Concept explainers
Compare Papa John’s and Yum! Brands
The following total liabilities and stockholders’ equity information (in millions) is provided for Papa John’s International, Inc. (PZZA) and Yum! Brands, Inc. (YUM) at the end of a recent year:
Papa John’s | Yum! Brands | |
Total assets | $495 | $8,075 |
Total liabilities | 444 | 7,164 |
Total stockholders’ equity | 51 | 911 |
Yum! Brands is a much larger company titan is Papa John’s; however, both companies compete internationally in the fast food business. Papa John’s is primarily in the carry-out and delivery pizza business, while Yum! Brands is in the quick-service restaurant business with its Pizza Hut. Taco Bell, and KFC brands.
a. Compute the ratio of liabilities to stockholders’ equity for each company. Round to one decimal place.
b. What conclusions regarding the margin of protection to creditors can you draw for these two companies?
c. Which company is more risky to creditors?
Trending nowThis is a popular solution!
Chapter 1 Solutions
Corporate Financial Accounting
- Summit Manufacturing produces snow shovels. The selling price per snow shovel is $30. There is no beginning inventory. Costs involved in production are: Direct materials $5.00 Direct labor 4.00 Variable manufacturing overhead 3.00 Total variable manufacturing costs per unit $12.00 Fixed manufacturing overhead per year $180,000 In addition, the company has fixed selling and administrative costs of $160,000 per year. During the year, Summit produces 40,000 snow shovels and sells 37,000 show shovels. What is net income use variable costing?arrow_forwardPlease provide this question solution general accountingarrow_forwardKindly help me with accounting questionsarrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning