This case considers the sudden and very large drop in the market value of equity for Krispy Kreme Doughnuts, Inc., associated with a series of announcements made in 2004.

Assess the financial health of the company and evaluate the implications of those announcements.

Identify 4 financial, accounting and/or managerial problems (there are many). Think about how these problems impacted the firms financial statements (do you see the effects of the decision). What do you think motivated the firm's decisions?

Given that the stock market reacted so negatively to the disclosures about adverse results and the revelations in the Wall Street Journal regarding the firms accounting methods for the franchise rights, what do you attribute the 80% decline in Krispy Kremes stock to? In answering this question think about the differences between accounting and finance.