roll out the new distribution plan in three phases: Phase- One: Change the distribution method to the company top 10% distributors. Only the high volume distributors with the high volume customer change over first.