The following selected information was taken from the financial statements of Krispy Kreme Doughnuts, Inc. Rent expense,

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The following selected information was taken from the financial statements of Krispy Kreme Doughnuts, Inc.image text in transcribed

Rent expense, net of rental income, totaled $9.6 million in fiscal 2010, $11.8 million in fiscal 2009 and $14.8 million in fiscal 2008.
Instructions

(a) Calculate each of the following ratios for 2010 and 2009.
(1) Current ratio.
(2) Free cash flow.
(3) Debt to total assets ratio.

(b) Comment on Krispy Kreme’s liquidity and solvency.

(c) Read the company’s note on leases (Note 10). If the operating leases had instead been accounted for like a purchase, assets and liabilities would have increased by approximately $68,000,000. Recalculate the debt to total assets ratio for 2010 and discuss the implications for analysis.

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Accounting Tools For Business Decision Making

ISBN: 9780470534786

4th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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