Professional Documents
Culture Documents
A Paper Submitted
In Partial Fulfillment of the Requirements for the Course
ACT611M (Financial Analysis)
Table of Contents
LIST OF TABLES
LIST OF FIGURES
ii
LIST OF APPENDICES
iii
ABSTRACT
iv
1
2
3
3
4
5
12
15
16
CHAPTER 3 METHODOLOGY
Research Design
Data for the Study/Method of Data Analysis
17
17
20
50
REFERENCES
APPENDICES
7
10
11
List of Tables
Table No.
1
Inventory turnover and average sale period for JFC and GADC
10
11
Dividends per share, Dividend yield per share of common stock, and
Dividend payout ratio for JFC and GADC
12
13
14
Return on total assets and Return on common stockholders equity for JFC
and GADC
15
Return on total assets and Return on common stockholders equity for JFC
and GADC
16
Comparison of Average Financial Ratios for JFC and GADC with the US
Industry Averages
17
18
List of Figures
Figure No.
1
ii
List of Appendices
Appendix No.
1
Balance Sheet of Jollibee Foods Corporation for the years 2000 2004
Income Statement for Jollibee Foods Corporation for the years 2000
2004
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
iii
Mc Reynald S. Banderlipe II
De La Salle University
________________________________________________________________________
ABSTRACT
Fast food restaurants continue its presence in the Philippine market for more than
twenty years. Up to now, these companies never ceases to maintain its presence to
capture the desired market. Jollibee and McDonalds, the two competing giants in the
Philippines, have competed in terms of offering various food products and services to its
customers. But the question remains which company is more successful in managing its
operations. Using the financial statements of Jollibee and McDonalds for the years 2000
2004, an analysis was performed using financial ratios for both companies. Results
show that Jollibee has performed better than McDonalds in terms of the financial ratios,
since Jollibee has been operating profitably for the past 5 years. McDonalds has to
continue striving to recover the deficit and eventually, improve its operations. In this
paper, the Du Pont analysis for Return on Equity was also presented, together with
contemporary issues such as Forecasting, Benchmarking, the Balanced Scorecard, and
Corporate Social Responsibility that would affect Jollibee, McDonalds, and the entire
QSR Industry.
iv
Chapter 1
Background of the Study
Introduction
Fast food invasion has been a triumphant success in the Philippines. Because of
the busy lifestyle of modern Filipinos, it is a natural instinct to simplify their eating
habits. Rather than spending a lot of time strolling in the market and buying food items
that needs to be cooked, they go to fast food in order to save time and energy in preparing
them. Rather than bringing to work or school packed meals, people go to fast food for
convenience instead of carrying lunchboxes. Rather than dining al fresco in expensive
restaurants, people go to fast food not only because it is delicious, but also to shell out a
small amount of money for it.
The competition between two giant fast food chains, Jollibee and McDonalds has
existed for years. These fast food chains compete not only to win the market share of fast
food customers, but also to dominate the Quick Service Restaurants (QSR) industry in the
Philippines. The obvious side of the fierce competition is the offering of similar product
lines (Acuna, Bernaldo, Dy, Malabanan, and Young, 2004). Burger McDo of
McDonalds challenged Jollibees Filipino-tasting Regular Yum. Chickenjoy faced with
McChicken in the chicken arena, while Peach Mango Pie competed with cinnamonsprinkled Apple Pie. Another battle exists between the Jolly Kiddy Meal and McDonalds
Happy Meal. These and a host of other items became a big hit for fast food lovers and
even became centers of discussions regarding which one is the best.
However, another way of assessing the competition between the two fast food
chains is how these companies will sustain their competitive leadership in the QSR
industry in the Philippines. A careful analysis of their financial statements would enable
users to make an objective evaluation about the performance and position of these
companies in the QSR industry of the Philippines.
This discourse aims to perform an analysis of the financial statements of Jollibee
Foods Corporation (JFC, Jollibee) and Golden Arches Development Corporation
(GADC [the licensee of McDonalds Corporation in the Philippines], or
McDonalds) for the years 2000-2004. Specifically, the study delves in the financial
aspect of these companies by comparing them to the existing industry averages and
making an evaluation of which company would have greater chances of dominating the
fast food industry in the Philippines.
Statement of Objectives
General Objective
The main objective of this research is to analyze the financial statements of
Jollibee and McDonalds from 2000 2004.
Specific Objective
To support the general objectives of the study, the study identified the following
specific objectives:
1) Analyze the financial statements of Jollibee and McDonalds in terms of their
financial ratios,
2) Determine which fast food company will lead in terms of financial
performance, and
3) Integrate significant issues in the analysis of the financial statements of
Jollibee and McDonalds.
Statement of Assumptions
Prior to the actual conduct of the study, several assumptions were noted in the
analysis of the financial statements of Jollibee and McDonalds.
1) The financial statements of the two companies are accurate and correct since
independent Certified Public Accountants subjected them to an audit.
2) Fast food restaurants other than Jollibee and McDonalds are irrelevant in the
study since the two are the major fast food chains in the country.
industry were used. This alternative was considered since it is in the United
States that most fast food companies operate, and as such, technology,
management practices, and other operational aspects are carried on to their
international branches, then the industry averages for fast food restaurants
operating in the United States may be applicable to the Philippines.
5) Economic Value Added is not included in the study. There is an existing
contention that value is only created if the returns from the operations of the
firm exceeded the cost of financing the operations (Firer, 1999). Moreover,
the procurement of data for EVA computation was impossible since the
management of the two companies cannot provide such data. Thus, no point
of comparison can be achieved.
6) Accounts receivable turnover and Average collection period are not used in
the study. Fast food restaurants generate revenue from over-the-counter
transactions. Many a few transactions enable these restaurants to recognize
receivables like related party transactions and birthday party packages, whose
receivables are collected based on installment plans before, during, and after
the event.
The Academe would utilize this research to be a reference material in the study of
Financial Analysis and Financial Management. In addition, the research will serve as a
guide for future researchers in analyzing the financial statements of other companies
within and outside the fast food industry. It also gives insights to researchers as to how to
integrate current issues and modern philosophies in business in conducting financial
analysis.
General Readers will enable to obtain an objective understanding and to
determine the real score on the financial status of Jollibee and McDonalds, plus an
overview of their commitment to their social responsibility for the general welfare of
many.
Government
and
Regulatory
Authorities,
and
Non-Governmental
Organizations (NGOs) can benefit from this research in formulating policies, setting up
guidelines, and enforcing laws that promotes social responsibility among Quick Service
Restaurants, particularly those related to environmental safety and protection, waste
disposal systems, and investing on youth nutrition and education.
Chapter 2
Review of Related Literature
Jollibee entered the list of the Top 1000 Corporations in 1981. Since then, the
company continues its unprecedented growth as it enters the Top 500 in 1984, the Top
250 in 1986, and Top 100 in 1987. Meanwhile, in 1983, JFC launched flagship motto of
JFC, known as the Langhap Sarap. The year 1986 signaled the start of branching out in
the international market by putting an international outlet in Taiwan and Brunei
Darussalam. In 1989, the company posted very remarkable sales of P1.3 Billion, while
expansion efforts continued when they acquired 73% share in the Hamburger segment of
the fast food industry in 1991. Jollibee became a public corporation in 1993 with its
initial offering of P9.00 per share.
The expansion of JFC came when they acquired Greenwich Pizza Corporation in
1994 and Delifrance, a popular French patisserie shop, in 1995. This led to the increased
variety of food items served by JFC. In 1996, the Far Eastern Economic Review cited
Jollibee as one of the leading companies in Asia. At the end of the year, more and more
Filipinos abroad trooped down to their Jollibee stores in Guam, the Middle East, and
Hong Kong. It was also in this year that social responsibility to the youth became one of
the primary agendas of the company by launching the MaAGA ang Pasko sa Jollibee and
the TV program Chikiting Patrol: At Home Ako Dito!
In 1997, Jollibee opened another branch in Xiamen, China, while launching
Kaya Mo, Kid! campaign to promote positive values and to help children achieve their
dreams. A year after, the company marked its 300th store in Balagtas, Bulacan, together
with an international branch in Daly City, California. The following years thereafter saw
the P20 Billion sales and recognition of Jollibee as the Most Admired Company in the
Philippines and third overall in Asia.
Jollibee opened its 400th store in Intramuros, Manila, while sales continuously
shoot up to the P27 Billion mark. In the same year, Jollibee opened its 500th store in
Basilan, Isabela Province. At present, Jollibee continues to expand its network of stores,
after acquiring Chowking in 2000, an 85 percent share in Yonghe King in 2004, and Red
Ribbon Bakeshop in 2005.
As of 2004, the company has about 500 Jollibee stores, 232 Greenwich stores,
303 Chowking stores, and 31 Delifrance stores, and expansion is still underway. Table 1
below shows the timetable of selected Jollibee Products sold in the Philippine market
starting from its inception in 1978.
Table 1
Timetable of Selected Jollibee Products from the Years 1978 2005
PRODUCTS
Regular Yum, Yum with Cheese
Spaghetti Special
Chickenjoy, French Fries
Palabok Fiesta
Breakfast Meals
Chunky Chicken Sandwich
Jollytwirl soft sundaes
Coleslaw, Jolly Hotdog, Peach Mango Pie
Pancakes
Fruit-flavored ice cream sundaes
Greenwich Pizzas and Pastas
Delifrance French Pastries, Burger Steak
Amazing Aloha, Chili Wings
Cheezy Bacon Mushroom Burger
Chowking Products, Pepper Crazy Burger,
Shanghai Rolls, Pocket Pies, and Swirly Bitz
Glazed Chicken Rice, Honey Beef Rice,
Chicken Sotanghon Soup, Jolly Meat Pies
Super Meals, Jolly Chicken Tocino
10
approximately 300 stores are now operating in the Philippines. Previously under the
supervision of McGeorge, McDonalds stores in the Philippines are now under the
tutelage of Golden Arches Development Corporation (GADC).
11
GADC absorbed all the resources, obligations, rights, privileges, immunities and all debts
incurred by the subsidiaries. GADC considers these mergers as forms of business
reorganization only. Table 2 shows a list of selected McDonalds products in the
Philippines.
Table 2
Timetable of Selected McDonalds Products from the Years 1981 2005
McDonald's Philippines
Timetable of Selected Products
1981 2004
YEAR
1981
1985
1986
1987
1991
1993
1996
1997
1998
1999
2001
2003
2004
2005
PRODUCTS
Hamburger, Big Mac, Quarter Pounder, Cheeseburger
Milkshakes, French Fries, Apple Pie, Sundaes
and other original McDonald's food items
Breakfast Meals
McSpaghetti
McChicken
Chicken McNuggets
McSaver's Value Meals, Burger McDo
Twister Fries
Happy Meals, Sundae cones for P5.00
McDobols
McFlurry specialty sundae
McShaker Fries, Rice Burger
Taro Pies, Burger McDo Steak
Beef Prosperity Burger, BBQ McDo Burger
Longganisa Burger, Mega Meals, Beef Steak
12
economic recession and the first one to succeed in the economic recovery period;
practically because of their main product: food.
In addition, Bautista described the QSR market as a monopolistic competition
given a few number of players ruling the industry of a vast number of sellers. Examples
of these are Jollibee and McDonalds for the hamburger segment, Chowking for the
Oriental food segment, Goldilocks and Red Ribbon for cakes and pastries, and
Greenwich for the pizza segment.
In terms of the foreign franchises, thirty-five percent of them are fast food
restaurants like McDonalds and Burger King. Why consider fast food restaurants as the
best places to eat? Palma (2001) presented that 5 out of 10 Filipinos considers fast food
chains as destinations for al fresco eating, since the food caters to Filipino taste buds and
the prices are reasonable. Moreover, better service and quality of food contributes to the
increasing number of customers, plus the fact that the increase of shopping malls within
and outside Metro Manila evidenced rapid urbanization in these areas (Cabacungan,
1995).
In addition, Acuna, et al. (2004) also noted that having a big market like this
industry requires other industries to back up their needed resources. Hence, fast food
chains procure local suppliers for beverages, food and dairy products for sale, except for
potatoes for French Fries and imported beef for their hamburgers. Furthermore, they
identified factors such as advertising and promotion, proper pricing, quality of food,
service and facilities, product lines, extensive branch network, and availability of raw
materials that would help these fast food restaurants attain continuous success. In terms
13
of price, any changes that would not agreeable to customers would induce them to buy
the alternatives (Palma and Bernardino, 1999).
Population is also considered one of the factors affecting the growth of the QSR
industry in the country. Economic theories stated that since population is one of the
determinants for consumption (Medina, 2003), then the increase in population will
increase food consumption. Hence, it is expected that the number of food outlets will
increase to meet the desired level of consumption.
Bautista (2002) described the QSR industry as the buyers market due to lowswitching costs and growing number of food outlets. Hence, fluctuations in product
prices would mean losing customers unless valid reasons apply. Moreover, Bautista
pointed out that youth population, proliferation of shopping malls, urban traffic, more
working wives (the increase of women in the labor force, as stated by Garcia, 2002),
increasing demand for alternatives to home cooking, and urbanization of key cities
outside Metro Manila will become the greatest opportunities for industrys growth. This
has been the critical areas in forecasting the future growth of the Quick Service
Restaurants.
Lastly, Bautista identified the strategies to be undertaken in expanding fast food
businesses in the future, as in the case of Jollibee Foods Corporation. She stresses the
need for store expansion, new store concepts, new products and enhancements,
acceleration of promotional activities, identification of cost leadership strategies,
strengthening the Management Information Systems (MIS), and the re-tooling of Human
Resources in order to attain the successful growth plans.
14
Conceptual Framework
The framework of the study delves on the useful role of financial statements
based on the rationale presented by Mejorada (2002). According to Mejorada, financial
statements provide information about the firms profitability, liquidity, and long-term
stability and require the ability of readers to interpret and give meaning to the data while
examining their relationships.
Translated into a diagram, Figure 1 shows the framework for the study. The
analysis of the financial statements requires computing for Profitability ratios, Liquidity
ratios, and Solvency ratios. After a thorough and careful analysis of the financial
statements, the users of the financial statements can make conclusions about the
companys performance and investment decisions on these companies.
Figure 1
Conceptual Framework on the Analysis of Financial Statements
Profitability
Ratios
FINANCIAL
STATEMENTS
Liquidity
Ratios
SOUND
DECSIONS
Solvency
Ratios
15
Operational Framework
The study utilizes the same principles as found in the conceptual framework.
Since the study involves analyzing the financial statements of the two giant fast food
companies. Financial ratios applicable to the industry will be computed after which,
Figure 2
Operational Framework for the Financial Analysis of Jollibee and McDonalds
Liquidity
Ratios
FINANCIAL
STATEMENTS
OF JOLLIBEE &
MCDONALDS
Solvency
Ratios
ISSUES:
WHO IS THE
BEST FAST
FOOD CHAIN IN
THE COUNTRY
IN TERMS OF
FINANCIAL
PERFORMANCE
?
Profitability
Ratios
Du Pont
Analysis
Benchmark
With
US QSR
Balanced
Scorecard
CSR
significant literature will be used to complement the outcome of the computed financial
ratios. These in turn, will be compared with the industry averages to determine whether if
these companies meet the desired target for the industry. In addition, the study will also
employ other issues such as Benchmarking, Du Pont Analysis, Balanced Scorecard and
Corporate Social Responsibility that will affect Jollibee and McDonalds continuous
leadership in the QSR industry of the Philippines.
16
Chapter 3
Methodology
Research Design
The study adopted a comparative analysis (Acuna, et al., 2004) to establish a
comparison among the financial ratios of Jollibee and McDonalds. The financial ratios of
each company were subjected to a confrontation with average financial ratios of the fast
food industry to determine the extent of closeness of the companys ratios with the
benchmark ratio. The discussion on the results of the financial analysis requires the use of
additional information provided by each company.
17
Data collected in the study are the balances of the balance sheet and income
statement accounts. While two analyses can be made: 1) a horizontal analysis of the
financial statements to spot increasing or decreasing trends on the accounts using the year
2000 as the benchmark year (year 2000 = 100) and 2) a vertical analysis of the financial
statements to determine the relationship of the account balances to the total assets, total
liabilities, or net sales, the study provided greater importance on the use of vertical
analysis.
Horizontal analysis is devoted to analyze trends (increase or decrease) of financial
statement item; a vertical analysis ponders on the relationships among components of the
financial statement within a particular period (Plewa and Friedlob, 2002).
Focusing on the vertical analysis provides the opportunity to create common-size
financial statements useful in comparing the company with another company and the
industry averages (Mohamad, 1996). This was due to a limitation of financial analysis
(Atkinson, Kaplan, and Young, 2004) which shows the difficulty of using horizontal
analysis in interpreting trends. The existence of unknown economic, competitive, or
political factors that might affect the organization can explain this drawback.
For the year 2000, some financial ratios were not computed. In as much as the
researcher would like to use the data, that would be impossible because of what happened
to Golden Arches Development Corporation in connection with their merger with wholly
owned subsidiaries. As stated in Note 2 of the companys financial statements for the
year ending December 31, 2002, their merger with wholly owned subsidiaries namely:
Cebu Golden Food Industries, Inc. (Cebu Food); Cebu Golden Food Ventures, Inc. (Cebu
18
Ventures); and EDSA Food Industries, Inc. (EDSA Food) resulted to GADCs takeover
of assets and liabilities of the subsidiaries.
The merger is considered a business reorganization (sic), the Subsidiaries being
wholly owned by GADC. Accordingly, the merger will be accounted for at historical cost
in a manner similar to the pooling of interests method. The financial statements as of
and for the years ended December 31, 2002 and 2001 gives effect to the planned merger
as if it had been consummated on December 31, 2000.
In this case, starting in the year 2001, the financial statements of GADC will be
presented in the same manner as the years 2002 onwards. The disclosures regarding gross
revenues pointed out two sources of income by GADC namely: Sales of company-owned
restaurants, and revenue from franchised and affiliated restaurants. Disclosures on
operating costs and expenses, on the other hand, began presenting the cost of sales of
GADC. This took place when GADC merged with McGeorge Food Industries
(McGeorge), Inc. on November 28, 2002
In the merger of GADC and McGeorge in 2002, the operations of GADC diverted
from the lease and sale or lease of restaurant facilities and equipment of McDonalds
Restaurant Operations to establish, maintain, and operate restaurants, cafes, bars, and
general food catering services, and to engage in the fast food restaurant business under
the McDonalds brand.
More than the financial analyses, current issues will be tackled such as
benchmarking with the U.S. industry averages, the use of the Balanced Scorecard, and
the integration of the Corporate Social Responsibility.
19
Chapter 4
Results and Discussion
20
Because of profitable operations, the company also increased its total dividends paid
annually to stockholders, from P199 Million in 2000 to P444 Million in 2004. Such
increasing trend is also visible the amount of retained earnings of JFC.
On the other hand, GADC suffered a decline in revenues in 2003, but was able to
recoil its total earnings in 2004. As presented in Appendix 4, the company also
experienced a somewhat smooth trend in its operating costs and expenses. In addition, the
income statement shows a decline in net losses of GADC from P641.7 Million in 2000 to
P22.6 Million in 2003. In 2004, the company obtained net income of P343 Million.
However, GADCs huge deficit resulted to no dividend distribution for the years covered.
More than looking at the basic financial statements of Jollibee and McDonalds,
the researcher performed an analysis of these two companies using certain financial ratios
applicable in the fast food industry in the Philippines. Appendices at the end of the paper
show the common-size financial statements, the trends for every ratio discussed and the
Du Pont computations for Return on Equity.
Liquidity ratios
I. Working capital
Table 3
Working capital for JFC and GADC
Ratio
2000
2001
2002
2003
2004
661,327,983
-3,981,407,376
640,773,468
-5,072,840,387
1,312,955,358
-4,836,956,329
957,578,128
-21,465,341
402,737,607
181,711,039
Working Capital
JFC
GADC
21
2000
2001
2002
2003
2004
1.22
0.21
1.20
0.22
1.35
0.21
1.22
0.98
1.07
1.14
Current ratio
JFC
GADC
Table 4 shows the currents ratios for Jollibee Foods Corporation and Golden
Arches Development Corporation. As can be seen, JFC has a current ratio from 1.22 in
22
2000 to 1.07 in 2004. GADC has current ratios lower than JFC from 2000 to 2003.
However, in 2004, GADC ousted JFC in the top spot, with a current ratio of 1.14.
The current ratio of JFC pertains to the reclassification of accounts in relation to a
P850 Million loan applied in 2001 for the construction of a new commissary in
Canlubang, Laguna. It also includes recognition of a P419 Million receivable from an
insurance company in connection with the fire that damaged the ongoing construction of
the commissary in 2002. Lastly, it also includes provisions to improve certain common
services required by various QSR systems. The restructuring, which commenced in 2003,
forms part of the three-year Cost Improvement Plan (CIP) of the company. Despite the
low current ratio for JFC, JFC can still manage all its current obligations.
In contrast, the low current ratio of GADC in 2000 to 2002 pertains to the loan
applied by GADC to an affiliate, McDonalds Restaurants Operators (MRO). This loan
was reclassified as non-current in 2003, following a meeting by GADC and MRO to
capitalize a portion of MROs advances to the company for P3.47 Billion. Despite the
improvement of the current ratio of GADC in 2003 to 2004, unless the capitalization
materializes, GADC has to find ways of managing its existing current obligations.
2000
2001
2002
2003
2004
0.68
0.17
0.63
0.14
0.84
0.15
0.86
0.65
0.78
0.77
Quick ratio
JFC
GADC
23
Quick ratios test the ability of the business to settle current obligations without
placing reliance on inventory since it is the most stringent and difficult test of measuring
financial strength (Kennon, 2006). Table 5 presents the quick ratio for JFC and GADC
for the years 2000 2004. As can be seen, the quick ratio of JFC is the highest in 2003,
when it registered 0.86. It, however, declined in 2004 with a ratio of 0.78. GADC has to
catch up with JFC, having quick ratios as low as 0.14.
JFCs quick ratios are higher than GADC, which means JFC has the greater
capability to manage all their existing obligations without inventory and prepaid
expenses. GADC might have improved in its struggle to come up with cold cash in a span
of hours or days, as evidenced by their increasing quick ratios from 0.14 to 0.77.
However, both companies admit that these quick assets cannot settle all the short-term
obligations. Quick ratios of both companies did not exceed 1.0, a trigger to improve the
management of their quick assets.
24
inventory turnover, it takes GADC to sell one batch of inventory in as much as 34 days in
2002.
Table 6
Inventory turnover and average sale period for JFC and GADC
Ratio
2000
2001
2002
2003
2004
15.73
15.58
17.23
20.58
21.27
N/A
10.29
7.80
8.66
8.20
23.20
23.42
21.18
17.73
17.16
N/A
35.45
46.77
42.14
44.54
Inventory turnover
JFC
GADC
Average sale period
JFC
GADC
The increasing number of distribution outlets and its three major commissaries
can explain Jollibees high turnover. Jollibee has been operating for more than 25 years
in approximately 500 branches in the Philippines and in other countries like Brunei,
Indonesia, Taiwan, Hong Kong, China, and in the United States. With the desire to
become the dominant food service industry in the country, the JFC acquired Greenwich,
Delifrance, Chowking, Yonghe King, and Red Ribbon. This expanded the variety of
products and distribution channels by JFC.
In addition, the company operates three commissaries in the country, one in Pasig
City, the other in Cebu City, and the new commissary in Canlubang, Laguna. These
further intensified the distribution system of the company to its stores. Moreover,
Jollibees revenue shoots up because of its strong marketing programs emanating from
the Langhap sarap motto.
25
GADC invests on their marketing programs as well, ranging from its first, drivethru facilities, the McSavers value meals and Happy Meals, and the introduction and relaunching of various McDonalds products. Although these pave way for the increased
popularity of McDonalds products, the company has to catch up Jollibee in generating
revenues from its products. Even McDonalds has more than 300 outlets in the country, it
still has to diversify its line of products and intensify its marketing programs in order to
attract more customers and create more sales of its popular items.
GADCs data for 2000 is not available since the cost of sales is not traceable in
the income statement. This was due to the difference in the type of operations GADC
assumed when GADC merged with McGeorge Food Industries in 2002 and took over the
restaurant operations of McDonalds in the country. Such takeover modified the income
statement presentation starting in 2001.
Solvency ratios
V. Debt to equity ratio
Table 7
Debt to equity ratio for JFC and GADC
Ratio
2000
2001
2002
2003
2004
0.51
0.70
0.64
0.77
0.81
(4.89)
(3.57)
(3.36)
(3.06)
(3.61)
The debt to equity ratio represents the amount of assets contributed by creditors
for every peso of assets supplied by the stockholders. As presented in Table 7, the debt to
equity ratio for JFC ranges from 0.51 to a high 0.81, while GADC has a negative D/E
26
ratio from 3.06 to a low 4.89. In relation to its current ratios, these results for Jollibee
relate to financing of the construction of a larger commissary through a loan applied to
Citibank, N.A. in 2001. The stockholders equity of JFC is larger because of the
continuous influx of new investors to the company way back in 1993 when JFC became
listed in the Philippine Stock Exchange. This was further enhanced by the retained
earnings reverted to the company reserved for future expansion and development
programs.
GADC is a corporation not listed in the Philippine Stock Exchange, and as such,
has a limited opportunity to increase its capital. In 2004, only 147,000 shares of stock
were issued out of its 150,000 authorized shares. McDonalds continue to suffer losses,
resulting to a colossal deficit carried from prior years operations, which were toppled
down by huge debt. GADC still is optimistic of recovering the deficit, as it marked an
operating net income in 2004.
2000
2001
2002
2003
2004
JFC
0.34
0.41
0.38
0.43
0.44
GADC
1.26
1.39
1.42
1.48
1.38
Debt ratio
shown in the table, GADCs total liabilities finance the companys total assets ranging
from 126% to 148%. This outcome was due to the advances from affiliates, which forms
the biggest bulk of their total liabilities. As of 2004, many of these advances are still
unsettled. Although it cannot be said that JFC is a safer investment, JFCs debt ratios
outperform GADC in terms of managing their outstanding obligations, with only 44% of
the total assets financed by debt.
2000
2001
2002
2003
2004
N/A
9.75
15.81
22.61
38.48
(0.22)
(1.74)
(1.75)
1.13
8.91
Table 9 shows the times interest earned for JFC and GADC for years 2000
2004. As presented in the table, JFC has increasing times interest earned from 9.75 to
38.48 times, while GADC declined to -1.75 in 2002. However, a sudden improvement
occurred in 2003 up to 2004, but such did not able to catch up with a high ratio for JFC.
JFCs escalating ratio is a result of the higher increase in sales over its cost of sales and
operating expenses, leading to a higher income before interest and taxes. Furthermore, it
28
can be attributed to the decrease in the outstanding liability of JFC to Citibank, N.A. for
the P850 Million loan applied in 2001, due to principal and interest payments.
GADCs times interest earned ratios resulted from the continuous losses incurred
by the company in closing down some of their stores. In addition, the negative income
before interest and taxes from 2000 to 2002 pertained to losses in writing off investments
and receivables, and the recognition of impairment losses in property, plant and
equipment amounting to P140.5 Million in 2002. However, an improvement in operations
began in 2003, as there was a decline in other expenses incurred. The large chunk of
interest expense for GADC pertains to their license agreement with McDonalds, the
conversion of P78 Million of the advances by McDonalds Restaurant Operators into an
interest-bearing loan, and the lease of warehouse and some restaurant locations from
McDonalds Philippines Realty Corporation.
2000
2001
2002
2003
2004
0.85
0.48
0.95
1.15
1.54
(37,527.28)
(34,370.52)
(1,578.42)
(153.50)
2,333.78
Earnings per share represent the share of each common stock in the net income of
the company. The higher the earnings per share means the greater share the common
stock has in the companys profit after tax and dividends paid to preferred stockholders
29
(Louderback, et al., 2000). Table 10 displays the EPS output for the financial statements
of JFC and GADC.
As can be seen, JFC has EPS ratios from 0.85 in 2000 to 1.54 in 2004. Because
JFC has stockholders who own more than 1 Billion authorized and issued shares, the
greater the denominator JFC has in determining its EPS. The stock of JFC is attractive
because of its greater earning capability than GADC due to profitable operations. A
GADC stock can share in the companys losses for as high as P37,527 per share in 2001.
Profitable operations for GADC in 2004 would result to a greater EPS of 2,334.
However, investing in a share of GADC stock would be risky for investors whether they
will suffer great losses or generate huge earnings.
IX. Dividends per share, Dividend yield per share of common stock, and Dividend
payout ratios
Table 11
Dividends per share, Dividend yield per share of common stock, and Dividend payout ratio for JFC and
GADC
Ratio
2000
2001
2002
2003
2004
0.23
N/A
0.26
N/A
0.33
N/A
0.43
N/A
0.02
N/A
0.02
N/A
0.01
N/A
0.02
N/A
0.02
N/A
0.23
N/A
0.47
N/A
0.28
N/A
0.29
N/A
0.28
N/A
0.20
N/A
30
Garrison and Noreen (2000) defines dividend yield per share of common stock as
the ratio that shows the return in terms of cash dividends provided by a stock. This ratio
is determined since investors cannot get the EPS, investors are entitled to receive
dividends. Dividend payout ratio, on the other hand, is an index that shows whether the
company pays out its earnings or reinvests it for future dividends (Louderback, et al.,
2000). Table 11 summarizes the computed dividends per share, dividend yield per share
of common stock, and dividend payout ratios for JFC and GADC.
As shown in the table 11, GADC is devoid of all the values of these three ratios.
The main reason is that the company did not paid dividends to its stockholders. To
reiterate, GADC suffered a deficit for the years covered, making the company unable to
distribute dividends. The companys net income in 2004 does not suffice dividend
payments as well.
On the other hand, JFCs stock yields an average of 0.18 on dividends. In the past
five years, the company distributes an average of 31% of total earnings, with the
remainder reinvested for future dividends.
2000
2001
2002
2003
2004
11.54
26.11
18.98
15.92
16.25
N/A
N/A
N/A
N/A
N/A
Price-earnings ratio
JFC
GADC
31
Price-earnings ratio measures the amount investors are willing to pay to purchase
a dollar of earnings (Louderback, et al., 2000). This is also used as a gauge of future
earning power of the firm (Gibson, 1997) since high P/E ratios would mean higher
growth opportunities. Table 12 shows the price-earnings ratio of JFC and GADC for the
years 2000 2004.
As can be seen in the table, JFCs price-earnings ratio escalated to a high 26.11 in
2001. However, the growth in the market price of JFC is slower than the growth in its
earnings per share. Despite this occurrence, JFC still expects high growth opportunities.
On the other hand, GADC expects to recover from its losses and obtain a positive EPS.
However, since GADC is not listed in the PSE, market price of its stock is unavailable;
thus, computing P/E ratio is not possible at this time. Growth may be difficult to attain
because of limited capitalization.
2000
2001
2002
2003
2004
5.80
5.58
6.53
6.97
8.19
(61,788.82)
(107,471.55)
(22,369.08)
(13,087.25)
(10,753.47)
32
As can be seen in Table 13, JFC improved from 5.80 in 2001 to 8.19 in 2004.
Because of profitable operations, the stockholders equity because of the increase in
retained earnings. This progress kept total liabilities form a minority in the enterprises
total assets. The ratio means that for Jollibee, assuming the business decides to liquidate,
the common stockholders are entitled to receive P8.19 worth of net assets after all assets
are sold and liabilities are paid off in 2004. Such scenario may be different for GADC,
whose total common stockholders equity became negative due to the continuous deficit
from 2000 2004. GADCs deficit amounted to P1.11 Billion in 2000 increased to
P2.073 Billion in 2003. Net income in 2004 of P343.2 Million decreased the deficit to
P1.729 Billion. As of now, the stockholders of GADC could not receive something if the
company liquidates.
33
from 2001 to 2003, but had a positive ROA of 0.08 in 2004. Return on common
stockholders equity for GADC results from both net losses and negative stockholders
equity in 2001 to 2003. However, in 2004, the company generated net income and a
negative stockholders equity because of the continuous deficit, making the ratio
negative. It is also noteworthy that return on assets did not exceed return on equity for
JFC. This could mean the greater capability of stockholders contribution to generate
revenues for the company.
Table 14
Return on total assets and Return on common stockholders equity for JFC and GADC
Ratio
2000
2001
2002
2003
2004
0.10
0.05
0.09
0.09
0.11
(0.26)
(0.16)
(0.03)
(0.01)
0.08
0.15
0.08
0.16
0.17
0.20
GADC
0.87
0.41
0.07
0.01
(0.20)
Discussion
The discussion part of this paper is a financial review on other information that
may be relevant in the analysis of the financial ratios of JFC and GADC.
34
the board expansion of the Quick Service Restaurants of the company with approximately
more than 100 stores opened each year. At the same time, the cost of sales also increased
from P15.5 Billion to P21.2 Billion; the same trend was seen also in the operating
expenses of JFC due the general rise of the costs of doing business, salaries and wages,
raw materials, fuel, and marketing and promotions. In addition, starting in year 2001, the
company began recognizing provisions for the impairment of owned and leased nonoperating properties as part of the rationalizing operations with the changing market
conditions.
Interest expense varies for the years 2000 2004. In 2002, the company decided
to covert the P850 Million loan applied in 2001 from a fixed rate of 11.91% to floating
rates because going fixed rates requires certain restrictions such as in selling, leasing or
transferring properties to other parties, the consolidation with other corporations,
declaring dividends greater than the net income, and the maintenance of financial ratios.
Hence, the interest rate of the loan became 7.87% in 2002, 7.75% in 2003, and 10.21% in
2004.
The increasing trend of equity in net losses in joint venture pertains to increasing
share of the company in the net loss of the joint venture of Baker Fresh Foods
Philippines, Inc. and Delifrance Asia, Ltd. from 1.6 Million in 2001 to 23.1 Million in
2004. Moreover, in 2004, the company acquired 85% of the issued capital shares of
Belmont Enterprises Ventures Ltd., the holding company of Yonghe King Chain of fast
food restaurants in China. Such acquisition resulted in the recognition of goodwill
amounting to P994 Million. Amortization of goodwill starting in 2004 amounted to 37.3
Million.
35
Total assets increased from P9.75 Billion in 2001 to P15.4 Billion in 2004, the
biggest chunk of the assets are cash and cash equivalents; property, plant and equipment;
and refundable deposits and other non-current assets. The expansion of the network of
fast food stores including the establishment of the new P1.5 Billion commissary in
Canlubang, Laguna, triggered the increase in the fixed assets, while other non-current
assets include refundable deposits and non-operating assets from closed shops subject to
impairment.
Notwithstanding the increase in current liabilities from P3.2 Billion in 2001 to
P5.9 Billion in 2004, the company was able to maintain its liquidity position, with a
current ratio of 1.20 in 2004. Non-current liabilities increased in connection with the
P850 Million loan. The stockholders equity, on the other hand, continues to increase
because of the fluctuating retained earnings, albeit the increase in dividends distributed to
stockholders from P229.8 Million in 2001 to P444.1 Million in 2004.
The company is continuously seeking to lead the QSR industry in the Philippines
in the following years through exponential growth in operations and the continuous
expansion of market coverage. Superior menu line-up, creative promotions and
marketing, and efficient manufacturing and logistics facilities to support the expanding
operations will help materialize this endeavor. Moreover, Jollibee Foods Corporation
continues to adhere to the strict, high standards of F.S.C. (Food, Service, and Cleanliness)
to support the mission of bringing happiness to everyone.
36
receivables, the largest portion pertained to the lease of land by Golden Arches Realty
Corporation, with unpaid rentals of P139.7 Million as of 2004, with the refundable
security deposits from affiliated restaurants amounting to P38.8 Million as of 2004.
GADCs Liabilities mainly come from the advances of McDonalds Restaurant
Operators (MRO), with the amount increased to P4.8 Billion in 2001, of which P78
Million assigned as payment for MROs subscription of shares of stock of GADC was
approved in 2002 by the SEC. In 2003, the company reclassified the loan as non-current
liability.
Because of the assignment, the capital stock increased, although the stockholders
equity continues to experience a deficit, because of continuous losses. In addition, the
merger of GADC and McGeorge Food Industries, Inc. in 2002 resulted to GADCs
absorption of losses and capital deficiency of McGeorge.
Revenue from company-owned restaurants comprises an average of 95% for the
years 2001 2004, while Cost of Sales average 42% of the total revenues of GADC.
37
Major expenses of the company come from the general increase in operating costs of the
company, including the general and administrative expenses.
In spite of the underdog status of GADC in the QSR industry behind its
competitor, GADC hopes to recover its deficit and continues to sprawl as the fastest
growing fast food chain in the country. This will be supplemented with the offering of
attractive menu items, locating restaurants in areas with possible growth potential,
improving the taste and appeal of its product lines, enhancing its image through
promotions, intensive marketing, and franchising strategies (Acuna, et al., 2004).
Up to now, McDonalds in the Philippines continue to live by the values of
Q.C.S.V (Quality, Service, Cleanliness, and Value) implemented in McDonalds outlets
worldwide to achieve customer satisfaction and further boost its sales to eventually
surpass the competitors feat.
Du Pont Analysis
The use of the Du Pont Model in determining Return on Equity (ROE) has
brought about the need to measure the true financial health of the firm by identifying
the drivers that create value for the firm. The Du Pont model seeks to understand factors
that influence the Return on Equity of the firm using basic accounting relationships
(Firer, 1999). Return on equity, in this case, is computed as the product of Profit Margin,
Asset Turnover, and Equity Multiplier (Leverage).
Table 15 shows the summary of Return on Equity computations for JFC and
GADC using the Du Pont Model for the years 2000 2004. As can be seen, GADC has
higher Returns on Equity than JFC for 2000 and 2001 with 0.607 and 0.320, respectively.
38
Apparently, the analysis of the financial statements show that GADC has negative net
profit margin because of continuous losses, and negative leverage because of the
continuous deficit experienced by the company. Appendix 24 shows the computations for
Return on Equity for JFC and GADC using the model. It can be said that the results for
GADC are quite misleading because negative proxies will lead to a positive product,
making users believe that the returns are higher for GADC.
Table 15
Summary of Return on Equity using Du Pont Model for JFC and GADC for the years 2000 2004
Return on Equity
Year
JFC
GADC
2000
0.146
0.607
2001
0.086
0.320
2002
0.144
0.070
2003
0.164
0.012
2004
0.189
(0.217)
JFC, on the other hand, may have prudent returns but because the company
continues to generate net income and manages its assets well, then the ROE computation
using Du Pont model should be favorable for Jollibee.
Benchmarking
To determine whether JFC and GADCs financial performance are in accordance
with the industry standards, the researcher determined the average financial ratios of JFC
and GADC for the years 2000 2004. The average ratios were compared with the
industry averages set in the United States for the year 2005 found in Reuters.com
website. The study used the US Industry Averages data since it is in the United States
39
that originated the spur of fast food chains and the birth of the Quick Service Restaurants
Industry.
Table 16 presents the comparison of the average financial ratios for JFC and
GADC together with the US Industry Averages. As can be seen, the current ratio and
quick ratio for JFC exceeded the US Industry Average of 1.01 and 0.64, respectively;
implying the ability of JFC to manage its current assets and quick assets. GADC has yet
to outperform the industry standards for these ratios.
Table 16
Comparison of Average Financial Ratios for JFC and GADC with the US Industry Averages
Ratio
Current ratio
Quick ratio
Inventory turnover
Average sale period
Debt to equity ratio
Debt ratio
Price-earnings ratio
Return on total assets
Return on common SHE
Gross margin percentage**
Operating margin percentage**
Net profit margin percentage**
JFC
2001-2004
1.01
0.76
18.08
20.54
0.69
0.40
17.76
0.09
0.15
0.19
0.06
0.05
US Industry
Averages*
0.90
0.60
52.50
6.95
0.50
0.33
26.6
0.1
0.2
0.28
0.13
0.12
GADC
2001-2004
0.64
0.43
8.74
42.22
-3.70
1.39
N/A
-0.08
0.23
0.58
0.04
-0.62
In terms of inventory turnover and average sale period, both JFC and GADC are
still struggling to sell its inventory at a faster pace. However, JFC sells their inventory
faster than GADC, having placed orders 18.08 times and sold each order within 20.54
days, compared with GADC, who placed orders at an average of 8.74 times and sold
them in 42.2 days. ROA and Return on Equity of JFC is also better than GADC, although
40
both companies have to meet the US Industry averages of 0.10 and 0.20, respectively.
The same goes for gross margin percentage, operating margin percentage, and net profit
margin percentage for JFC. GADC, on the other hand, while maintaining a high 0.58
gross margin percentage, suffered losses that made the other two ratios negative.
The United States has the longest history of fast food consumption in the world.
From its inception in 1921 when the first fast food, White Castle, spawned, there are
about countless fast food brands introduced in American markets. It is also in the United
States that foreign fast food chains adopted technology, management practices, and other
operational aspects. In 2000, consumer spending on fast food restaurants amounted to
$110 Billion, far from $6 Billion in 1970. The National Restaurant Association in
America forecasts that in 2006, consumer spending on fast food restaurants will increase
to P142 Billion (Fast Food, 2006).
In line with this, it can be inferred that such phenomenon might affect the
performance of fast food companies in terms of its financial ratios. This phenomenon can
also be explained by the large number of fast food companies situated in the country,
leading to more food choices and more avenues towards generating income.
Based on the analysis, JFC performs better than GADC in terms of the financial
ratios; but still, it has to work its way toward meeting the industry requirements, although
both companies are trendsetters in the Quick Service Restaurants Industry in the
Philippines.
Proposed Balanced Scorecard for the Fast food Industry in the Philippines
The use of the balanced scorecard is nowadays a more useful tool in meeting the
corporate objectives of the organization. Other than its corporate objective, the balanced
41
scorecard is composed of four important perspectives that every organization should look
into: the Financial Perspective, the Customer Perspective, the Internal Process
Perspective, and the Internal Learning and Growth Perspective (Kaplan and Norton,
1996). Table 17 presents the proposed balanced scorecard for the Quick Service (Fast
Food) Restaurants in the Philippines after the financial analysis of Jollibee and
McDonalds.
Table 17
Proposed Balanced Scorecard for the Fast Food Restaurant in the Philippines
Corporate Objective: To become the leader in the QSR industry of the Philippines
Strategic Objectives
Financial (MissionLevel) Perspective
Specific Objectives
Become the largest fast food
chain in terms of number
Become the most popular QSR
brand in the country
Improve revenue growth
Improve returns
Customer Perspective
Internal Process
Perspective
Measures
Number of outlets (per city, per
province, per region)
Number of food segments, Number of
products offered within the segment
Total revenues, Gross profit margin,
Operating profit margin, and net profit
margin
Return on Total Assets, Return on
Equity, and Return on Investment
42
As can be seen in the table, in terms of financial perspective, fast food companies
continue to struggle to lead fast food industry by its presence in various places in the
Philippines. In terms of the number of outlets in the system, Jollibee has a system-wide
network of more than 900 stores, distributed strategically throughout the entire country.
On the other hand, McDonalds has kept to its international standard of business
organizations, carrying only the same brand for 25 years in the Philippines. Despite its
successful marketing programs, the company has to recover from its huge deficit and
should maintain profitable operations, which started in 2004.
In terms of the customer perspective, Acuna, et al. (2004) assumed a combined
market share of 80% for Jollibee and McDonalds, leaving the rest of the pack behind
including Burger King, Wendys, Tropical Hut, and a host of others fast food stores.
Jollibees triumphant success in getting the largest share in the market is associated with
the variety of products being offered by the company, hence, increasing customer
satisfaction.
Trying to get a large share of the market requires the company to understand the
needs of its customers and to offer products and services that would cater to their needs.
In addition, they should work out the delivery process to reduce errors in effectively
serving the customers. Furthermore, fast food companies should invest in staff training to
harness the potentials of their employees and to increase employee satisfaction.
Kaplan and Norton (1996) argue that the balanced scorecard goes beyond
traditional financial measures since business units also strive to create value for current
and future customers. In addition, it also addresses the redefining of internal strengths
43
and investing on people, systems, and processes to ensure a favorable performance for
the organization.
Jollibee
In 1995, Aga Muhlach, a favorite endorser of Jollibee products, approached
Jollibee and proposed a nationwide toy drive for kids on Christmas. This idea was coined
as Ma-AGA ang Pasko sa Jollibee. This campaign encourages young kids and adults to
donate their old toys to children housed in different shelters in the Philippines. Because
of its huge success in the first year, JFC decided to continue the nationwide toy drive and
in 1999, JFC saw the addition of books in the program, and the increase in the number of
charitable institution beneficiaries to more than 100. In 2005, JFC is celebrating the
projects 11th anniversary, with more than 400,000 children blessed with toys and books
given during the Christmas season.
44
45
thinking abilities of children of promoting peace to the country. These projects lauded
Jollibee with a Grand Anvil Award in 2000 as the most outstanding community service
program by the Public Relations Society of the Philippines (PRSP) Anvil Awards.
Jollibee also took a bolder step in 2000 when they considered Habitat for
Humanity a beneficiary for its 4th Quarter 2000 Mission. The company launched a project
entitled Pabahay Pambuhay through the JFC Group for Habitat. This project aims to
raise funds for construction materials and to encourage employees, management, and
suppliers of JFC to spend some of their time building homes for the poor families in the
country. Since then, the project has helped different Habitat for Humanity projects in
various sites in the Philippines. This project motivated the company to make a long-term
commitment of not just building homes, but also hoping for a better life for its
beneficiary families.
Jollibee tied up with the Department of Social Welfare and Development and
Kabisig ng Kalahi, to promote a Supplemental-feeding program entitled Nurture the
Future. This program, which was launched in 2001, aims to feed hundreds of
undernourished schoolchildren. This is done through serving one nutritious meal daily
with vegetables and other ingredients to the school children. The organization taught
mothers of these schoolchildren personal hygiene, child spacing, family life and a host of
other lessons. This project is in line to decrease the percentage of malnutrition among
schoolchildren throughout the country.
Recently, Jollibee supported the Give-A-Life Charity Foundation. Through the
financial assistance of the employees of the company, Jollibee assisted indigent patients
46
confined at various hospitals. The company also provided life-saving medical devices and
medicines to support these patients.
McDonalds Philippines
Since McDonalds believes in the capabilities of the young children, the company
launched in 1993 the MAKABATA program, designed to award the selected child
achievers in various areas of achievement. This project was the first for the Quick Service
Restaurants Industry.
In 1996, McDonalds launched Ronald McDonalds House Charities in the
Philippines to provide housing facilities to street children throughout the entire country.
McDonalds Philippines also established schoolhouses to different poor communities to
serve as day care centers fully staffed and furnished with meals and snacks for its
students. They also installed a playground for the enjoyment of the students as well as
promoting good health through physical activities.
The company also launched the Tuloy sa Don Bosco program. This program
aims to provide assistance to the development programs of the Don Bosco Technical
Institute in its desire to train young boys with the various vocational courses such as
welding, mechanics and machine shops and to provide employment opportunities for
these young men upon graduation in the courses. While training, the Society of Don
Bosco provides shelter to these boys; the boys, on the other hand, may have the option to
live in their families. This entails the program to support the daily expenses of the Society
in helping these boys.
McDonalds also provides nutritional information of its products to its customers
and to promote workforce diversity and minority owned franchises for its outlets.
47
With this at hand, the study proposes a CSR scorecard for the QSR Industry
which entails resolving of issues affecting the society and the environment. Table 18
shows the proposed scorecard for this purpose after analyzing the financial statements for
Jollibee and McDonalds.
As can be seen, the scorecard delves more on the usage of resources, waste
disposal, health and nutrition, and support to charitable programs. QSR restaurants should
48
undertake energy conservation activities since most stores are open for hours. QSR
restaurants must also recognize its commitment to environment and society by finding
alternative methods of converting used cooking oil as sources of alternative renewable
energy. Moreover, they should also practice cultural and environmental considerations in
procuring raw materials for its products such as meats, fish and agricultural produce, and
in the waste disposal practices to reduce the amount of kitchen scraps, plastics, and styro
materials.
Restaurants must also promote health and wellness by providing nutritional
information in their products and offering balanced menus to reduce the adverse effects
of fast food consumption that leads to obesity. Fast food restaurants must also continue to
support local communities and undertake charitable programs to improve the lives of the
marginalized sectors of the society. While the ultimate goal of Jollibee and McDonalds
is to dominate the QSR market, it should not compromise its responsibility to the
environment and the society by considering these measures of social commitment.
49
Chapter 5
Conclusion and Recommendation
Since food is one of the ultimate needs of every person, then food retailers will
continue to grow and succeed in nourishing the needs of its consumers. The Quick
Service Restaurants (QSR) Industry is one of the food retailers who will continue to
flourish as the major food providers for every customer, especially in the Philippines,
where majority of the total expenditures of every Filipino goes to food.
The success of every Quick Service (fast food) restaurant cannot solely be
determined by the number of its customers, the number of its mascot endorsers, or the
variety of menu items offered. Their performance is measured by analyzing their
financial statements to see how they manage their resources and obligations to generate
profitable earnings for the business.
Jollibee and McDonalds are the archrivals in the Philippine fast food industry.
With more than 25 years of existence, these companies have proven its dominance in
introducing new product lines and programs to attract a significant market for their
products.
However, in the analysis of the financial statements of these two companies, it is
no doubt that financial performance measures favored Jollibee over McDonalds (or the
GADC). More than the nationalistic aspect since Jollibee is of a Filipino origin, its strong
marketing programs and networks with other fast food chains like Greenwich, Delifrance,
Chowking, Yonghe King, and its newest member, Red Ribbon, enabled the company to
soar higher in terms of profits and increasing resources, while managing their obligations.
50
Furthermore, the expansion of facilities and the introduction and re-introduction of their
brands has enabled consumers to appreciate their products.
Jollibee succeeded because of its impressive financial ratios. However, the
company should not rest in their laurels. Further improvements in its operations should be
considered together with their settlement of obligations.
Conversely, McDonalds have to continue its struggle of ousting Jollibee in its
current position in the market. However, the dominance of Jollibee in the market and the
management of expenses resulted to continuous losses and deficit. Furthermore, the
companys obligations are valued at huge amounts and are still unpaid. This results to
dismal financial ratios that would severely affect the company in terms of its operating
capabilities. GADC, therefore, has to improve in its financial performance, to negotiate
its obligations, and to continue intensifying its marketing programs to finally recover and
successfully compete with Jollibee.
If allowed, GADC may consider offering their stocks to the public. This may
entail opportunities for greater capitalization and thus, be able to recover their deficit.
These should be complemented with profitable operations.
Other than Jollibee and McDonalds, the QSR industry in the Philippines, in
general, is still challenged to improve its standing despite its stability. Fast food
companies should continue to strive for excellence in gaining customer satisfaction
leading to greater profits. They should also manage its resources and obligations to their
suppliers and creditors, as well as continuing their obligation to serve the community and
the society where these companies benefit from.
51
Having analyzed the financial statements of Jollibee and McDonalds, the study
enumerates the following recommendations.
1. Perform an industry analysis of the QSR industry in the Philippines. The Hotel
and Restaurants Association of the Philippines cannot perform the industry
analysis because fast food companies do not furnish data to the association
anymore. It is hoped that the group will be more persistent to the procurement of
data for all companies covered by the industry to come up with relevant
information that can be useful in performing studies connected with the industry.
2. Future studies should also include the computation of EVA . Economic value
added was not performed in the study due to lack of data. Should future
researchers be given more time to do financial analysis studies, they should also
place importance in the inclusion of Economic Value Added in their analysis.
3. Perform an analysis of measuring business performance through the balanced
scorecard and the CSR scorecard. Although this study presented the proposed
balanced scorecard and CSR scorecard for the QSR industry in the Philippines,
there might be some other items that should form part of the scorecards to be
explored in future research. In addition, future studies should also delve on the
actual use of these scorecards for performance measurement of QSR companies.
4. Consider other financial ratios that may be useful in the analysis of financial
statements. The research may not have covered all financial ratios that maybe
relevant in the evaluation of the companies financial performance. Hence, ratios
such as cash ratio, cash flow liquidity ratios, and a host of others should also be
evaluated.
52
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http://en.wikipedia.org/wiki/Fast_food.
Firer, C. (1999). Driving financial performance through the Du Pont identity: A strategic
use of financial analysis. Financial Practice and Education, 9 (1), 34-45.
Garcia, L. (2002). Jollibee: The taste that conquered the nation. Unpublished professorial
lecture. Manila, Philippines: De La Salle University.
Garrison, R., & Noreen, E. (2000). Managerial Accounting. Singapore: Irwin McGrawHill.
APPENDICES
Appendix 1
Balance Sheet of Jollibee Foods Corporation for the years 2000 - 2004
JOLLIBEE FOODS CORPORATION
Balance Sheets
2004
2003
2002
2001
2000
ASSETS
Current assets
Cash and cash equivalents
Short-term investments
3,001,990,853
2,788,514,243
2,297,887,999
1,157,712,953
1,217,517,358
281,596,838
1,276,900,695
960,440,878
864,927,511
860,042,210
838,548,511
1,109,461,890
880,984,892
818,342,097
1,088,900,064
897,672,922
591,134,202
693,081,357
1,083,674,218
754,592,451
717,931,192
6,261,084,478
5,323,021,370
5,064,831,825
3,861,247,678
3,671,669,983
68,922,242
63,812,052
5,694,000
AND
121,665,782
123,475,355
160,493,217
49,994,029
3,350,616
6,307,689,197
5,782,210,909
4,887,341,447
4,598,220,498
3,537,787,547
686,211,288
623,380,627
165,988,526
213,403,953
90,496,996
1,942,374,692
1,008,958,554
928,109,074
1,028,093,980
1,588,767,104
15,387,947,679
12,924,858,867
11,206,764,089
9,750,960,138
8,897,766,246
4,409,666,753
3,688,339,652
3,021,513,101
2,574,587,566
2,539,288,073
EQUITY
Liabilities
Accounts payable and accrued expenses
Current portion of long-term debt
226,666,667
226,666,667
226,666,667
113,333,333
656,195,285
17,000,000
5,500,000
565,818,166
433,436,923
498,196,699
532,553,311
471,053,927
5,858,346,871
4,365,443,242
3,751,876,467
3,220,474,210
3,010,342,000
Long-term debt
56,666,666
283,333,333
510,000,000
736,666,667
63,594,910
90,433,000
20,000,000
779,491,489
746,498,940
24,633,275
57,827,369
20,604,180
19,126,686
6,782,733,211
5,543,535,884
4,302,480,647
3,976,267,563
3,010,342,000
Minority Interests
238,801,012
179,409,964
179,647,405
99,007,866
8,822,821
1,014,394,851
Stockholder's equity
Capital Stock, P1 par value
1,022,158,363
1,032,928,362
1,030,081,688
1,017,238,784
Subscription receivables
(18,155,444)
(72,351,160)
(97,303,721)
1,710,781,686
1,833,141,842
1,788,889,996
1,656,967,805
1,640,025,313
144,291,625
207,736,533
190,492,509
85,196,487
(26,022,885)
Retained earnings
5,947,990,508
4,811,437,711
4,386,731,055
3,620,244,231
3,540,823,753
Total
8,807,066,738
7,812,893,288
7,298,891,527
6,379,647,307
6,169,221,032
440,653,282
610,980,269
574,255,490
703,962,598
290,619,607
8,366,413,456
7,201,913,019
6,724,636,037
5,675,684,709
5,878,601,425
Translation adjustments
15,387,947,679
12,924,858,867
11,206,764,089
9,750,960,138
8,897,766,246
Appendix 2
Balance Sheet of Golden Arches Development Corporation for the years 2000 2004
GOLDEN ARCHES DEVELOPMENT CORPORATION
Balance Sheets
2004
2003
2002
2001
2000
ASSETS
Current assets
Cash and cash equivalents
691,249,702
425,545,315
516,331,989
534,334,399
2,169,246
300,969,948
323,465,574
367,960,248
404,357,013
851,095,523
Inventories
348,059,538
267,252,192
269,056,129
390,255,466
138,263,369
135,869,302
106,577,541
95,061,069
77,356,585
49,422,868
1,476,148,490
1,122,840,622
1,248,409,435
1,406,303,463
1,040,951,006
12,764,583
22,318,542
36,978,542
9,250,000
112,738,431
104,375,390
92,744,182
118,475,936
88,471,418
1,746,636,492
1,961,589,395
2,205,591,711
2,428,970,650
2,589,719,641
140,090,880
27,166,792
634,280,211
731,387,128
755,283,892
761,013,864
396,268,805
TOTAL ASSETS
LIABILITIES
AND
4,122,659,087
3,969,677,869
4,339,007,762
4,724,013,913
4,115,410,870
161,000,000
1,918,500,000
EQUITY
Liabilities
Short-term loans
Accounts payable and accrued expenses
Advances from a stockholder - current
Payable to affiliates
880,634,754
785,331,564
916,283,069
927,613,309
4,735,032,611
413,802,697
358,974,399
422,611,617
5,306,782,976
2,837,165,276
133,333,333
66,666,667
11,438,467
17,080,898
1,294,437,451
1,144,305,963
6,085,365,764
6,479,143,850
133,359,773
5,022,358,382
Long-term debt
175,091,101
169,055,652
4,140,770,111
4,492,332,611
57,431,435
57,431,435
57,431,435
57,431,436
57,431,436
Guaranty deposits
36,764,153
31,686,058
31,594,210
23,992,620
24,413,084
1,117,943
1,209,537
1,130,156
5,704,494,251
5,894,811,719
6,175,509,352
6,561,777,443
5,171,999,725
147,100,000
147,100,000
147,100,000
17,100,000
17,100,000
849,970
849,970
849,970
31,986,653
(1,729,785,134)
(2,073,083,820)
(1,984,451,560)
(1,854,863,530)
(1,105,675,508)
(1,581,835,164)
(1,925,133,850)
(1,836,501,590)
(1,837,763,530)
(1,056,588,855)
Accrued rent
Advances from a stockholder
66,666,667
4,122,659,087
3,969,677,869
4,339,007,762
4,724,013,913
4,115,410,870
Appendix 3
Income Statement for Jollibee Foods Corporation for the years 2000 - 2004
JOLLIBEE FOODS CORPORATION
Comparative Income Statement and Reconciliation
2004
Revenues:
Net sales
Royalties, frachise fees
and other revenues
Gross Revenues
2003
24,325,440,617
1,902,221,504
26,227,662,121
21,170,217,720
2002
19,970,375,920
18,774,292,493
2001
P
17,446,126,352
2000
P
14,474,091,714
1,689,968,217
1,485,523,248
1,320,533,439
1,139,523,116
21,660,344,137
20,259,815,741
18,766,659,791
15,613,614,830
17,487,885,289
16,435,280,247
15,480,178,021
12,367,070,829
Gross Profit
5,057,444,401
4,172,458,848
3,824,535,494
3,286,481,770
3,246,544,001
3,255,518,125
2,976,354,986
2,457,742,884
2,570,295,449
2,245,789,430
1,801,926,276
1,196,103,862
1,366,792,610
716,186,321
1,000,754,571
164,875,775
88,267,343
18,638,639
46,941,947
127,366,224
1,966,802,051
1,284,371,205
1,385,431,249
763,128,268
1,128,120,795
122,669,155
129,509,729
63,289,019
45,676,771
(51,113,678)
(56,813,534)
(87,648,781)
(78,308,850)
(60,370,866)
(24,093,915)
(15,927,116)
(1,643,152)
1,977,986,662
1,332,973,485
1,345,144,371
728,853,037
1,128,120,795
(465,331,180)
(397,216,896)
(373,755,325)
(314,272,098)
(331,575,480)
102,021,568
253,163,097
(8,405,103)
35,507,033
6,559,330
1,614,677,050
1,188,919,686
962,983,943
450,087,972
803,104,645
(34,003,894)
(6,711,932)
7,827,292
36,305,301
56,897,383
1,580,673,156
1,182,207,754
970,811,235
486,393,273
860,002,028
444,120,359
344,420,209
272,870,250
229,782,492
199,232,812
1,136,552,797
837,787,545
697,940,985
256,610,781
660,769,216
4,811,437,711
3,973,650,166
3,620,244,231
3,363,633,450
2,830,388,513
(344,525,050)
5,947,990,508
4,811,437,711
3,973,660,166
(127,524,279)
3,620,244,231
3,363,633,450
Appendix 4
Income Statement for Golden Arches Development Corporation
GOLDEN ARCHES DEVELOPMENT CORPORATION
Comparative Income (Loss) Statement and Reconciliation
2004
Revenues
Sales by company-owned
restaurants
Revenue from franchise and
affiliated restaurants
5,789,051,243
2003
5,474,993,735
2002
2001
5,967,976,748
2000
5,547,140,194
348,747,875
302,901,255
251,230,293
225,849,233
Gross Revenues
6,137,799,118
5,777,894,990
6,219,207,041
5,772,989,427
2,521,423,940
2,322,529,228
2,572,875,445
2,720,537,523
Gross Profit
3,616,375,178
3,455,365,762
3,646,331,596
3,052,451,904
3,455,339,057
3,426,476,686
3,573,660,281
3,406,341,168
914,422,969
161,036,121
28,889,076
72,671,315
(353,889,264)
256,136,655
Other income
107,535,392
Other expenses
1,170,559,624
40,202,019
41,255,097
135,271,749
6,339,962
(23,296,814)
(174,768,039)
(134,602,725)
(377,815,073)
268,571,513
45,794,281
(60,841,627)
(353,220,240)
(115,338,456)
(30,149,376)
(40,563,686)
(34,805,117)
(202,917,152)
(517,382,857)
238,422,137
5,230,595
(95,646,744)
(556,137,392)
(632,721,313)
Current
(8,047,539)
(27,202,289)
(34,032,880)
(31,519,125)
(8,119,841)
Deferred
112,924,088
(607,433)
91,594
(79,381)
(875,418)
343,298,686
(22,579,127)
(129,588,030)
(587,735,898)
(641,716,572)
343,298,686
(22,579,127)
(129,588,030)
(587,735,898)
(641,716,572)
(161,452,124)
(66,053,133)
(2,073,083,820)
P
(1,729,785,134)
(2,050,504,693)
P
(2,139,136,953)
(1,854,863,530)
P
(1,984,451,560)
(1,267,127,632)
P
(1,854,863,530)
(463,958,936)
P
(1,267,127,632)
Appendix 5
Common Size Balance Sheet for Jollibee Foods Corporation
JOLLIBEE FOODS CORPORATION
Balance Sheets
2004
2003
2002
2001
2000
ASSETS
Current assets
19.51%
21.57%
20.50%
11.87%
13.68%
Short-term investments
1.83%
0.00%
0.00%
0.00%
0.00%
8.30%
7.43%
7.72%
8.82%
9.42%
7.21%
6.82%
7.30%
11.17%
10.09%
3.84%
5.36%
9.67%
7.74%
8.07%
40.69%
41.18%
45.19%
39.60%
41.27%
Long-term receivables
0.45%
0.49%
0.00%
0.00%
0.06%
0.79%
0.96%
1.43%
0.51%
0.04%
40.99%
44.74%
43.61%
47.16%
39.76%
LIABILITIES
AND
4.46%
4.82%
1.48%
2.19%
1.02%
12.62%
7.81%
8.28%
10.54%
17.86%
100.00%
100.00%
100.00%
100.00%
100.00%
EQUITY
Liabilities
28.66%
28.54%
26.96%
26.40%
28.54%
1.47%
1.75%
2.02%
1.16%
0.00%
4.26%
0.13%
0.05%
0.00%
0.00%
3.68%
3.35%
4.45%
5.46%
5.29%
38.07%
33.78%
33.48%
33.03%
33.83%
Long-term debt
0.37%
2.19%
4.55%
7.55%
0.00%
0.41%
0.70%
0.18%
0.00%
0.00%
5.07%
5.78%
0.00%
0.00%
0.00%
0.16%
0.45%
0.18%
0.20%
0.00%
44.08%
42.89%
38.39%
40.78%
33.83%
1.55%
1.39%
1.60%
1.02%
0.10%
6.64%
7.99%
9.19%
10.43%
11.40%
Total Liabilities
Minority Interests
Stockholder's equity
Capital Stock, P1 par value
Subscription receivables
-0.12%
-0.56%
-0.87%
0.00%
0.00%
11.12%
14.18%
15.96%
16.99%
18.43%
Translation adjustments
0.94%
1.61%
1.70%
0.87%
-0.29%
Retained earnings
38.65%
37.23%
39.14%
37.13%
39.79%
Total
57.23%
60.45%
65.13%
65.43%
69.33%
2.86%
4.73%
5.12%
7.22%
3.27%
54.37%
55.72%
60.01%
58.21%
66.07%
100.00%
100.00%
100.00%
100.00%
100.00%
Appendix 6
Common Size Balance Sheet for Golden Arches Development Corporation
GOLDEN ARCHES DEVELOPMENT CORPORATION
Balance Sheets
2004
2003
2002
2001
2000
ASSETS
Current assets
Cash and cash equivalents
16.77%
10.72%
11.90%
11.31%
0.05%
7.30%
8.15%
8.48%
8.56%
20.68%
Inventories
8.44%
6.73%
6.20%
8.26%
3.36%
3.30%
2.68%
2.19%
1.64%
1.20%
25.29%
35.81%
28.29%
28.77%
29.77%
Long-term receivables
0.31%
0.56%
0.85%
0.20%
0.00%
2.73%
2.63%
2.14%
2.51%
2.15%
42.37%
49.41%
50.83%
51.42%
62.93%
3.40%
0.68%
0.00%
0.00%
0.00%
LIABILITIES
AND
15.39%
18.42%
17.41%
16.11%
9.63%
100.00%
100.00%
100.00%
100.00%
100.00%
EQUITY
Liabilities
Short-term loans
0.00%
0.00%
0.00%
3.41%
46.62%
21.36%
19.78%
21.12%
19.64%
3.24%
0.00%
0.00%
109.13%
0.00%
0.00%
10.04%
9.04%
9.74%
112.34%
68.94%
0.00%
0.00%
0.00%
1.41%
3.24%
0.00%
0.00%
0.26%
0.36%
0.00%
31.40%
28.83%
140.25%
137.15%
122.04%
Long-term debt
0.00%
0.00%
0.00%
0.00%
1.62%
Accrued rent
4.25%
4.26%
0.00%
0.00%
0.00%
0.00%
100.44%
113.17%
0.00%
0.00%
1.39%
1.45%
1.32%
1.22%
1.40%
Guaranty deposits
0.89%
0.80%
0.73%
0.51%
0.59%
0.00%
0.00%
0.03%
0.03%
0.03%
138.37%
148.50%
142.33%
138.90%
125.67%
3.57%
3.71%
3.39%
0.36%
0.42%
0.02%
0.02%
0.02%
0.00%
0.78%
41.96%
52.22%
45.74%
39.26%
26.87%
-38.37%
-48.50%
-42.33%
-38.90%
-25.67%
100.00%
100.00%
100.00%
100.00%
100.00%
Appendix 7
Common Size Income Statement for Jollibee Foods Corporation
JOLLIBEE FOODS CORPORATION
Comparative Income Statement and Reconciliation
2004
2003
2002
2001
2000
92.75%
92.20%
92.67%
92.96%
92.70%
Revenues
Net sales
Royalties, frachise fees and other revenues
7.25%
7.80%
7.33%
7.04%
7.30%
100.00%
100.00%
100.00%
100.00%
100.00%
80.72%
80.74%
81.12%
82.49%
79.21%
Gross Profit
19.28%
19.26%
18.88%
17.51%
20.79%
Gross Revenues
12.41%
13.74%
12.13%
13.70%
14.38%
6.87%
5.52%
6.75%
3.82%
6.41%
Other income
0.63%
0.41%
0.09%
0.25%
0.82%
Other expenses
0.00%
0.00%
0.00%
0.00%
0.00%
7.50%
5.93%
6.84%
4.07%
7.23%
0.47%
0.60%
0.31%
0.24%
0.00%
0.19%
0.26%
0.43%
0.42%
0.00%
0.23%
0.11%
0.08%
0.01%
0.00%
7.54%
6.15%
6.64%
3.88%
7.23%
Current
1.77%
1.83%
1.84%
1.67%
2.12%
Deferred
0.39%
1.17%
0.04%
0.19%
0.04%
6.16%
5.49%
4.75%
2.40%
5.14%
0.13%
0.03%
0.04%
0.19%
0.36%
Net income
6.03%
5.46%
4.79%
2.59%
5.51%
Appendix 8
Common Size Income Statement for Golden Arches Development Corporation
GOLDEN ARCHES DEVELOPMENT CORPORATION
Comparative Income (Loss) Statement and Reconciliation
2004
2003
2002
2001
2000
94.32%
94.76%
95.96%
96.09%
0.00%
Revenues
Sales by company-owned restaurants
Revenue from franchise and affiliated restaurants
Gross Revenues
5.68%
5.24%
4.04%
3.91%
0.00%
100.00%
100.00%
100.00%
100.00%
100.00%
41.08%
40.20%
41.37%
47.13%
0.00%
Gross Profit
58.92%
59.80%
58.63%
52.87%
0.00%
56.30%
59.30%
57.46%
59.00%
78.12%
2.62%
0.50%
1.17%
-6.13%
21.88%
1.75%
0.70%
0.66%
0.00%
0.54%
Other expenses
0.49%
1.11%
2.81%
3.50%
32.28%
3.88%
0.09%
-0.98%
-9.63%
-9.85%
0.00%
0.00%
-0.56%
0.00%
-44.20%
3.88%
0.09%
-1.54%
-9.63%
-54.05%
-0.69%
-0.13%
-0.47%
-0.55%
-0.55%
Deferred
1.84%
-0.01%
0.00%
0.00%
-0.07%
5.59%
-0.39%
-2.08%
-10.18%
-54.82%
Note: For all years, year 1 represents 2000, year 2 represents 2001, year 3 represents 2002, year4
represents 2003, and year 5 represents 2004, unless otherwise indicated
Appendix 9
Working Capital for Jollibee and McDonalds
Working Capital
Amount
2,000,000,000
0
-2,000,000,000
-4,000,000,000
-6,000,000,000
402,737,607
181,711,039
Year
Appendix 10
Current ratio of Jollibee and McDonalds
Curre nt Ratio
1.50
Value
JFC
661,327,983
1.00
0.50
0.00
JFC
1.22
1.20
1.35
1.22
1.07
GADC
0.21
0.22
0.21
0.98
1.14
Ye ar
Appendix 11
Earnings per share of Jollibee and McDonalds
Quick Ratio
1.00
0.80
Value
0.60
0.40
0.20
0.00
JFC
0.68
0.63
0.84
0.86
0.78
GADC
0.17
0.14
0.15
0.65
0.77
Ye ar
Appendix 12
Inventory turnover for Jollibee and McDonalds (Year 1 is 2001)
Value
20.00
15.00
10.00
5.00
-
JFC
15.58
17.23
20.58
21.27
GADC
10.29
7.80
8.66
8.20
Ye ar
Appendix 13
Average sale period for Jollibee and McDonalds (Year 1 is 2001)
Ave r age Sale Pe r iod
50.00
45.00
40.00
35.00
V
a
lu
e
30.00
25.00
20.00
15.00
10.00
5.00
-
JFC
23.42
21.18
17.73
17.16
GA DC
35.45
46.77
42.14
44.54
Ye ar
Appendix 14
Debt to equity ratio for Jollibee and McDonalds
De bt to Equity Ratio
2.00
Value
(2.00)
(4.00)
(6.00)
JFC
GA DC
0.51
0.70
0.64
0.77
0.81
(4.89)
(3.57)
(3.36)
(3.06)
(3.61)
Ye ar s
Appendix 15
Debt ratio for Jollibee and McDonalds
De bt Ratio
2.00
Value
1.50
1.00
0.50
-
JFC
0.34
0.41
0.38
0.43
0.44
GADC
1.26
1.39
1.42
1.48
1.38
Ye ars
Appendix 16
Times interest earned for Jollibee and McDonalds (Year 1 is 2001)
No. of Times
50.00
40.00
30.00
20.00
10.00
(10.00)
JFC
GADC
9.75
15.81
22.61
38.48
(1.74)
(1.75)
1.13
8.91
Ye ars
Appendix 17
Earnings per share for Jollibee and McDonalds
Value
20000.00
0.00
-20000.00
-40000.00
JFC
0.85
0.48
0.95
1.15
1.54
(153.50)
2,333.78
Appendix 18
Book value per share for Jollibee and McDonalds
(50,000.00)
(100,000.00)
(150,000.00)
JFC
5.80
5.58
6.53
6.97
8.19
Appendix 19
Return on total assets for Jollibee and McDonalds
Value
0.10
(0.10)
(0.20)
(0.30)
JFC
GADC
0.10
0.05
0.09
0.09
0.11
(0.26)
(0.16)
(0.03)
(0.01)
0.08
Years
Appendix 20
Return on common stockholders equity for Jollibee and McDonalds
0.60
0.40
0.20
(0.20)
(0.40)
JFC
0.15
0.08
0.16
0.17
0.20
GADC
0.87
0.41
0.07
0.01
(0.20)
Years
Appendix 21
Gross margin percentage for Jollibee and McDonalds
Percentage
80.00%
60.00%
40.00%
20.00%
0.00%
JFC
17.51%
18.88%
19.26%
19.28%
GADC
52.87%
58.63%
59.80%
58.92%
Ye ar
Appendix 22
Operating margin percentage for Jollibee and McDonalds
Percentage
30.00%
20.00%
10.00%
0.00%
-10.00%
6.41%
3.82%
6.75%
5.52%
6.87%
0.50%
2.62%
JFC
Ye ar
Appendix 23
Net profit margin percentage for Jollibee and McDonalds
Percentage
20.00%
0.00%
-20.00%
-40.00%
-60.00%
JFC
5.51%
2.59%
4.79%
5.46%
6.03%
GADC
-54.82
Appendix 24
Du Pont computation for Jollibee and McDonalds
Du Pont Analysis
2000
2001
2002
2003
2004
JFC
Profit Margin
x Total Asset Turnover
Return on Assets
x Financial Leverage
Return on Equity
0.055
1.755
0.097
1.514
0.146
0.026
1.925
0.050
1.718
0.086
0.048
1.808
0.087
1.667
0.144
0.055
1.676
0.092
1.795
0.164
0.060
1.704
0.103
1.839
0.189
GADC
Profit Margin
x Total Asset Turnover
Return on Assets
x Financial Leverage
Return on Equity
(0.548)
0.284
(0.156)
(3.895)
0.607
(0.102)
1.222
(0.124)
(2.571)
0.320
(0.021)
1.433
(0.030)
(2.363)
0.070
(0.004)
1.456
(0.006)
(2.062)
0.012
0.056
1.489
0.083
(2.606)
(0.217)