Question

With this case, we review the liquidity of several restaurant companies. The restaurant companies reviewed and the year-end dates are as follows: 1. Yum Brands, Inc. December 25, 2010: December 26, 2009 (52 weeks each year) "YUM consist of six operating segments:KFC-U.S., Pizza Hut -U.S., Taco Bell -U.S. Long John Silver's ("LJS")-U.S. and A&W A11 American Food Restaurants ("A&W") -U.S., YUM Restaurants International ("YRI" or "International Division") and YUM Restaurants China ("China Division")." Source: Yum! Brands, Inc. and Subsidiaries 2010 10-K 2. Panera Bread December 28, 2010; December 29, 2009 (52 weeks each year) "Panera Bread Company and its subsidiaries, referred to as "Panera Bread." "Panera," the "Company, " "we," "us," and "our," is a national bakery-cafe concept with 1,453 Company-owned and franchise- operated bakery-cafe locations in 40 states, the District of Columbia, and Ontario, Canada." Source: Panera Bread 2010 10-K 3. Starbucks October 3, 2010: September 27, 2009 (Fiscal year 2010 included 53 weeks, while fiscal year ended 2009 included 52 weeks) "Starbucks is the premier roaster and retailer of specialty coffee in the world, operating in more than 50 countries." || Source: Starbucks 2010 10-K Data reviewed Yum Brands, Inc. 2010 2009 Panera Bread 2010 2009 Starbucks 2010 2009 * 1.0037 1.00501.0228 1.0700 $2.38 $2.22 $3.62 $2.78 $1.24 $0.52 All-inclusive degree of financial leverage Diluted earnings per share before nonrecurring items Percentage of earnings retained Dividend yield Price/earnings ratio Market price per share *Disclosure not adequate to compute 100.00% 100.00% 100.00% 64.42% 1.85% 20.87 $49.66 66.20% 2.26% 15.94 $35.38 81.97% 1.39% 20.92 $25.94 28.21 $102.11 24.69 $68.63 38.13 $19.83

Required

a.      Provide an independent review of each individual company (Yum, Panera, Starbucks) in terms of its performance in the following financial ratios for the year 2009 and 2010. Explain its performance between 2009 and 2010 :

(i)      financial leverage

(ii)     diluted earnings per share

(iii)    percentage of earnings retained

(iv)    dividend yield

(v)     price/earnings ratio

(vi)       market price per share

Answer 1

Answer:

The following are performance of individual company between 2009 and 2010

Yum brands inc:

1. Degree of financial leverage is not available.
2. Diluted earning per share gives moderate procuring per share.
3. Percentage of earnings retained holds 66% earning and rest distributes as profit.
4. Dividend yield is superior to other different organisations.
5. Price /earnings ratio is lower than demonstrates share is less expensive.
6. Market price per share shows moderate development in share cost.

Panera bread:

1. Degree of financial leverage has lower degree of financial leverage than starbucks that shows lower financial chance.
2. Diluted earning per share is superior to other two organisations.
3. Percentages of earnings retained holds all the profit and reinvest into the organisation with the goal that organisation can develop and share cost can go up.
4. Dividend yield holds all the profit so doesn't give any dividend to investors.
5. P/e ratio is moderate.
6. Market cost per share shows higher development in share cost as organization reinvests its profit ,this stock is a development stock.

Starbucks:

1. Degree of financial leverage has minimal higher level of financial leverage than panera bread that demonstrates minimal higher financial risk.
2. Diluted earning per share is gaining per share is less.
3. Percentage of earnings retained holds 82%earnings in 2010 and rest amount distribute as dividend.
4. Diviend yeild is lower than the yum brands inc .
5. P/e proportion was higher in 2009 yet lower in 2010.
6. Market value per share  shows lower development in share cost .

Conclusion:

I might want to put my cash into panera bread as it has lower financial risk and friends gives higher earning per share and development opportunities.