Financial Analysis and Interpretation for KFC Brand- myassignmenthelp

Question: Discuss about theFinancial Analysis and Interpretation for KFC Brand. Answer: Business sector KFC is the fast food brand that is specialized in chicken. It has more than 19,500 units all over 115 nations and territories. It is the 2nd largest restaurant chain in world after McDonald. Main menus of KFC include fried chicken and side dishes include chicken sandwiches, grilled chicken, desserts, hot wings and chicken strips. KFC is the subsidiary of Yum Brands that also owns Taco Bell and Pizza Hut (KFC: Finger Lickin Good 2018). It is supported through the Yum that offers support and programmes including customer attraction, brand recognition, competitive advantage, economic stability, multi-unit growth, solid business support, training and access to finance. Despite of drop in the consumer spending, restaurant sector survived recession efficiently. Further, the franchisees of KFC are allowed to use (i) some trademarks of KFC, service marks, trade names and commercial symbols that includes Kentucky Fried Chicken and KFC marks (ii) proprietary formats for business, procedures, m ethods, designs, specifications and standards that are authorised by the franchisor, only in connection with the outlet operation. The company operates more than 70 branches for KFC all over Ireland. However, recently the branches together recorded the loss amounting to 9 million after writing down 4.5 million for inter-company loan. The company marginally employed 230 staffs (Irishtimes.com 2018). Further, the company is evaluating the offers for banking facilities as the directors are confident regarding sealing the new deal soon. The company uses various sales promotions for reaching to the potential customers. It includes exhibits, coupon and various entertainment promotions for promoting their products and increasing the level of sales. Main competitors The main competitor of KFC is Burger King. Both the brands lose owing to the fact that they serve the heart attacks in bag. However both the companies can be compared on the following aspects Price if the prices of the foods are considered then the prices of both the brands are almost close in terms of the set meals. However, if just ordering items are considered from the aspect of value, burger king is the clean winner. Innovation if the innovation aspect is taken into consideration burger king is better as compared to KFC as burger king makes changes in their menu on regular basis. On the other hand, the food menu of KFC tends to move around chickens items only. Variety in variety aspect, KFC is the the winner as it also offers the chicken rice instead of simple fried chicken and usual burger (BURGER KING 2018). Profitability ratio KFC Ratio Formula 2017 2016 2015 2014 Profitability Ratio Gross profit margin Gross profit / sales *100 49.74 45.11 43.49 27.09 Net profit margin Net profit / Sales *100 22.42 25.85 19.99 7.69 Return on capital employed PBIT/ Capital employed * 100 72.68 40.56 28.75 22.96 Return on shareholder's fund (Net profit-Pref div)/(ordinary share capital+reserves)*100 -21.16 -29.26 133.44 65.52 Burger King Ratio Formula 2017 2016 2015 2014 Profitability Ratio Gross profit margin Gross profit / sales *100 59.57 58.34 55.35 86.95 Net profit margin Net profit / Sales *100 26.99 23.06 12.63 -22.46 Return on capital employed PBIT/ Capital employed * 100 8.96 9.30 6.90 2.69 Return on shareholder's fund (Net profit-Pref div)/(ordinary share capital+reserves)*100 13.73 9.91 3.57 -9.19 It is the financial metrics used for analysing the ability of a business to create earnings from revenues after meeting the relevant costs and various expenses. Looking into the profitability ratio of the KFC, that is the gross profit margin, net profit margin and return on capital employed for the last 4 years that is from the year 2014 to 2017 it has been identified that all the profitability ratios of the company are in increasing trend (Yum.com 2018). On the other hand, if the gross profitability ratio and return on shareholders fund of burger king for the same period is compared with KFC it can seen that for all the years burger kings gross profit ratio as is more than KFC and for 2016 and 2017 the return on shareholders fund is better for Burger King as compared to KFC. However, if the net profit status and return on capital employed is compared it can be seen that KFC is in better position as compared to Burger King. Investment ratio KFC Ratio Formula 2017 2016 2015 2014 Investment ratio Dividend payout ratio Dividend announced/earnings available for dividend*100 31.04 45.28 56.90 65.52 Dividend cover ratio earnings available for dividend/Dividend announced*100 322.12 220.83 175.75 152.62 Dividend yield ratio Dividend per share/market value per share*100 1.07 2.68 3.18 2.73 Earnings per share Given 3.86 2.58 2.13 2.37 Price earnings ratio Market value per share/Earning per share 21.88 25.05 25.67 24.14 Burger King Ratio Formula 2017 2016 2015 2014 Investment ratio Dividend payout ratio Dividend announced/earnings available for dividend*100 15.03 15.15 17.41 -39.21 Dividend cover ratio earnings available for dividend/Dividend announced*100 665.21 660.15 574.30 -255.02 Dividend yield ratio Dividend per share/market value per share*100 1.38 1.12 1.05 0.77 Earnings per share Given 2.64 1.48 0.51 -1.16 Price earnings ratio Market value per share/Earning per share 21.44 37.29 82.20 -33.62 These ratios are used for measuring the performance of the companys share and the ratios like earning per share and price earnings ratio are used under the investment ratio. If the dividend ratios are compared that is the dividend payout ratio, dividend cover ratio and dividend yield ratio, it is identified that KFC is in better position as compared to Burger King. Moreover, earning available for payment of dividend for Burger King in the year 2014 was in negative. Earnings per share of last 4 years for KFC are better as compared to Burger King (Rbi.com 2018). Further, owing to negative net earnings the EPS as well as PE ratio of Burger King for 2014 is negative. However for other 3 years that is from 2015 to 2017 the PE ratio of Burger King is better as compared to KFC. Therefore, if overall profitability and investment factor is compared it can be seen that KFC is in better position than Burger King. Reflection Our group was formed for working on the assignment of Financial analysis and interpretation. The assignment was regarding the critical analysis of famous fast food chain KFC and its comparison with the competitor Burger King and finally providing conclusion on which one is better in comparison to other. The purpose of the report was to reflect our experience on the group work. In this reflection part I will state my experience with regard to formation of the group, organizing the group work and managing of our group work. Formation of group is the primary stage and under this stage it was decided that which member will do which part of the task. We have formed our own group after conducting a discussion with other students. As we all were familiar to each other it was easy to form the group and allocate the task. Among all I was the leader and therefore I was responsible for smooth communication among the group members. I was also responsible for discussion regarding the assignment and make it clear to each member regarding his part. However, if I was to do it again, I will try to avoid the delay at the initial level. Further, I will summarize the assignment task to avoid any kind of unnecessary confusion among the group members. It will also minimize the issues among the members regarding the task and no one will be in a position to blame others for their own mistakes. However, at last I was happy working with other members as we were able to complete the task on time. It would not have been possible without mutual cooperation. Further, I expect that if next time we work together on any other assignment we will have better understanding and communication that will enhance the quality of task. Reference BURGER KING. 2018. BURGER KING. [online] Available at: https://www.bk.com/ [Accessed 9 Apr. 2018]. Irishtimes.com. (2018). Kentucky Fried Chicken | The Irish Times. [online] Available at: https://www.irishtimes.com/topics/topics-7.1213540?article=truetag_company=Kentucky+Fried+Chickenpage=2 [Accessed 12 Apr. 2018]. KFC: Finger Lickin Good. 2018. Sandwiches - KFC.com. [online] Available at: https://www.kfc.com/menu/sandwiches [Accessed 9 Apr. 2018]. Rbi.com. 2018. Home | Restaurant Brands International amp;trade;. [online] Available at: https://www.rbi.com/ [Accessed 9 Apr. 2018]. Yum.com. 2018. Yum! Brands A World with More Yum!. [online] Available at: https://www.yum.com/ [Accessed 9 Apr. 2018].