Analysis of Debt
Total Debt (Carrying Amount)
YUM! Brands Inc., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
- Short-term borrowings
- There is a significant fluctuation observed in short-term borrowings over the five-year period. The amount started at 320 million USD in 2011, sharply declined to 10 million USD in 2012, then rose moderately to 71 million USD in 2013. A larger increase is seen in 2014 reaching 267 million USD, followed by a dramatic surge to 923 million USD by the end of 2015. This pattern indicates a variable short-term financing strategy with a notable increase in reliance on short-term debt in the latest year.
- Long-term debt
- Long-term debt exhibits relatively stable behavior with minor decreases and some fluctuation. Starting at 2,997 million USD in 2011, it slightly decreased to 2,932 million USD in 2012 and further to 2,918 million USD in 2013. A moderate increase to 3,077 million USD occurred in 2014, followed by a small reduction to 3,054 million USD in 2015. This stability suggests a consistent long-term financing approach, with only modest adjustments year-over-year.
- Total debt obligations, including capital leases (carrying amount)
- The total debt obligations generally trend upwards during the period. The total was 3,317 million USD in 2011, decreased to 2,942 million USD in 2012 but then showed gradual recovery and growth to 2,989 million USD in 2013 and 3,344 million USD in 2014, culminating in a substantial rise to 3,977 million USD by the end of 2015. This overall increase is primarily driven by the sharp rise in short-term borrowings in the last year, indicating an increasing total leverage position.
- Overall observations
- The key observation is the considerable increase in short-term borrowings in 2015, which contributes to the highest recorded total debt obligations during the analyzed period. Long-term debt remains fairly stable, which may point to a deliberate strategy to maintain a steady long-term capital structure. The significant rise in short-term debt raises potential considerations regarding liquidity management, refinancing risk, or a strategic move to leverage short-duration borrowing possibly due to favorable market conditions.
Total Debt (Fair Value)
| Dec 26, 2015 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Debt obligations, excluding capital leases | 3,700) |
| Capital lease obligations | 169) |
| Total debt obligations, including capital leases (fair value) | 3,869) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2015-12-26).
Weighted-average Interest Rate on Debt
Weighted-average effective interest rate on debt: 5.45%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 6.03% | 300) | 18) | |
| 6.36% | 325) | 21) | |
| 7.45% | 325) | 24) | |
| 5.59% | 250) | 14) | |
| 4.01% | 350) | 14) | |
| 3.88% | 350) | 14) | |
| 4.01% | 325) | 13) | |
| 5.42% | 275) | 15) | |
| 7.63% | 169) | 13) | |
| Total | 2,669) | 145) | |
| 5.45% | |||
Based on: 10-K (reporting date: 2015-12-26).
1 US$ in millions
2 Weighted-average interest rate = 100 × 145 ÷ 2,669 = 5.45%