Required:

$1.$ One way Krispy Kreme executives could achieve the revenue target is to open new stores as quickly as possible. Explain why this might alarm shareholders.

$2.$ Why might it be important for the bonus plan to use the same EBITDA definition used in Krispy Kreme's "secured credit facilities" $($loan agreements$)?$

$3.$ Describe how Krispy Kreme$$s executive bonus plan could encourage accounting abuses.

$4.$ Beginning in fiscal $2014($the year ended February $1,2015),$ Krispy Kreme began using pre$-$tax income instead of EBITDA as a performance metric in its compensation plan. What information in the company$$s balance sheets suggests its management may have been responding to changing financial incentives when the performance metric changed?