*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 |
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Horizontal |
Horizontal |
| YUM!
Brand, Inc.-Consolidated Statements of Income |
Vertical |
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Vertical |
Analysis |
Analysis |
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30-12-2006 |
Analysis |
31-12-2005 |
Analysis |
$ Change |
% Change |
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in millions |
%-2006 |
in millions |
%-2005 |
2005-2006 |
2005-2006 |
| Revenues |
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| Company Sales |
$8,365 |
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$8,225 |
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| Franchise and license fees |
1,196 |
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1,124 |
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| Total Revenues |
9,561 |
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9,349 |
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| Costs and Expenses |
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| Company restaurants |
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| Food and paper |
2,549 |
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2,584 |
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| Payroll and employee benefits |
2,142 |
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2,171 |
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| Occupancy and other operating expenses |
2,403 |
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2,315 |
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| Total Costs |
7,094 |
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7,070 |
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| General and administrative
expenses |
1,187 |
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1,158 |
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| Franchise and license
expenses |
35 |
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33 |
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| Closures and impairment
expenses |
59 |
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62 |
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| Refranchising (gain) loss |
-24 |
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-43 |
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| Other (income) expense |
-51 |
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-80 |
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| Wrench litigation (income)
expense |
0 |
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-2 |
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| AmeriServe and other charges
(credits) |
-1 |
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-2 |
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| Total Costs and Expenses |
8,299 |
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8,196 |
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| Operating Profit |
1,262 |
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1,153 |
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| Net interest expense (income) |
154 |
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127 |
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| Income (Loss) Before Income
Taxes |
1,108 |
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1,026 |
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| Income taxes |
284 |
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264 |
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| Net Income (loss) |
$824 |
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$762 |
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Horizontal |
Horizontal |
| YUM! Brand, Inc.-Consolidated
Balance Sheets |
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Vertical |
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Vertical |
Analysis |
Analysis |
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30-12-2006 |
Analysis |
31-12-2005 |
Analysis |
$ Change |
% Change |
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in millions |
%-2006 |
in millions |
%-2005 |
2005-2006 |
2005-2006 |
| ASSETS |
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| Current Assets |
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| Cash and equivalents |
$319 |
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$158 |
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| Short-term investments |
6 |
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43 |
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| Accounts and notes receivable |
220 |
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236 |
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| Inventories |
93 |
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85 |
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| Prepaid expenses and other
current assets |
132 |
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75 |
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| Deferred income taxes |
57 |
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181 |
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| Advertising cooperative
assets |
74 |
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77 |
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| Total Current Assets |
901 |
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855 |
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| Property, pland and
equipment, net |
3,631 |
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3,356 |
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| Goodwill |
662 |
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538 |
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| Intangible assets, net |
347 |
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330 |
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| Investments |
138 |
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173 |
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| Other assets |
369 |
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320 |
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| Deferred income taxes |
305 |
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225 |
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| Total Non-current Assets |
5,452 |
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4,942 |
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| Total assets |
$6,353 |
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$5,797 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY |
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| Current Liabilities |
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| Accounts payable and other
current liabilities |
$1,386 |
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$1,256 |
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| Income taxes payable |
37 |
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79 |
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| Short-term borrowings |
227 |
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211 |
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| Advertising cooperative
liabilities |
74 |
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77 |
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| Total current liabilities |
1,724 |
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1,623 |
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| Long-Term Liabilities |
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| Long-term debt |
2,045 |
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1,649 |
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| Other liabilities and
deferred credits |
1,147 |
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1,076 |
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| Total long-term liabilities |
3,192 |
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2,725 |
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| Shareholders' Equity |
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| Preferred stock, no par
value, no shares issued |
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| Common
stock, 265 shares and 278 shares issued in 2006 and 2005, respectively |
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| Retained earnings |
1,593 |
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1,619 |
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| Accumulated other
comprehensive loss |
-156 |
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-170 |
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| Total shareholders' equity |
1,437 |
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1,449 |
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| Total liabilities and shareholders'
equity |
$6,353 |
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$5,797 |
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| Ratio |
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Formula |
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Calculation |
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Result |
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(words) |
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(numbers) |
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| A.
Liquidity Ratios |
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Hint: All Formulas are located on Page 710 &
711, with the exception of Gross Profit % |
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| 1. Current Ratio |
= |
Current assets |
= |
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= |
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Current liabilities |
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| 2. Acid Test Ratio |
= |
Cash+Short-term Investmetns + Net Current receviables |
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= |
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Current Liabilities |
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| 3. Inventory turnover |
= |
Cost of goods sold |
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Average inventory |
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| 4. Accounts Receivable
turnover |
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Net Sales |
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= |
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Total Sales and Net A/R and Notes Receivable |
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Average net accounts receivable |
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| 5.
Average Collection Period (Days’ sales in receivables) |
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Average net accounts receivable |
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One day's sales |
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| B. Solvency Ratios |
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| 1. Debt ratio |
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Total liabilities |
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Ttoal assets |
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| 2. Times-interest-earned ratio |
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Income from operations |
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| Note - Use Operating Profit |
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Interest expense |
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| C. Profitability Ratios |
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| 1. Gross Profit Percentage |
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Gross profit |
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= |
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| Note: Gross Profit is Revenue - Costs. Do Not Include Expenses |
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Total Revenue |
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| Formula on Page 328 |
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| 2. Rate
of return on net sales (Profit Margin rate) |
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Net income |
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Net sales |
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| 3. Rate of return on total
assets |
= |
Net income + Interest expense |
= |
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Average total assets |
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| 4. Rate
of return on common stockholders’ equity |
= |
Net income - Preferred dividends |
= |
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Average common stockholder's equity |
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| 5.
Earnings per share |
= |
Net income - Preferred
dividends |
= |
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= |
$ |
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| Hint -
Page 758 - Use Weighted Average without Dilutive Shares |
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Average number of shares of
common stock outstanding |
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| 6. Price/earnings ratio |
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Market price per share of common stock |
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29.40 |
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Earnings per shares |
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| 7. Dividend Yield |
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Dividend per share of common stock |
= |
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| Hint: Dividend Per Share - Located on Page 751 in
Textbook |
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Market price per share of common stock |
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29.40 |
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| 8. Book value per share |
= |
Total Stockholder's equity - Preferred equity |
= |
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$ |
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Number of shares of common outstanding |
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| Market
Price Information was retreived from the following link: |
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| Project
2 Rubric - Students |
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| Criteria |
Excellent |
Good |
Poor |
Very Poor |
| H & V Analysis: |
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Completeness |
All
requirements are completed in accordance with the directions, labeled and
organized well in worksheet. |
All
requirements are completed and mostly follow the directions, labeled and
fairly organized in worksheet. |
Most
requirements are completed that mostly follow the directions, missing some
labels and only somewhat organized. |
Requirements
are not completed and/or the directions were generally not followed, missing
labels and unorganized. |
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Accuracy |
All
ratios are calculated with accurate results and appropriate terms of
expression. |
80%
plus of ratios are calculated with accurate results and mostly appropriate
terms of expression. |
60-79%
of ratios are calculated with accurate results and some appropriate terms of
expression. |
Less
than 60% of ratios are calculated with accurate results and some appropriate
terms of expression. |
| Ratios: |
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Completeness |
All
requirements are completed in accordance with the directions, labeled and
organized well in worksheet. |
All
requirements are completed and mostly follow the directions, labeled and
fairly organized in worksheet. |
Most
requirements are completed that mostly follow the directions, missing some
labels and only somewhat organized. |
Requirements
are not completed and/or the directions were generally not followed, missing
labels and unorganized. |
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Accuracy |
All
ratios are calculated with accurate results and appropriate terms of
expression. |
80%
plus of ratios are calculated with accurate results and mostly appropriate
terms of expression. |
60-79%
of ratios are calculated with accurate results and some appropriate terms of
expression. |
Less
than 60% of ratios are calculated with accurate results and some appropriate
terms of expression. |
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