Management you need to understand leverage so that

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Unformatted text preview: Management: You need to understand leverage so that you can magnify returns for the firm’s owners and to understand 506 capital structure theory so that you can make decisions about the firm’s optimal capital structure. Marketing: You need to understand breakeven analysis, which you will use in pricing and product feasibility decisions. Operations: You need to understand the impact of fixed and variable operating costs on the firm’s breakeven point and its operating leverage, because these costs will have a major impact on the firm’s risk and return. KRISPY KREME INVESTORS EAT UP KRISPY KREME STOCK n April 2000, Krispy Kreme Doughnuts went public at $21 a share. Investors gobbled up the shares as fast as consumers did its hot-from-the-oven glazed doughnuts. In 2001 the stock split, and the company did a secondary offering that doubled the number of shares in the market. By the end of its fiscal year in January 2002, the company’s market capitalization was over $2 billion. Krispy Kreme used the proceeds from its equity issues to fund an aggressive expansion campaign to build store...
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This document was uploaded on 01/19/2014.

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