Balance Sheet: Liabilities and Stockholders’ Equity
The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.
Liabilities represents obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity.
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YUM! Brands Inc., consolidated balance sheet: liabilities and stockholders’ equity
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).
The financial data reveals several noteworthy trends in the company's liabilities and equity positions over the five-year period.
- Current Liabilities
- There is an overall increase in total current liabilities, rising from $2,450 million in 2011 to $3,088 million in 2015. This increase is driven primarily by a substantial rise in short-term borrowings, which escalated sharply from $320 million in 2011 to $923 million in 2015 after a low of $10 million in 2012. Additionally, other current liabilities increased steadily from $250 million to $417 million over the period. Conversely, accounts payable experienced a slight decline from $712 million to $616 million, while accrued capital expenditures fluctuated with no clear upward or downward trend. Dividends payable showed a consistent increase, from $131 million to $197 million, indicating a rising dividend obligation.
- Noncurrent Liabilities
- Long-term debt remained relatively stable, fluctuating slightly around the $3,000 million mark, ending at $3,054 million in 2015. However, other liabilities and deferred credits declined significantly from $1,471 million in 2011 to $958 million in 2015, contributing to an overall decrease in total noncurrent liabilities from $4,468 million to $4,012 million. As a result, total liabilities showed a moderate fluctuation but trended upwards toward the end of the period, finishing at $7,100 million in 2015 compared to $6,918 million in 2011.
- Shareholders’ Equity
- Shareholders’ equity experienced a marked decline over the five years, dropping from $1,916 million in 2011 to $969 million in 2015. Retained earnings, a major component of equity, decreased significantly from $2,052 million to $1,150 million, indicating either substantial dividend payments, losses, or other equity-based adjustments. Accumulated other comprehensive income showed volatility, swinging from negative $247 million in 2011 to a positive $64 million in 2013, before moving back into a negative position at negative $239 million in 2015. The decline in equity suggests a weakening in the company's net asset base during this period.
- Overall Balance Sheet Movements
- The total of liabilities, redeemable noncontrolling interest, and shareholders’ equity decreased gradually from $8,834 million in 2011 to $8,075 million in 2015, indicating a contraction in the overall size of the company's balance sheet. This contraction correlates with reductions in both total shareholders' equity and certain liability categories, despite the increase in current liabilities, particularly short-term borrowings. The presence of redeemable noncontrolling interest diminished over time, from $59 million in 2012 to $6 million in 2015, suggesting a reduction in such claims against the company’s resources.
In summary, the company displays a shift towards greater reliance on short-term financing, an increase in current liabilities, and a notable erosion of shareholders’ equity, which collectively may point to increased financial leverage and potential stress on the capital structure by the end of the period under review.