Cash flow tells management about the health of the company, because it shows the level of money coming in and also shows management how much the company is spending. It does not matter if there is a lot of money coming in if that money and more is all going back out. Cash flow is a balance, and it is not just about how much Krispy Kreme is bringing in, but how much the company is spending. Positive cash flow is important, and can reveal a great deal about the company and how good it will be as an investment.
Income Statement Trend Analysis
An income statement does not consider all the issues that a cash flow analysis addresses. Instead, it looks specifically at home much money is coming in to the company. In Krispy Kreme's case, the income has risen for the last three years. That is good news for several reasons. Naturally, it is important to see that the company is continuing to make money and that the amount of income is rising. Additionally, though, the amount is rising even though there is a recession and the country (and the world) is experiencing some economic downturn. This speaks volumes about the financial health of the company, because it is indicating that Krispy Kreme continues to do well even when the economy falters and struggles. Companies that can succeed when times are hard are generally good investments, because they provide more security to their investors, as well as to management and to others who are involved with them, such as employees and stakeholders.
Management Analysis
The management of Krispy Kreme has largely been successful. It is nearly impossible to have a company that is doing so well, and have poor management operating that company. Companies do not always fail solely because of poor management, but a company that does not have good management at the helm is at a serious disadvantage when it comes...
Krispy Kreme's management has been able to successfully grow the company throughout the time it has been in business. The sales continue to rise, as do profits. Additionally, allowing Krispy Kreme to move into the overseas market was a strong move for the company, and now that segment is growing faster than domestic sales. There is no danger that domestic sales will fade away, but it is very encouraging to see how management has taken the company and allowed it to become completely global in nature. Because many companies are trending toward globalization, Krispy Kreme will not fall behind its competitors and end up struggling in the future. Globalization only helps to build even better and stronger financial health for the company.
Conclusion
A company like Krispy Kreme is large enough that its demise would affect a significant number of people throughout the world. However, its strength is obvious and that is an important issue for any potential investor to consider. The most significant change seen in the financial analysis of Krispy Kreme was the jump in sales figures for international operations. As has been mentioned, that is an encouraging sign that shows the globalization efforts of the company and will help the company to see more success in the future. The main cause for the change could also be expansion. In other words, the sales figures rose because more stores were opened, thus allowing for more international sales of Krispy Kreme's products. Financially, there are several implications for the company. The most significant of those are the fact that the company's sales and profits are growing, and that the company also has more responsibility. With every store that is opened, Krispy Kreme takes on more and must ensure that the stores operate properly. This is a small price to pay for continued financial success.
