Krispy Kreme Doughnuts began as a single doughnut shop in Winston Salem, North Carolina in 1937. By the start of the new millennium, Krispy Kreme was non only able to boast iconic status yet nearly had a cult-like following. Less than a year after its initial public offering in April 2000, Krispy Kreme shares were selling for 62 times earnings. As it had a trem barous increase in bottom line and brand recognition, it formulated an aggressive outline to expand. Its shops tripled from 2000 to 2004, with 427 stores in 45 states and four foreign countries.
However, at the end of 2004, the company inform several accounting revelations, changing project of the company in ring Street and plummeting its stock legal injury in the market. On May 7, 2004, it indicated that its Hot Doughnut and cocoa Shops were falling short of expectations and that it had plans to close three of them (resulting in a charge of 7 to 8 million dollars). Following the news, the Wall Street Journal addressed the aggressive accounting sermon the company had made for franchise acquisitions.
For instance, it purchased a struggling lucre franchise, asked some of its underperforming stores to be closed, and agreed to pay the companys accrued interest on past-due loans for it to raise its purchase harm of the franchise. Then it recorded interest paid by the franchisee as interest income, and thus, immediate profit; however the company schedule the purchase cost of the franchise as an intangible asset, which the company did not amortize. The company came under close scrutiny by the SEC who conducted an investigation related to franchise re-acquisitions and the companys previously announced reduction in earning guidance. In 2005, it announced that it would restate the 2004 financial statements in order to correct original errors. This, in turn, made it decrease its pre-tax income between 6.2 to 8.1 million dollars. Its slow down filing of the financial reports created...If you want to get a expert essay, order it on our website: Orderessay
If you want to get a full essay, wisit our page: write my essay .
No comments:
Post a Comment