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ACCT212 Project 2: Financial Statement Analysis-YUM! Brands, Inc.

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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;$5,797;Ratio;Formula;Calculation;Result;(words);(numbers);A.;Liquidity Ratios;Hint: All Formulas are located on Page 710;711, with the exception of Gross Profit %;1. Current Ratio;=;Current assets;=;=;Current liabilities;2. Acid Test Ratio;=;Cash+Short-term Investmetns + Net Current receviables;=;=;Current Liabilities;3. Inventory turnover;=;Cost of goods sold;=;=;Average inventory;4. Accounts Receivable;turnover;=;Net Sales;=;=;*Use;Total Sales and Net A/R and Notes Receivable;Average net accounts receivable;5.;Average Collection Period (Days? sales in receivables);=;Average net accounts receivable;=;=;One day's sales;B. Solvency Ratios;1. Debt ratio;=;Total liabilities;=;=;Ttoal assets;2. Times-interest-earned ratio;=;Income from operations;=;=;Note - Use Operating Profit;Interest expense;C. Profitability Ratios;1. Gross Profit Percentage;=;Gross profit;=;=;Note: Gross Profit is Revenue - Costs. Do Not Include Expenses;Total Revenue;Formula on Page 328;2. Rate;of return on net sales (Profit Margin rate);=;Net income;=;=;Net sales;3. Rate of return on total;assets;=;Net income + Interest expense;=;=;Average total assets;4. Rate;of return on common stockholders? equity;=;Net income - Preferred dividends;=;=;Average common stockholder's equity;5.;Earnings per share;=;Net income - Preferred;dividends;=;=;$;Hint -;Page 758 - Use Weighted Average without Dilutive Shares;Average number of shares of;common stock outstanding;6. Price/earnings ratio;=;Market price per share of common stock;=;29.40;=;Earnings per shares;7. Dividend Yield;=;Dividend per share of common stock;=;=;Hint: Dividend Per Share - Located on Page 751 in;Textbook;Market price per share of common stock;29.40;8. Book value per share;=;Total Stockholder's equity - Preferred equity;=;=;$;Number of shares of common outstanding;Market;Price Information was retreived from the following link;http://finance.aol.com/quotes/yum-brands-inc/yum/nys/historical-prices?tf=12/29/2006-10/4/2009&gran=d;Project;2 Rubric - Students;Criteria;Excellent;Good;Poor;Very Poor;H & V Analysis;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.;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;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.;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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