EAT AT MY RESTAURANT-CASH FLOW
With this case, we review the cash flow of several restaurant companies. The restaurant companies
reviewed and the year-end dates are as follows:
1. Yum Brands, Inc.
(December 30, 2008; December 30, 2007)
"Through the five concepts ofKFC, Pizza Hut, Taco Bell, LJS and A & W (the "Concepts")
the company develops, operates, franchises and licenses a world system of restaurants which
prepare, package and sell a menu of competitively priced food items." 1 0-K
2. Panera Bread
(December 30, 2008; December 25, 2007)
"As of December 30, 2008, Panera operated and through franchise agreements with 39 franchisee
groups, 1,252 cafes." 1 0-K
3. Starbucks
(September 28, 2008; September 30, 2007)
"Starbucks Corporation was formed in 1985 and today is the world's leading roaster and retailer
of specialty coffee." 1 0-K
Yum Brands, Inc. Panera Bread Starbucks*
Data Reviewed
Net cash provided by operating
activities
Net income
Operating cash flow/current maturities
of long-term debt and current notes
payable
Operating cash flow/total debt
Operating cash flow per share
Operating cash flow/cash dividends
*Includes commercial paper and short-tenn borrowings.
Required
2008 2007
(In millions)
1,521
964
60.84
22.92
3.10
4.72
1,551
909
5.39
25.64
2.87
5.68
2008 2007 2008 2007
(In thousands) (In millions)
156,282 154,014 1,258.7 1,331.2
67,436 57,456 315.5 672.6
No current maturities oflong- 176.36* 187.20*
term debt and current notes
payable
87.43 60.97 39.56 43.51
5.14 4.79 1.70 1.73
No cash dividends No cash dividends
a. Comment on the difference between net cash provided by operating activities and net income.
Speculate on which number is likely to be the better indicator of long-term profitability.
b. Comment on the data reviewed for each firm.
c. Do any of these firms appear to have a cash flow problem? Comment.
1 answer