Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
YUM! Brands Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
The analysis of the financial leverage and related debt ratios over the examined periods reveals notable trends and shifts in the company's capital structure. The ratios under consideration include Debt to Equity, Debt to Capital, Debt to Assets, and Financial Leverage.
- Debt to Equity Ratio
- This ratio displayed relative stability and moderate fluctuation from early 2012 through late 2015, generally remaining within the range of approximately 1.28 to 2.17. A significant escalation is observed beginning in early 2016, with a sharp increase to 4.37, and an exceptionally high spike reaching 30.97 in mid-2016, indicating a considerable increase in leverage relative to equity during this period.
- Debt to Capital Ratio
- The Debt to Capital ratio exhibited a gradual upward trend over the timeline. It increased steadily from around 0.56 in early 2013 to 0.68 by the end of 2014, fluctuating slightly but showing a general tendency to rise further, reaching 0.81 by early 2016. A marked increase occurred in mid-2016, with values rising to 0.97 and further to 1.08 and 1.26, suggesting a growing proportion of debt within the total capital.
- Debt to Assets Ratio
- This ratio followed a similar increasing trend, moving from approximately 0.33 in early 2013 up to 0.41 by the end of 2014, maintaining a level near 0.39-0.41 through late 2015. In 2016, the ratio rose substantially, reaching 0.49 and continuing its ascent to 0.59, 0.66, and finally a high of 0.88, illustrating increased reliance on debt financing relative to total assets.
- Financial Leverage Ratio
- Financial leverage showed moderate variability between 2012 and 2015, with values mostly between 3.66 and 5.39. However, a pronounced spike appears in early 2016, with the ratio rising to 8.86 followed by a dramatic surge to 52.7 by mid-2016, reflecting an extraordinary increase in the use of debt relative to equity, subsequently amplifying overall financial risk.
Overall, the company's financial leverage and debt ratios remained relatively stable with modest increments from 2012 through the end of 2015. Beginning in early 2016, these ratios experienced abrupt and substantial increases, which may indicate a strategic shift toward higher debt usage or a response to changes in equity levels. The sharp rise in these ratios implicates a potential increase in financial risk, requiring further examination of the underlying causes and potential implications on creditworthiness and operational flexibility.
Debt Ratios
Debt to Equity
YUM! Brands Inc., debt to equity calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Short-term borrowings | 48) | 39) | 2,321) | 923) | 566) | 568) | 266) | 267) | 72) | 70) | 70) | 71) | 15) | 68) | 21) | 10) | 18) | 316) | 319) | ||||||
| Long-term debt | 9,119) | 5,324) | 2,510) | 3,054) | 2,651) | 2,831) | 3,121) | 3,077) | 3,315) | 3,095) | 2,949) | 2,918) | 2,917) | 2,918) | 2,924) | 2,932) | 3,003) | 2,995) | 3,006) | ||||||
| Total debt | 9,167) | 5,363) | 4,831) | 3,977) | 3,217) | 3,399) | 3,387) | 3,344) | 3,387) | 3,165) | 3,019) | 2,989) | 2,932) | 2,986) | 2,945) | 2,942) | 3,021) | 3,311) | 3,325) | ||||||
| Shareholders’ equity (deficit), YUM! Brands, Inc. | (1,896) | (389) | 156) | 911) | 1,825) | 1,569) | 1,707) | 1,547) | 2,505) | 2,264) | 2,275) | 2,166) | 2,194) | 2,223) | 2,293) | 2,154) | 2,197) | 2,135) | 2,142) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to equity1 | — | — | 30.97 | 4.37 | 1.76 | 2.17 | 1.98 | 2.16 | 1.35 | 1.40 | 1.33 | 1.38 | 1.34 | 1.34 | 1.28 | 1.37 | 1.38 | 1.55 | 1.55 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity (deficit), YUM! Brands, Inc.
= 9,167 ÷ -1,896 = —
2 Click competitor name to see calculations.
- Total debt
- The total debt level exhibited fluctuations over the observed periods. Initially, from early 2012 through late 2013, the debt remained relatively stable, fluctuating between approximately $2.9 billion and $3.3 billion. Starting in 2014, there was a modest upward trend, with debt rising to around $3.4 billion by late 2014. In 2015, debt remained relatively stable until a notable increase in early 2016. The period from early 2016 to late 2016 showed a sharp rise in total debt, culminating in a substantial increase to approximately $9.2 billion by September 2016.
- Shareholders’ equity
- Shareholders’ equity generally exhibited minor fluctuations and a modest upward trend from early 2012 through late 2014, ranging roughly between $2.1 billion and $2.5 billion. However, a significant decline is observable starting in 2014, becoming more pronounced in 2015 and continuing into 2016. By mid to late 2016, shareholders’ equity turned negative, reaching nearly -$1.9 billion by the last period observed. This indicates a deterioration in net assets and possibly accumulated losses or substantial share repurchases.
- Debt to equity ratio
- The debt to equity ratio showed relative stability between 1.28 and 1.55 from early 2012 until late 2014, reflecting a balanced relationship between debt and equity. Beginning in 2014, this ratio increased sharply, peaking at 2.17 in late 2015, which suggests growing leverage. The ratio spiked dramatically in 2016 due to the combination of rising debt and negative equity values, reaching an extreme value of 30.97 before data became incomplete. This spike highlights a critical change in financial structure, indicating significant leverage risk.
- Overall observations
- The data reveals a stable financial profile in terms of debt and equity until approximately 2014. From 2014 onward, the company appears to have increased its debt substantially while experiencing a decline in equity, culminating in negative equity by 2016. The sharp rise in the debt to equity ratio reflects a shift toward higher financial leverage and increased financial risk. Such trends may warrant attention regarding the company’s solvency and capacity to manage its obligations effectively.
Debt to Capital
YUM! Brands Inc., debt to capital calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Short-term borrowings | 48) | 39) | 2,321) | 923) | 566) | 568) | 266) | 267) | 72) | 70) | 70) | 71) | 15) | 68) | 21) | 10) | 18) | 316) | 319) | ||||||
| Long-term debt | 9,119) | 5,324) | 2,510) | 3,054) | 2,651) | 2,831) | 3,121) | 3,077) | 3,315) | 3,095) | 2,949) | 2,918) | 2,917) | 2,918) | 2,924) | 2,932) | 3,003) | 2,995) | 3,006) | ||||||
| Total debt | 9,167) | 5,363) | 4,831) | 3,977) | 3,217) | 3,399) | 3,387) | 3,344) | 3,387) | 3,165) | 3,019) | 2,989) | 2,932) | 2,986) | 2,945) | 2,942) | 3,021) | 3,311) | 3,325) | ||||||
| Shareholders’ equity (deficit), YUM! Brands, Inc. | (1,896) | (389) | 156) | 911) | 1,825) | 1,569) | 1,707) | 1,547) | 2,505) | 2,264) | 2,275) | 2,166) | 2,194) | 2,223) | 2,293) | 2,154) | 2,197) | 2,135) | 2,142) | ||||||
| Total capital | 7,271) | 4,974) | 4,987) | 4,888) | 5,042) | 4,968) | 5,094) | 4,891) | 5,892) | 5,429) | 5,294) | 5,155) | 5,126) | 5,209) | 5,238) | 5,096) | 5,218) | 5,446) | 5,467) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to capital1 | 1.26 | 1.08 | 0.97 | 0.81 | 0.64 | 0.68 | 0.66 | 0.68 | 0.57 | 0.58 | 0.57 | 0.58 | 0.57 | 0.57 | 0.56 | 0.58 | 0.58 | 0.61 | 0.61 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Debt to capital = Total debt ÷ Total capital
= 9,167 ÷ 7,271 = 1.26
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's leverage and capital structure over the observed periods.
- Total Debt
- Total debt displayed relative stability initially, with moderate fluctuations from March 2012 through December 2013, maintaining a range approximately between 2,900 and 3,300 million US dollars. Subsequently, a gradual increase became evident starting around June 2014. This upward trajectory accelerated markedly from December 2015 onward, culminating in a substantial rise by September 2016, where total debt reached 9,167 million US dollars. This represents a nearly threefold increase compared to the earlier stable period.
- Total Capital
- Total capital showed minor variations throughout most of the timeline, remaining largely within the 4,800 to 5,900 million US dollars range until approximately September 2014. From this point, total capital experienced some volatility, including a notable dip around December 2014, followed by a recovery and subsequent fluctuations. More importantly, a significant increase occurred in the last quarter examined, where total capital rose sharply to 7,271 million US dollars by September 2016.
- Debt to Capital Ratio
- The debt to capital ratio started at a high level, around 0.61 in early 2012, then evidenced a slight downtrend reaching approximately 0.56-0.58 during 2012 and 2013, reflecting some deleveraging or capital growth relative to debt. However, from the end of 2014 onwards, the ratio rose consistently, indicating growing leverage. This trend became particularly pronounced in 2016, where the ratio surpassed 1.0 by June and climbed to 1.26 by September 2016, signaling that the company’s total debt had exceeded its total capital.
Overall, the financial data indicates a period of relative balance in leverage ratios and capital structure initially, followed by a significant increase in debt levels over the latter periods. The rising debt to capital ratio suggests increased financial risk and reliance on debt financing, particularly evident in 2016. The sharp escalation in both total debt and total capital towards the end of the period examined denotes possible strategic financing decisions or external financial pressures impacting capital structure.
Debt to Assets
YUM! Brands Inc., debt to assets calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Short-term borrowings | 48) | 39) | 2,321) | 923) | 566) | 568) | 266) | 267) | 72) | 70) | 70) | 71) | 15) | 68) | 21) | 10) | 18) | 316) | 319) | ||||||
| Long-term debt | 9,119) | 5,324) | 2,510) | 3,054) | 2,651) | 2,831) | 3,121) | 3,077) | 3,315) | 3,095) | 2,949) | 2,918) | 2,917) | 2,918) | 2,924) | 2,932) | 3,003) | 2,995) | 3,006) | ||||||
| Total debt | 9,167) | 5,363) | 4,831) | 3,977) | 3,217) | 3,399) | 3,387) | 3,344) | 3,387) | 3,165) | 3,019) | 2,989) | 2,932) | 2,986) | 2,945) | 2,942) | 3,021) | 3,311) | 3,325) | ||||||
| Total assets | 10,432) | 8,184) | 8,221) | 8,075) | 8,306) | 8,294) | 8,305) | 8,345) | 9,177) | 8,810) | 8,705) | 8,695) | 8,730) | 8,764) | 8,945) | 9,011) | 8,974) | 9,177) | 9,343) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Debt to assets1 | 0.88 | 0.66 | 0.59 | 0.49 | 0.39 | 0.41 | 0.41 | 0.40 | 0.37 | 0.36 | 0.35 | 0.34 | 0.34 | 0.34 | 0.33 | 0.33 | 0.34 | 0.36 | 0.36 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Debt to assets = Total debt ÷ Total assets
= 9,167 ÷ 10,432 = 0.88
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a general upward trend over the observed periods. Starting from approximately 3,325 million USD in early 2012, the total debt remained relatively stable with slight fluctuations until the end of 2015. However, from early 2016 onward, there was a marked increase in total debt, rising sharply to over 9,167 million USD by the third quarter of 2016.
- Total Assets
- Total assets showed minor fluctuations with a slight downward tendency from early 2012 through to late 2015, decreasing from around 9,343 million USD to approximately 8,306 million USD. The asset base stabilized somewhat around this level but saw a notable increase in the third quarter of 2016, reaching approximately 10,432 million USD.
- Debt to Assets Ratio
- The debt to assets ratio remained relatively stable and moderate at around 0.33 to 0.41 from early 2012 through to the end of 2015. Beginning in early 2016, this ratio rose sharply, moving from 0.39 to 0.88 by the third quarter of 2016. This indicates a significant intensification in leverage, with debt increasing at a faster pace relative to assets during this latter period.
- Overall Trends and Insights
- The financial data reflect a period of relative stability in both total debt and assets up to the end of 2015, with leverage ratios remaining moderate. The substantial escalation in total debt in the early to mid-2016 timeframe corresponded with increased total assets but at a slower rate, resulting in a pronounced rise in the debt to assets ratio. This trend suggests a strategic shift towards higher leverage, which may have implications for financial risk and capital structure management.
Financial Leverage
YUM! Brands Inc., financial leverage calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Total assets | 10,432) | 8,184) | 8,221) | 8,075) | 8,306) | 8,294) | 8,305) | 8,345) | 9,177) | 8,810) | 8,705) | 8,695) | 8,730) | 8,764) | 8,945) | 9,011) | 8,974) | 9,177) | 9,343) | ||||||
| Shareholders’ equity (deficit), YUM! Brands, Inc. | (1,896) | (389) | 156) | 911) | 1,825) | 1,569) | 1,707) | 1,547) | 2,505) | 2,264) | 2,275) | 2,166) | 2,194) | 2,223) | 2,293) | 2,154) | 2,197) | 2,135) | 2,142) | ||||||
| Solvency Ratio | |||||||||||||||||||||||||
| Financial leverage1 | — | — | 52.70 | 8.86 | 4.55 | 5.29 | 4.87 | 5.39 | 3.66 | 3.89 | 3.83 | 4.01 | 3.98 | 3.94 | 3.90 | 4.18 | 4.08 | 4.30 | 4.36 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity (deficit), YUM! Brands, Inc.
= 10,432 ÷ -1,896 = —
2 Click competitor name to see calculations.
The financial data over the periods indicate several notable trends in the company's asset base, equity position, and leverage ratios.
- Total Assets
- Total assets exhibit a relatively stable trend from early 2012 through mid-2016, fluctuating modestly around the 8,000 to 9,000 million US dollar range. Starting at approximately 9,343 million US dollars in the first quarter of 2012, assets declined gradually to a low near 8,075 million by early 2016, before a sharp increase to 10,432 million US dollars in the third quarter of 2016, indicating a significant asset acquisition or revaluation at that time.
- Shareholders’ Equity
- Equity values show a generally declining trend with marked volatility. From a high of around 2,142 million US dollars in early 2012, equity remains in the 2,000 to 2,500 million range through late 2014, peaking around 2,505 million in the third quarter of 2014. Following this peak, equity decreases drastically, becoming very low or negative from early 2015 onward, reaching a deficit of approximately 1,896 million US dollars by the third quarter of 2016. This substantial decline in shareholders’ equity suggests either sustained losses, significant dividend payments, or other transactions affecting retained earnings or capital structure.
- Financial Leverage
- Financial leverage ratios show a normal range initially, fluctuating between about 3.6 and 4.4 through the end of 2014. However, starting in 2015, leverage spikes sharply, with notable ratios of 5.39 and 5.29 in early and mid-2015, respectively. By 2016, the financial leverage ratio trends upwards drastically, reaching values as high as 8.86 and even soaring to an unusually high figure of 52.7. The last two data points are missing leverage values, likely due to negative equity, which invalidates the ratio calculation. The increasing leverage corresponds with the observed decline in equity, reflecting higher reliance on debt relative to equity and potentially elevated financial risk.
Overall, the data reveal a concern regarding the equity trajectory and leverage position. While assets remain relatively stable with a late surge, the erosion into negative equity and the surge in leverage suggest increasing financial risk and possible distress. The negative equity indicates that liabilities may have exceeded assets, calling for closer examination of the company’s capital structure and profitability moving forward.