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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 & Ver 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
Due: End of Sunday, Week #7 PROJECT #2-HORIZONTAL AND VERTICAL ANALYSIS-SOLUTION YUM! Brand, Inc.-Consolidated Statements of Income Vertical 12/30/2006 Analysis in millions %-2006 $8,365 1,196 9,561 87.49% 12.51% 100.00% Vertical 12/31/2005 Analysis in millions %-2005 $8,225 1,124 9,349 87.98% 12.02% 100.00% Horizontal Analysis $ Change 2005-2006 $140 $72 $212 Horizontal Analysis % Change 2005-2006 1.70% 6.41% 2.27%
Revenues Company Sales Franchise and license fees Total Revenues Costs and Expenses Company restaurants Food and paper Payroll and employee benefits Occupancy and other operating expenses Total Costs General and administrative expenses Franchise and license expenses Closures and impairment expenses Refranchising (gain) loss Other (income) expense Wrench litigation (income) expense AmeriServe and other charges (credits) Total Costs and Expenses Operating Profit Net interest expense (income) Income (Loss) Before Income Taxes Income taxes Net Income (loss)
2,549 2,142 2,403 7,094 1,187 35 59 (24) (51) 0 (1) 8,299 1,262 154 1,108 284 $824
26.66% 22.40% 25.13% 74.20% 12.42% 0.37% 0.62% -0.25% -0.53% 0.00% -0.01% 86.80% 13.20% 1.61% 11.59% 2.97% 8.62%
2,584 2,171 2,315 7,070 1,158 33 62 (43) (80) (2) (2) 8,196 1,153 127 1,026 264 $762
27.64% 23.22% 24.76% 75.62% 12.39% 0.35% 0.66% -0.46% -0.86% -0.02% -0.02% 87.67% 12.33% 1.36% 10.97% 2.82% 8.15%
($35) -1.35% ($29) -1.34% $88 3.80% $24 0.34% $29 2.50% $2 6.06% ($3) -4.84% $19 -44.19% $29 -36.25% $2 -100.00% $1 -50.00% $103 1.26% $109 9.45% $27 21.26% $82 7.99% $20 7.58% $62 8.14%
ASSETS Current Assets Cash and equivalents Short-term investments Accounts and notes receivable Inventories Prepaid expenses and other current assets Deferred income taxes Advertising cooperative assets Total Current Assets Property, pland and equipment, net Goodwill Intangible assets, net Investments Other assets Deferred income taxes Total Non-current Assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and other current liabilities Income taxes payable Short-term borrowings Advertising cooperative liabilities Total current liabilities Long-Term Liabilities Long-term debt Other liabilities and deferred credits Total long-term liabilities Shareholders' Equity
$319 6 220 93 132 57 74 901 3,631 662 347 138 369 305 5,452 $6,353
5.02% 0.09% 3.46% 1.46% 2.08% 0.90% 1.16% 14.18% 57.15% 10.42% 5.46% 2.17% 5.81% 4.80% 85.82% 100.00%
$158 43 236 85 75 181 77 855 3,356 538 330 173 320 225 4,942 $5,797
2.73% 0.74% 4.07% 1.47% 1.29% 3.12% 1.33% 14.75% 57.89% 9.28% 5.69% 2.98% 5.52% 3.88% 85.25% 100.00%
$161 ($37) ($16) $8 $57 ($124) ($3) $46 $275 $124 $17 ($35) $49 $80 $510 $556
101.90% -86.05% -6.78% 9.41% 76.00% -68.51% -3.90% 5.38% 8.19% 23.05% 5.15% -20.23% 15.31% 35.56% 10.32% 9.59%
Preferred stock, no par value, no shares issued Common stock, 265 shares and 278 shares issued in 2006 and 2005, respectively Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities and shareholders' equity
Ratio
A. Liquidity Ratios 1. Current Ratio
=
Formula
(words) Hint: All Formulas are located on Page 710 & 711, with the exception of Gross Profit % Current ratio Current liabilities =
3. Inventory turnover
4. Accounts Receivable turnover = *Use Total Sales and Net A/R and Notes Receivable 5. Average Collection Period (Days sales in receivables)
2. Times-interest-earned ratio Note - Use Operating Profit C. Profitability Ratios 1. Gross Profit Percentage
Note: Gross Profit is Revenue Costs. Do Not Include Expenses Formula on Page 328 2. Rate of return on net sales (Profit Margin rate) =
5. Earnings per share Hint - Page 758 - Use Weighted Average without Dilutive Shares 6. Price/earnings ratio
7. Dividend Yield Hint: Dividend Per Share Located on Page 751 in Textbook 8. Book value per share
Total common stock holders equity Number of common stock shares outstanding
Market Price Information was retreived from the following link: http://finance.aol.com/quotes/yum-brands-inc/yum/nys/historical-prices?tf=12%2F29%2F2006-10%2F4%2F2009&gran=d Market Price on 12/29/06 was used.
Calculation
(numbers)
Result
0.52
0.32
79.71 times
41.93 times
365 41.93
8.70 days
0.77
8.19 times
2,467 9,561
26%
$824 9,561
9%
824 $6,075
14%
0.57
3.11
9.45
10%
1,437 265
5.42
10%2F4%2F2009&gran=d
Accuracy
Ratios: Completeness All requirements are completed in accordance with the directions, labeled and organized well in worksheet. All ratios are calculated with accurate results and appropriate terms of expression. All requirements are completed and mostly follow the directions, labeled and fairly organized in worksheet. 80% plus of ratios are calculated with accurate results and mostly appropriate terms of expression. Most requirements are completed that mostly follow the directions, missing some labels and only somewhat organized. 60-79% of ratios are calculated with accurate results and some appropriate terms of expression.
Accuracy
Very Poor Requirements are not completed and/or the directions were generally not followed, missing labels and unorganized. Less than 60% of ratios are calculated with accurate results and some appropriate terms of expression.
Requirements are not completed and/or the directions were generally not followed, missing labels and unorganized. Less than 60% of ratios are calculated with accurate results and some appropriate terms of expression.