Memo on the accounting analysis of two companies of In and Out and KFC
Kentucky Fried Chicken (KFC) was incorporated in 1955and until 1997 a wholly owned subsidiary of Pepsi Company; inc.It operates over five thousand units in USA which is approximately 60% of franchises in the world. It’s the largest fast-food chicken operator and franchiser in the world. It has over three thousand and seven hundred units of which two-thirds are franchised. It also participates in joint ventures and its ever looking for investment opportunities in fast-foods sector.
In the late 1997, it expected to become a fully owned subsidiary of Tricon Global Restaurants, which was to be formed from the Pepsi company ltd.In 1996, it had total sales totaling to $6.4 billion and had by then five thousands eight hundred and twelve eating joints.KFC has two divisions under Pepsi company. The president of KFC is Roger Eaton (Reuters-November 3rd 2008). It’s a part of Pepsi company divisions, that is, Pepsi worldwide restaurants and Pepsi co Restaurants international. All these divisions are based in Dallas, USA.In 1994, KFC sales amounted to three thousand five hundred million dollars compared to three thousand seven hundred and twenty million dollars in 1995.
Over the past seven years starting from 1987 -1994 and KFC worldwide sales have grown by approximately eight point two percent. The growth has been attributed mostly to new restaurants and higher volume of sales. In 1993, international growth was three point three percent, 1994 was four percent and in 1995 grew by two point three percent. According to the financial statements of worldwide Restaurants concepts Inc for the accounting period ending 2003,KFC revenues increased by seventeen point three million dollars from one hundred and two point five million dollars in 2003 as compared to eighty five point two million dollars in 2002,that is twenty point three percent increment. The rise was driven by increased sales as a result of extensive marketing reaching to eight percent increased sales per restaurant that has been in operation for more than fifteen months.
By the start of 30th April, 2003 to the end of 30th April 2002, there were one hundred and ten restaurants and one hundred and seven restaurants respectively. The prime costs increased from fifty one point two million in 2002 to sixty point eight million dollars in 2003.This was due to the decreased labor cost and increased productivity and lower food cost due to proper control. The other operating costs in 2003 were twenty three point eight million compared to twenty million dollars in 2002, which is nineteen point one percent increase which was caused by adverse exchange rate and costs of operating additional four restaurants and to support increased sales in the same year.
The net income per share which is the net income per total number of outstanding shares which evaluates the company’s profit per share of stock outstanding, dropped from 1994 to 1995 by almost ten percent which could damage the investors confidence should it persist. It should be within the industry’s norm. The returns on Equity which is the net income per shareholders equity, based on Pepsi co whose ratio is below the industry but since Pepsi co is a stable company, it doesn’t raise major concern.
The working capital improved in 1995 compared to 1993, but is still shaky. Current ratio, which has been two for many periods, Pepsi co has been above this ratio indicating good condition in paying short term debts doubling the industry rate in 1995 and has been rising since then. The return on assets has been ranging from four to five percent and doesn’t show any signs of improving. The net profit margin has been well above the industry ratio except in years 1994 and 1995 where it has been declining thus, not desirable. The total assets turnover has been desirable with the company properly utilizing few assets to produce more sales. The debt-equity ratio has been downward over the past which means it’s desirable.
In and out is a group of fast food restaurants located in Western USA.Its head offices are at Irvine,carlifonia.They were founded by Harry Snyder and Esther, his wife in 1948.Its a private company that has never been franchised and operates more than two hundred and ten joints in California. It’s owned by lynsi Martinez and Mark Taylor is the president and chief financial officer is roger kotch.It earned estimated revenue of two hundred and sixteen point eight million dollars in 2007.
NB: There were no ready financial reports and accounts statements for In and Out Burger for complete financial analysis.
“Heublein Merger Plan with Kentucky Fried Is Ratified by Holders”, wall street journal,
July 9, 1971.
Hume, Scott, “KFC to Stick with What It’s Finally Doing Right,” Advertising Age, June 27, 1983.
Jeffrey, Don, Peter Romeo, and Rick Van Warner, “KFC Company Profile” (a multiple-article series), Nation’s Restaurant News, December 15, 1986.
Klein, Frederick C., “John Y. Brown, Rich and Taking It Easy,” Wall Street Journal, April 1, 1975.
Kentucky Fried Chicken: Retrieved on 3rd November from: http://kelley_keith.tripod.com/mgmnt5313.html
Kentucky Fried Chicken: retrieved on 3rd November from
Worldwide restaurant concepts, Inc: retrieved on 3rd November from http://www.getfilings.com/o0001047469-04-023483.html
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