Discuss the importance of each of the five analysis: depreciation, company stock, cash flow statement, income statement trend analysis and management analysis. Explain what the information conveys to management. How would I use each of these tools when analyzed Krispy Kreme's financial statement and what do they revel about the financial health of the company? Discuss any significant changes observed in the results of your year to year financial analyses. What are some possible causes for those changes? Ware the financial implications of these changes for the company.
The response addresses the queries posted in 1204 words with references.
//Before scripting about the financial health of the Krispy Kreme, first, we have to gain knowledge about the importance of the analysis of the different aspects of the company; such as cash flow statement, depreciation, common stock and income statement trends. So, to start with, the analysis of these elements is written here. //
Importance of Cash Flow Statement Analysis
Cash flow analysis is useful for short term financial planning in an organization. It is an important part of a company's financial report. This statement records the cash and cash equivalents of a company. It helps to plan and coordinate the financial policies appropriately. With the help of this statement, the management can predict cash inflows and cash outflows accruing to the company in the near future, which further forms the basis for preparation of budgets. For investors, the cash flow statement is a screen to judge the financial health of the company. (Khan & Jain, 2002)
Importance of Depreciation Analysis
The depreciation analysis plays an important role in analyzing the actual physical and financial utility of the assets owned by the company. Appropriate depreciation analysis enables the company to find out correct net profit earned and cost incurred by the company. True picture of the financial position of the company also depends on the correct rate of depreciation provided during the preparation of final accounts. The depreciation accounts provide an insight to the management for purchasing new fixed assets, which have depleted or became obsolete in due course of time and use. At the same time it let the management thinks for the arrangement of funds to purchase the new fixed assets. It also let the creditors know the worth of the assets for providing loans against their mortgage.
Importance of Income Statement Trend Analysis
This analysis plays a key role in determining the direction of changes in the company over a period of time. It helps management find out the ...
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