Krispy Kreme Doughnuts Inc. - 1361 Words

In March of 2009, the SEC filed a cease-and-desist order to Krispy Kreme Doughnuts Inc., for their actions in prior years. The corporation had purposely inflated their earnings throughout 2003 and 2004 in an attempt to meet Wall Street expectations and retain their investors. With the over inflation of their actual earnings, Krispy Kreme was able to present a higher earnings per share (EPS) to the public and therefore become more favorable among investors. In this case there are three primary transactions known as â€Å"round-trip† transactions that occur. This meaning that the company was paying set amounts to franchisee’s and then expecting them to return the payments in a prearranged manner. In doing so, this would allow Krispy Kreme to record extra pretax income and therefore inflate their profits. There were also reports of channel stuffing that surfaced from former employees once the SEC began investigating Krispy Kreme. According to the reports Krispy Kreme would send double orders at the end of the year in order to boost their sales and meet expectations. Those orders would then be returned and credited at the beginning of the next fiscal year. Price-Waterhouse-Coopers were the auditors at the time and would then face serious questioning as to why they never noticed the increased shipments at the end of each year followed by the credits when the orders were returned the next year. Looking at the three incidents that occurred each had their own unique distinctions whileShow MoreRelatedKrispy Kreme Doughnuts, Inc. Essay1301 Words   |  6 Pagesinvolves the improperly represented earnings by Krispy Kreme Doughnuts, Inc. during the fourth quarter of fiscal year (FY) 2003 and each quarter of FY 2004. The company used improper accounting methods to avoid lowering its earnings during that period. Krispy Kreme also fraudulently reported its earnings per share (EPS) throughout that time, which exceeded the previously stated EPS by 1 percent. An a greement to settle the charges against Krispy Kreme was reached on March 4, 2009 when the SecuritiesRead MoreKrispy Kreme Doughnuts, Inc.1582 Words   |  7 PagesKrispy Kreme Doughnuts, Inc. (hereinafter, â€Å"Krispy Kreme†) seemed poised to become an industry leader and Wall Street chart topper in 2000, however, by 2004 the company’s stock price had plummeted. Krispy Kreme’s stock price one day after the initial public offering in April of 2000, was $40.63, giving the company a market capitalization of nearly $500 million. Investors believed Krispy Kreme was the next big money maker to enter the market. By 2005, Krispy Kreme shares were trading at less thanRead MoreKrispy Kreme Doughnuts, Inc.1736 Words   |  7 PagesCase Study in Corporate Finance Krispy Kreme Doughnuts, Inc. Presented by – Group A2 Timeline Krispy Kreme Doughnuts, Inc. Ratio Analysis Liquidity Ratios As shown in Exhibit 1, quick ratio for Krispy Kreme gradually rose from 1.05 to 2.72, during 2000 to 2004. And current ratio changed with the similar pattern. Generally, a quick ratio of 1 is considered good in most industries. As for Krispy Kreme, the quick ratio is always higher than 1, and the highest point is 3.25 in 2004. This meansRead MoreKrispy Kreme Doughnuts, Inc6147 Words   |  25 Pages; ,.: ) j I 1 7 I I I l-*--*** I I ___i Krispy Kreme Doughnuts,Inc. As the millennium began, the future for Krispy Kreme Doughnuts,Inc., smelled sweet.Not only could the company boast iconic statusand a nearly cultlike following. it had quickly become a darling of Wali Street.Less than a year after its initial public offering, in April 2000, Krispy Kreme shareswere selling for 62 times earnings and, by 2003, Fortune magazinehad dubbed the company the hottestbrand in AmericaRead MoreKrispy Kreme Doughnuts, Inc.1832 Words   |  8 PagesIndustry Size Krispy Kreme Doughnuts, Inc. (KKD) is an American global doughnut company and coffeehouse chain based in Winston-Salem, North Carolina. Krispy Kreme was founded on July 13, 1937, and its parent organizations are JAB Holding Company, Cotton Parent, Inc. Krispy Kreme is leading the market with the following products, hot regular/decaf/flavored coffee, iced coffee, donuts, bagels, and muffins. The company produces 7.5 million doughnuts a day, 2.7 billion a year. Also, the company operatesRead MoreKrispy Kreme Doughnuts, Inc. Essay1210 Words   |  5 Pagesoughnuts Case #7 Krispy Kreme Doughnuts, Inc. [pic] FNCE 4620 - Financial Analysis and Policy Dr. Gregory Group 1 Chris Suggs Alex Stephens Florian Fourmanoy Jonathan Colangione Table of Contents 1. Executive Summary 2. Problem Statement 3. Data Analysis 4. Key Decision Criteria 5. Alternatives Analysis 6. Recommendations 7. Action and Implementation Plan 1. Executive Summary: Krispy Kreme Doughnuts was a successful privately ownedRead MoreKrispy Kreme Doughnuts, Inc.2214 Words   |  9 PagesKrispy Kreme Doughnuts, as discussed in Darden Business Publishing Case UVA-F-1479, appears to be at a crossroads. After years of astronomical growth, the company find its share price plummeting in the midst of discoveries about faulty accounting practices. The following paper examines several issues behind the sudden decline First, the historical income statements and balance sheets are examined to determine the financial health and current condition of the company. This is followed by an analysisRead MoreKrispy Kreme Doughnuts, Inc.—2004 Cynthia Duff5082 Words   |  21 PagesKRISPY KREME DOUGHNUTS, INC.—2004 Cynthia Duff Francis Marion University Ticker Symbol: KKD www.krispykreme.com The neon sign Hot Doughnuts Now, when illuminated, lures hungry customers into the local Krispy Kreme stores. The sign signals that Krispy Kreme s signature product, Hot Original Glazed doughnuts, are right now rolling under the glazing process and are ready to be devoured by anxiously waiting customers. There s nothing better than a hot, fresh, fluffy glazed doughnut that meltsRead MoreKrispy Kreme Doughnuts Inc Case Study Essay1120 Words   |  5 PagesKrispy Kreme Doughnuts Inc Case Study Summary In this SWOT analysis, I will delve into the strengths, weaknesses, opportunities, and threats that affect the Krispy Kreme Doughnuts Inc. Krispy Kreme is a highly successful company, whose main product, not surprisingly, is doughnuts. The company went public in 2000, and saw a hugely successful increase in share price immediately after. Vernon Rudolph founded the Krispy Kreme company in 1937 in Winston-Salem, NC. The company has since becomeRead MoreKrispy Kreme Doughnuts, Inc.: A Hot Brand in America2798 Words   |  12 Pagesï » ¿ KRISPY KREME DOUGHNUTS, INC. As the millennium began, the future for Krispy Kreme Doughnuts, Inc., smelled sweet. Not only could the company boast iconic status and a nearly cultlike follow ­ing, it had quickly become a darling of Wall Street. Less than a year after its initial public offering, in April 2000, Krispy Kreme shares were selling for 62 times earn ­ings and, by 2003, Fortune magazine had dubbed the company the hottest brand in America. With ambitious plans to open 500 doughnut shops