ACCT 311 Group 10

Overview
In this class, we study the valuation and disclosure of financial statement accounts. Individual
account values provide important information about a firm’s financial health. However, there is
often greater value when these account values are used to calculate
financial ratios
. Many
financial statement users rely on financial ratios to estimate a firms’ underlying value and make
significant investing and financing decisions based on financial ratio analysis.
In this case study, we assume you are analysts that have been asked to recommend a food company
for investment. Specifically, your manager has asked your group to prepare a report that analyzes
and compares the relative value of Domino’s vs Papa John’s. The report should provide a
recommendation of which company to invest in and provide relevant financial facts to support
your decision.
Ratio Analysis
In this case study, we will analyze the following characteristics using financial ratios:
•
Liquidity: measures the company’s short-term ability to pay its maturing obligations
• Solvency: measures the degree of protection for long-term creditors and investors
• Profitability: measures the degree of success of a given company for a given period of time
Learning Objectives
At the end of this case study, students should be able to:
1.
Compute and interpret liquidity, solvency, and profitability ratios.
2.
Manipulate data within Excel across tabs and different workbooks.
3.
Apply visualization technology to communicate results of analyses.
4.
Create an analyst report that is informative and professional.
Data/Resources Provided
●
Domino’s Financial Statements (
Excel Spreadsheet)
● Papa John’s Financial Statements (
Excel Spreadsheet)● Report Template (
Microsoft Word
)You should incorporate information gathered from at least two other resources (i.e., footnote

disclosures, Seeking Alpha reports, WSJ articles, etc.). Please cite your sources.

I also attached an example he had posted.

My part to answer is the following:

● Basic information about Domino’s and Papa John’s organized as an easy-to-read table:

▪ Ticker symbol and stock exchange▪ Number of employees▪ Number of stores▪ Size (total assets as of most recent fiscal year end)▪ Net income or loss (as of most recent fiscal year end)

2021
2022
2023
2024
LIQUIDITY RATIOS
Current ratio
1.46
1.47
Acid test (or quick ratio)
0.68
0.59
Debt to equity ratio
-1.40
-1.38
Times interest earned ratio
4.26
3.89
29.97%
-13.01%
27.63%
-10.77%
SOLVENCY RATIOS
PROFITABILITY RATIOS
Return on assets (%)
Return on equity (%)
Instructions:
Column E –> Using the financial data provided in the different tabs, calculate the six missing financial ratios for fiscal year 2023. The
financial ratios should be calculated using a formula and not keyed in.
Input should look like this: “= K120/D370”
Input should NOT look like this: 0.49
Column F –> Develop an estimate for the six missing financial ratios for fiscal year 2024. These inputs do not need to be formulas.
CONSOLIDATED BALANCE SHEETS
Assets
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable, net of reserves of $ 5,885 in 2023; $ 4,762 in 2022; $1,869 in 2021
Inventories
Prepaid expenses and other
Advertising fund assets, restricted
Total current assets
Property, plant and equipment:
Land and buildings
Leasehold and other improvements
Equipment
Construction in progress
Accumulated depreciation and amortization
Property, plant and equipment, net
Other assets:
Operating lease right-of-use assets
Investments in marketable securities, restricted
Goodwill
Capitalized software, net of accumulated amortization of $ 183,980 in 2023; $ 165,457 in 2022; $142,509 in 2021
Investment in DPC Dash
Other assets
Deferred income tax assets, net
Total other assets
Total assets
Liabilities and stockholders’ deficit
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued compensation
Accrued interest
Operating lease liabilities
Insurance reserves
Advertising fund liabilities
Other accrued liabilities
Total current liabilities
Long-term liabilities:
Long-term debt, less current portion
Operating lease liabilities
Insurance reserves
Deferred income tax liabilities
Other accrued liabilities
Total long-term liabilities
Total liabilities
Commitments and contingencies (Note 6)
Stockholders’ deficit
Common stock, par value $ 0.01 per share; 170,000,000 shares authorized;
34,726,182 in 2023; 35,419,718 in 2022; 36,138,273 in 2021 issued and outstanding
Preferred stock, par value $ 0.01 per share; 5,000,000 shares authorized,
no ne issued
Additional paid-in capital
Retained deficit
Accumulated other comprehensive loss
Total stockholders’ deficit
Total liabilities and stockholders’ deficit
December 31,
2023
January 1,
2023
$
$
$
$
114,098
200,870
282,809
82,964
30,215
106,335
817,291
January 2,
2022
60,356
191,289
257,492
81,570
37,287
162,660
790,654
$
148,160
180,579
255,327
68,328
27,242
180,904
860,540
108,791
176,817
364,620
24,505
674,733
(370,368)
304,365
105,659
172,725
333,787
22,536
634,707
(332,472)
302,235
108,372
193,572
312,772
27,815
642,531
(318,466)
324,065
207,323
16,720
11,688
134,105
143,553
26,174
13,680
553,243
1,674,899
219,202
13,395
11,763
108,354
125,840
28,852
1,926
509,332
1,602,221
210,702
15,433
15,034
95,558
125,840
22,535
2,109
487,211
1,671,816
56,366
106,267
54,689
33,367
39,330
28,135
104,246
124,950
547,350
4,934,062
179,548
38,559
—
45,747
5,197,916
$
$
54,813
89,715
40,442
34,473
34,877
31,435
157,909
92,957
536,621
4,967,420
195,244
40,179
7,761
44,061
5,254,665
$
$
55,588
91,547
59,567
37,982
37,155
32,588
173,737
102,577
590,741
5,014,638
184,471
36,913
3,922
50,667
5,290,611
$
5,745,266
5,791,286
5,881,352
347
354
361
—
2,801
(4,069,648)
(3,867)
(4,070,367)
1,674,899
—
9,693
(4,194,418)
(4,694)
(4,189,065)
1,602,221
—
840
(4,207,917)
(2,820)
(4,209,536)
1,671,816
$
$
CONSOLIDATED STATEMENTS OF INCOME
Revenues:
U.S. Company-owned stores
U.S. franchise royalties and fees
Supply chain
International franchise royalties and fees
U.S. franchise advertising
Total revenues
Cost of sales:
U.S. Company-owned stores
Supply chain
Total cost of sales
Gross margin
General and administrative
U.S. franchise advertising
Refranchising loss (gain)
Income from operations
Other income
Interest income
Interest expense
Income before provision for income taxes
Provision for income taxes
Net income
Earnings per share:
Common Stock – basic
Common Stock – diluted
December 31,
2023
For the Years Ended
January 1,
2023
$
$
376,180
604,897
2,715,009
310,077
473,195
4,479,358
445,810
556,269
2,754,742
295,007
485,330
4,537,158
314,673
2,437,268
2,751,941
1,727,417
434,554
473,195
149
819,519
17,713
11,683
(196,475)
652,440
133,322
$ 519,118
378,018
2,510,534
2,888,552
1,648,606
416,524
485,330
(21,173)
767,925
—
3,162
(198,254)
572,833
120,570
$ 452,263
$
$
$
$
14.80
14.66
12.66
12.53
the Years Ended
January 2,
2022
$
478,976
539,883
2,560,977
298,036
479,501
4,357,373
374,104
2,295,027
2,669,131
1,688,242
428,333
479,501
—
780,408
36,758
345
(191,806)
625,705
115,238
$ 510,467
$
$
13.72
13.54
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income
Currency translation adjustment
Comprehensive income
$
$
For the Years Ended
December 31,
January 1,
2023
2023
519,118 $
452,263 $
827
(1,874)
519,945 $
450,389 $
January 2,
2022
510,467
510,071
Ended
$
$
January 2,
2022
510,467
(396)
510,071
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Refranchising loss (gain)
Loss on sale/disposal of assets
Amortization of debt issuance costs
(Benefit) provision for deferred income taxes
Non-cash equity-based compensation expense
Excess tax benefits from equity-based compensation
Provision for losses on accounts and notes receivable
Unrealized gain on investments
Changes in operating assets and liabilities:
Changes in accounts receivable
Changes in inventories, prepaid expenses and other
Changes in accounts payable and accrued liabilities
Changes in insurance reserves
Changes in operating lease assets and liabilities
Changes in advertising fund assets and liabilities, restricted
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of assets
Purchases of franchise operations and other assets
Purchase of investments
Other
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
Repayments of long-term debt and finance lease obligations
Proceeds from exercise of stock options
Purchases of common stock
Tax payments for restricted stock upon vesting
Payments of common stock dividends and equivalents
Cash paid for financing costs
Other
Net cash used in financing activities
Effect of exchange rate changes on cash
Change in cash and cash equivalents, restricted cash and cash equivalents
Cash and cash equivalents, beginning of period
Restricted cash and cash equivalents, beginning of period
Cash and cash equivalents included in advertising fund assets, restricted,
beginning of period
Cash and cash equivalents, restricted cash and cash equivalents and cash
and cash equivalents included in advertising fund assets, restricted,
beginning of period
Cash and cash equivalents, end of period
Restricted cash and cash equivalents, end of period
Cash and cash equivalents included in advertising fund assets, restricted,
end of period
Cash and cash equivalents, restricted cash and cash equivalents and cash
and cash equivalents included in advertising fund assets, restricted,
end of period
December 31,
2023
$
519,118
For the Years Ended
January 1,
2023
$
452,263
80,640
149
1,299
5,535
(19,509)
37,514
(3,397)
1,472
(17,713)
80,251
(21,173)
1,813
5,645
253
28,709
(2,169)
3,536
—
(26,515)
160
69,373
(5,163)
632
(52,731)
590,864
(6,333)
(17,059)
(36,605)
1,507
2,174
(17,495)
475,317
(105,396)
161
—
—
(1,682)
(106,917)
(87,234)
41,089
(6,814)
—
(722)
(53,681)
14,898
(55,705)
8,656
(269,025)
(5,410)
(169,772)
—
—
(476,358)
340
7,929
60,356
191,289
120,000
(175,676)
3,312
(293,740)
(10,720)
(157,531)
(1,594)
—
(515,949)
(963)
(95,276)
148,160
180,579
143,559
161,741
$
395,204
114,098
200,870
490,480
60,356
191,289
88,165
143,559
403,133
$
395,204
January 2,
2022
$
510,467
72,923
—
1,189
7,509
1,988
28,670
(18,911)
659
(36,758)
(8,107)
(9,420)
51,346
6,216
1,210
45,225
654,206
(94,172)
16
—
(49,082)
515
(142,723)
1,850,000
(910,212)
19,682
(1,320,902)
(6,820)
(139,399)
(14,938)
(244)
(522,833)
(316)
(11,666)
168,821
217,453
115,872
502,146
148,160
180,579
161,741
$
490,480
2021
2022
2023
2024
LIQUIDITY RATIOS
Current ratio
0.89
0.95
Acid test (or quick ratio)
0.53
0.57
Debt to equity ratio
-6.10
-4.19
Times interest earned ratio
9.73
4.32
0.45%
-2.30%
7.75%
-30.59%
SOLVENCY RATIOS
PROFITABILITY RATIOS
Return on assets (%)
Return on equity (%)
Instructions:
Column E –> Using the financial data provided in the different tabs, calculate the six missing financial ratios for fiscal year 2023. The
financial ratios should be calculated using a formula and not keyed in.
Input should look like this: “= K120/D370”
Input should NOT look like this: 0.49
Column F –> Develop an estimate for the six missing financial ratios for fiscal year 2024. These inputs do not need to be formulas.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Revenues:
Domestic Company-owned restaurant sales
North America franchise royalties and fees
North America commissary revenues
International revenues
Other revenues
Total revenues
Costs and expenses:
Operating costs (excluding depreciation and amortization shown separately below):
Domestic Company-owned restaurant expenses
North America commissary expenses
International expenses
Other expenses
General and administrative expenses
Depreciation and amortization
Total costs and expenses
Refranchising and impairment loss
Operating income
Net interest expense
Income before income taxes
Income tax expense
Net income before attribution to noncontrolling interests
Net income attributable to noncontrolling interests
Net income attributable to the Company
Calculation of net income for earnings per share:
Net income attributable to the Company
Dividends on redemption of Series B Convertible Preferred Stock
Dividends paid to participating securities
Net income attributable to participating securities
Net income attributable to common shareholders
Basic earnings per common share
Diluted earnings per common share
Basic weighted average common shares outstanding
Diluted weighted average common shares outstanding
Dividends declared per common share
Year ended
December 31,
2023
$
$
$
$
$
$
$
December 25,
2022
December 26,
2021
726,362 $
144,550
852,361
157,187
255,253
2,135,713
708,389 $
137,399
869,634
129,903
256,778
2,102,103
778,323
129,310
761,305
150,771
248,712
2,068,421
587,889
787,554
103,198
235,483
210,357
64,090
1,988,571
—
147,142
(43,469)
103,673
20,874
82,799
(701)
82,098 $
585,307
811,446
76,001
238,810
217,412
52,032
1,981,008
(12,065)
109,030
(25,261)
83,769
14,420
69,349
(1,577)
67,772 $
621,871
703,622
87,286
226,320
212,265
48,816
1,900,180
—
168,241
(17,293)
150,948
25,993
124,955
(4,939)
120,016
82,098
—
—
—
82,098
2.49
2.48
32,931
33,159
1.76
67,772 $
—
(306)
(104)
67,362 $
1.90 $
1.89 $
35,497
35,717
1.54 $
120,016
(109,852)
(6,091)
—
4,073
0.12
0.12
35,007
35,337
1.15
$
$
$
$
$
Consolidated Statements of Comprehensive Income
Year Ended
(In thousands)
Net income before attribution to noncontrolling interests
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments
Interest rate swaps (1)
Other comprehensive income (loss), before tax
Income tax effect:
Foreign currency translation adjustments
Interest rate swaps (2)
Income tax effect
Other comprehensive income (loss), net of tax
Comprehensive income before attribution to noncontrolling interests
Less: comprehensive income, redeemable noncontrolling interests
Less: comprehensive income, nonredeemable noncontrolling interests
Comprehensive income attributable to the Company
December 31,
2023
$
82,799
1,560
1,453
3,013
$
(353)
(328)
(681)
2,332
85,131
(198)
(503)
84,430
Year Ended
December 31,
December 25,
December 26,
2023
2022
2021
$
82,799 $
69,349 $
124,955
$
1,560
1,453
3,013
(4,970)
4,757
(213)
(1,397)
6,848
5,451
(353)
(328)
(681)
2,332
85,131
(198)
(503)
84,430 $
1,143
(1,094)
49
(164)
69,185
(574)
(1,003)
67,608 $
321
(1,575)
(1,254)
4,197
129,152
(2,609)
(2,330)
124,213
Consolidated Balance Sheets
(In thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable (less allowance for credit losses of $ 8,353 in 2023; $ 6,718 in 2022; $2,364 in 2021)
Notes receivable, current portion
Income tax receivable
Inventories
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Finance lease right-of-use assets, net
Operating lease right-of-use assets
Notes receivable, less current portion (less allowance for credit losses of $ 16,092 in 2023; $ 14,499 in 2022; $1,500 in 2021)
Goodwill
Deferred income taxes
Other assets
Total assets
Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit
Current liabilities:
Accounts payable
Income and other taxes payable
Accrued expenses and other current liabilities
Current deferred revenue
Current finance lease liabilities
Current operating lease liabilities
Total current liabilities
Deferred revenue
Long-term finance lease liabilities
Long-term operating lease liabilities
Long-term debt, net
Deferred income taxes
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 19)
Redeemable noncontrolling interests
Stockholders’ deficit:
Common stock ($ 0.01 par value per share; issued 49,235 at December 31, 2023 and 49,138 at December 25, 2022)
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Treasury stock ( 16,747 shares at December 31, 2023 and 14,402 shares at December 25, 2022, at cost)
Total stockholders’ deficit
Noncontrolling interests in subsidiaries
Total Stockholders’ deficit
Total Liabilities, Redeemable noncontrolling interests and Stockholders’ deficit
December 31,
2023
$
n 2022; $2,364 in 2021)
2 in 2023; $ 14,499 in 2022; $1,500 in 2021)
3 and 49,138 at December 25, 2022)
ember 25, 2022, at cost)
$
$
December 25,
2022
December 25,
2021
40,587 $
104,244
5,199
2,577
36,126
42,285
231,018
282,812
31,740
164,158
12,346
76,206
76,725
875,005 $
47,373 $
102,533
6,848
8,780
41,382
44,123
251,039
249,793
24,941
172,425
21,248
70,616
74,165
864,227 $
70,610
81,370
12,352
9,386
34,981
46,310
255,009
223,856
20,907
176,256
35,504
80,632
5,156
88,384
885,704
74,949 $
17,948
158,167
20,427
9,029
24,076
62,316 $
8,766
142,535
21,272
6,850
23,418
28,092
19,996
190,116
21,700
4,977
22,543
—
287,424
13,846
16,580
160,672
480,730
258
93,154
1,052,664
304,596
20,366
24,144
151,050
757,422
60,192
1,317,770
265,157
23,204
19,022
160,905
597,069
68,317
1,133,674
851
1,217
492
452,290
(7,803)
219,027
(1,123,098)
(459,092)
15,476
491
449,829
(10,135)
195,856
(922,434)
(286,393)
15,729
—
5,498
0
490
(445,126
(9,971)
(183,157
(806,472)
(187,670)
(15,212
$
(443,616)
875,005 $
(270,664)
864,227 $
(172,458)
885,704
Consolidated Statements of Cash Flows
(In thousands)
Operating activities
Net income before attribution to noncontrolling interests
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (benefit) for allowance for credit losses on accounts and notes receivable
Depreciation and amortization
Refranchising and impairment loss
Deferred income taxes
Stock-based compensation expense
Other
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
Income tax receivable
Inventories
Prepaid expenses and other current assets
Other assets and liabilities
Accounts payable
Income and other taxes payable
Accrued expenses and other current liabilities
Deferred revenue
Net cash provided by operating activities
Investing activities
Purchases of property and equipment
Notes issued
Repayments of notes issued
Acquisitions, net of cash acquired
Proceeds from refranchising, net of cash transferred
Proceeds from the sale of property and equipment
Other
Net cash used in investing activities
Financing activities
Proceeds from issuance of senior notes
Net proceeds of revolving credit facilities
Debt issuance costs
Proceeds from exercise of stock options
Repurchase of Series B Convertible Preferred Stock
Acquisition of Company common stock
Dividends paid to common stockholders
Dividends paid to preferred stockholders
Tax payments for equity award issuances
Distributions to noncontrolling interests
Repayments of term loan
Principal payments on finance leases
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Year ended
December 31,
2023
$
December 25,
2022
December 26,
2021
82,799 $
69,349 $
124,955
5,393
64,090
(852)
48,816
(5,991)
17,924
66
20,539
52,032
12,065 —
2,798
18,388
1,056
(8,049)
6,212
5,441
817
(11,803)
23,371
9,087
7,402
(3,704)
193,055
(29,167)
586
(7,496)
5,587
(13,458)
(8,350)
(10,710)
4,846
(257)
117,808
4,023
(8,113)
(4,708)
2,866
(20,077)
(9,278)
9,733
15,875
182
184,675
(76,620)
(4,338)
4,655
(5,613)
(78,391)
(9,296)
13,045
(1,219)
13,588 —
—
(520)
(62,793)
(68,559)
(16,132)
18,555
(699)
—
—
3,457 —
3,336
(75,123)
—
—
159,000
—
115,000
—
2,252
—
4,036
—
(210,348)
(58,451)
—
(125,000)
(54,767)
—
(6,416)
(1,320)
—
(9,546)
(1,211)
—
(8,821)
28
(5,416)
664
3,753
16,919
581
3,323
(63,512)
400,000
80,000
(9,179)
11,969
(188,647)
(72,499)
(40,356)
(6,394)
(5,847)
(5,942)
(340,000)
(4,566)
935
$
(124,076)
(642)
(6,786)
47,373
40,587 $
(76,240)
(2,012)
(23,237)
70,610
47,373 $
(180,526)
(231)
(59,594)
130,204
70,610
BASIC INFORMATION
DELTA(NYSE: DAL)
Number of Employees: ~83,000 Employees (Reported: Dec 31st, 2021: MarcoTrends.net)
Total Asset Valuation: 72,459 Million (Reported: Dec 31st, 2021: MarcoTrends.net)
Net (Loss)/Income: 280 Million (Reported: Dec 31st, 2021: MarcoTrends.net)
UNITED(NASDAQ: UAL)
Number of Employees: ~84,100 Employees (Reported Dec 31st, 2021: MarcoTrends.net)
Total Asset Valuation: 68,175 Million (Reported: Dec 31st, 2021: MacroTrends.net)
Net (Loss)/Income: (1,964) Million (Reported: Dec 31st, 2021: MarcoTrends.net)
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