29 Jun Question ACCT212 Project 2: Financial Statement Analysis-YUM! Brands, Inc.
Question
ACCT212 Project 2: Financial Statement Analysis-YUM! Brands, Inc.
Description:
Using the financial statements for YUM! Brands, Inc. located in Appendix A of your Textbook, you will calculate Vertical and Horizontal Analysis and the Financial Ratios listed below for the year ended in 2006.
Due Date:
The project is due by the end of Week 7.
Grade Weight:(75 points)
The financial statement analysis project will count for 7.5% of your overall course grade. The Worksheets contained in this Workbook will aid in completing the requirements for submission.
Requirements:
1. Complete the Excel Spreadsheet in this Workbook labeled Horizontal & Vertical. Calculate the Horizontal & Vertical Analysis of YUM Brands, Inc.
2. Complete the Excel Spreadsheet in this Workbook labeled Ratios. Calculate the 2006 Ratios and show your computations and the formulas for YUM! Brands, Inc. Financial Statements in Appendix A.
Financial Ratio Calculations*
A. Liquidity Ratio
1. Current ratio
2. Acid-test ratio
3. Inventory turnover
4. Accounts Receivable turnover
5. Average Collection Period (Days’ sales in receivables)
B. Solvency Ratios
1. Debt ratio
2. Times-interest-earned ratio
C. Profitability Ratios
1. Gross Profit Percentage
2. Rate of return on net sales (Profit Margin rate)
3. Rate of return on total assets
4. Rate of return on common stockholders’ equity
5. Earnings per share of common stock
6. Price/earnings ratio
7. Dividend Yield
8. Book value per share of common stock
*Note: If you are unable to locate an item needed for a ratio, make an assumption and make sure you note your assumption in your work.
PROJECT #2-HORIZONTAL AND VERTICAL ANALYSIS-SOLUTION
Horizontal Horizontal
YUM! Brand, Inc.-Consolidated Statements of Income Vertical Vertical Analysis Analysis
30-12-2006 Analysis 31-12-2005 Analysis $ Change % Change
in millions %-2006 in millions %-2005 2005-2006 2005-2006
Revenues
Company Sales $8,365 $8,225
Franchise and license fees 1,196 1,124
Total Revenues 9,561 9,349
Costs and Expenses
Company restaurants
Food and paper 2,549 2,584
Payroll and employee benefits 2,142 2,171
Occupancy and other operating expenses 2,403 2,315
Total Costs 7,094 7,070
General and administrative expenses 1,187 1,158
Franchise and license expenses 35 33
Closures and impairment expenses 59 62
Refranchising (gain) loss -24 -43
Other (income) expense -51 -80
Wrench litigation (income) expense 0 -2
AmeriServe and other charges (credits) -1 -2
Total Costs and Expenses 8,299 8,196
Operating Profit 1,262 1,153
Net interest expense (income) 154 127
Income (Loss) Before Income Taxes 1,108 1,026
Income taxes 284 264
Net Income (loss) $824 $762
Horizontal Horizontal
YUM! Brand, Inc.-Consolidated Balance Sheets Vertical Vertical Analysis Analysis
30-12-2006 Analysis 31-12-2005 Analysis $ Change % Change
in millions %-2006 in millions %-2005 2005-2006 2005-2006
ASSETS
Current Assets
Cash and equivalents $319 $158
Short-term investments 6 43
Accounts and notes receivable 220 236
Inventories 93 85
Prepaid expenses and other current assets 132 75
Deferred income taxes 57 181
Advertising cooperative assets 74 77
Total Current Assets 901 855
Property, pland and equipment, net 3,631 3,356
Goodwill 662 538
Intangible assets, net 347 330
Investments 138 173
Other assets 369 320
Deferred income taxes 305 225
Total Non-current Assets 5,452 4,942
Total assets $6,353 $5,797
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and other current liabilities $1,386 $1,256
Income taxes payable 37 79
Short-term borrowings 227 211
Advertising cooperative liabilities 74 77
Total current liabilities 1,724 1,623
Long-Term Liabilities
Long-term debt 2,045 1,649
Other liabilities and deferred credits 1,147 1,076
Total long-term liabilities 3,192 2,725
Shareholders’ Equity
Preferred stock, no par value, no shares issued
Common stock, 265 shares and 278 shares issued in 2006 and 2005, respectively
Retained earnings 1,593 1,619
Accumulated other comprehensive loss -156 -170
Total shareholders’ equity 1,437 1,449
Total liabilities and shareholders’ equity $6,353 $5,797
Ratio Formula
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