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.
Her online sales sell out in less than a week. There is potential for this company to grow. Due to the fact that demand is much higher than Raven can supply, this would be a good barrier to entry opportunity for an investor. Raven impressed the sharks with her response explaining how she had to walk away from a two million dollar deal with Sam’s Club because she didn’t have the resources to produce a volume of orders that high. Mark
Case Write-Up 1 Clarkson Lumber Company Murat ÖZTAŞ Overview Clarkson Lumber is a company that has been experiencing rapid growth in sales; thus facing a problem of cash shortage to continue its expected growth. Even though Mr. Clarkson was able to manage to have low operating expenses while running the business, the cash flow crisis is coming. Besides the urgent need for cash to recover the liquidity of the company, the owner, Mr. Clarkson has to pay back the note payable (with %11 interest) his former partner’s interest, which he bought out for $200.000 in 1994. Clarkson Company is not generating enough profit to pay off its debt in required amount of time. The financial statements and analysis ratios both indicate that the company is doing well.
By having rapid timing and synchronicity, Zara spends its money on things that can help increase the responsiveness and speed of the chain. Zara can reduce inventories and forecast error by postponement of the decisions after knowing the trends. The apparel industry cycle time has averaged more than six months. For five to six weeks cycle time has been achieved. By having this speed Zara can introduce new designs weekly and every three to four weeks 75% of their merchandise is displayed, which matches the customers preferences more than competitors.
Capital expenditure of $155,000 was incurred during last 2 years. Increase in invested capital reduced both IGR and SGR. As sales growth rate was higher than IGR and SGR, firm had to rely on trade credits and trade notes, besides internal accruals and bank notes to finance its cash outflows. Projections for 1996 are based on information provided and other assumptions described in excel sheets viz. all trade notes will be fully paid and trade credit of 10 days is for additional purchases made from April 1, 1996.
Due to her concerns, Maggie has used all of the company’s cash to pay off the increased inventory immediately to receive the two percent discount offered by suppliers. (Horniman Horticulture: Chapter 9) Issues/Problems According to Exhibit 1, cash has significantly declined over the past four years for a number of reasons. Both inventory and accounts receivable have increased substantially. Inventory accounts for nearly half of the total assets value which hinders Horniman Horticulture from having more cash on hand because the inventory is not very liquid. Horniman Horticulture would have extreme difficulty creating cash from its inventory is an
Net income for Jan 2000 --$5956 Feb 2004--$57,087 Then discontinued Montana Mills resulting in a loss But was able to come back in Aug 2004 $5764 The balance sheets show current ratio (current assets to dollars in liabilities) Krispy Kreme had more cash assets available 2004 compared to 2000. This is why the company was able to recover from the loss of Montana Mills. The steady growth and quick recovery shows the Krispy Kreme is a financially healthy company. 2. How can financial ratios extend your understanding of financial statements?
But as competition intensified through the early 2000s, Schwab had found it harder to straddle the divide between full-service 2004, revenues were flat, and net income had declined by 39% in just 12 months. Upon his return as CEO, Chuck out both costs and prices to restore the brand’s perceived value among retail investors and hopefully improve market share. Though that corporate marketing budget was among the first to be cut, Saeger had argued that brand-building initiatives would have to play a role in driving future growth and brand revitalization. Six months into the TTC test market, she persuaded management to invest a further $30 million in the TTC campaign for the fourth quarter of 2005. She was confident that the campaign could take at least some credit for Schwab’s turnarround: a 6% increase in revenue from year-end 2004 to 2005 and a 153% increase in net income for the same period.
The current ratio was 3.6 on February 29, 1988which mean that it has plenty of cash to cover any of its current liabilities. Moreover, Interco’s capitalized leases were 19.3%. The company was financially “overcapitalized”. When looking at the company collectively, Interco also looks healthy, with sales increasing 4.04% in 1987 and 13.4% in 1988.Growth in earnings moved Interco further toward its goal of a 14-15% return on equity: 1988’s ROE of 11.7% was up from 9.7% in fiscal 1987. However, if closer examination is undertaken, it is clear to see that the general retail and apparel businesses are struggling while footwear and furniture have been flourishing.
Over the course of Jones's leadership (not forget that this guy also was voted as CEO of the year), which began in 1973, revenue had grown at an average annual rate of 12 percent, and earnings had grown at 16 percent, not much different from Welch’s 20-year-performance. In my opinion, the challenge for Welch was to spot trouble before it occurred, to take preventative measures, and to make the most of GE's (and stock markets’) tremendous momentum. The challenge for Welch was to keep the earnings growth at a high pace as the numbers of the company (assets, revenues, etc) get bigger. For a huge elephant as GE, it was getting highly risky not to implement a change that makes a turnaround on its bureaucratic business model. In some ways, Welch was able to implement his sweeping agenda of change in GE because he created a sense of crisis within the organization.