FIN 5201 2M
Case in Corporate Finance
dent: Tuesday 1pm-4pm
Instructor: Steve Ng
Krispy Kreme Doughnuts, Inc.
Krispy Kreme Doughnuts (KKD) is one of the most popular brands of doughnuts in the linked States. The association built doughnut shops that offered customers the unique experience of sightedness the doughnuts being made while they were in the shop get the product. As the company grew in popularity, it proceeded to expand at a rapid rate. In April 2000, the CEO, Scott Livengood, took the company public and it had one of the largest initial public offerings (IPO) at that period. After a few eld of success, however, the company ran into serious troubles.
On May 25th of 2003, the rampart Street Journal published a story on Krispy Kreme (KKD) that tarnished their re postation. The article described the questionable accounting practices that the company employ when recording the purchase of struggling stores they franchised in the state of Michigan. The franchised stores owed the company several million dollars for equipment and interest. The article revealed that KKD booked the purchase be as an intangible asset and failed to properly account for amortisation expenses.
Typically, the accounting treatment for reacquired franchise rights is to amortize the value of the science over its legal life. The aggressive accounting practices of the company triggered the U.S. Securities and supplant Commission (SEC) to investigate KDD in January of 2005. KKDs Board of Directors inflexible to restate the financial statement to correct previous errors. However, the misfortune to provide the new financial statement on time damaged the reputation of the company even further. The companys shares fell below $10 a share and it put itself at risk of paying credit-facility default and being delisted from the upstart York Stock Exchange (NYSE). The bad publicity KKD got because of the accounting stain did contribute to the drop of stock...If you want to get a climb 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