Financial Health General Financial Health Term Paper

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But these changes, materialized in increased sales and consequently revenues, improved quality of the products and services offered as well as the technologies used in the manufacturing process have supported the development of the corporation. From a financial point-of-view, they created the image of a strong and reliable company. The reasons why this change has financial implications is a simple one: a stronger company is better perceived by the market and by the stakeholders, increasing as such the company's sales and easing their penetration of new territories. Then, it generates increased interest from investors, easing as such Krispy Kreme's access to funding possibilities.

Even though Krispy Kreme is a strong company and represents an international brand, they are still subjected to numerous risks deriving from both the inside as well as the outside of the company. These risks, as presented by the Management's Discussion and Analysis of Financial Condition and Results of Operations, are determined by:

the company's ability to continue and manage growth delays in store openings the quality of franchise store operations the price and availability of raw materials needed to produce doughnut mixes and other ingredients changes in customer preferences and perceptions risks associated with competition risks associated with fluctuations in operating and quarterly results compliance with government regulations other factors" (Krispy Kreme 2002 Form 10-K).

An important risk facing Krispy Kreme shareholders is the management's determination to commit to long-term success. This strategy is generally to be preferred in the detriment of short-term success, but it can generate dissatisfaction from the stockholders as it limits their benefits. Otherwise put, since the company executives are determined to invest for the long-term benefit of the organization, they could easily decide to cut down or reduce the payment of shareholders' dividends.

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And the stockholders are generally interested in short-term success and strong financial highlights which entitle them to a part of the firm's profits. However, even if on the short run the shareholders might be financially disadvantaged by the company's decisions, the long-term success is also in their best interest as it offers them a stable source of income.

The accounting manager is the one person in charge of evaluating and guaranteeing for the company's financial records. Ever since the ENRON scandal, much more emphasis is placed on the responsibilities of the accounting manager. As such, not only have his responsibilities increased, but the control over his implemented actions has also been increased. However this is merely a part of his activity, all actions implemented by the accounting manager are aimed to reduce the financial risk to which the company is subjected. In this order of ideas, the accounting managers at Krispy Kreme must evaluate and limit this risk from numerous perspectives, including their obligation to "record and analyze the financial information of the companies for which they work. Among their other responsibilities are budgeting, performance evaluation, cost management, and asset management. Usually, management accountants are part of executive teams involved in strategic planning or the development of new products. They analyze and interpret the financial information that corporate executives need in order to make sound business decisions. They also prepare financial reports for other groups, including stockholders, creditors, regulatory agencies, and tax authorities. Within accounting departments, management accountants may work in various areas, including financial analysis, planning and budgeting, and cost accounting" (U.S. Department of Labor, 2007)......

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