In this case, we review the debt of several restaurant companies. The restaurant companies reviewed and the

Question:

In this case, we review the debt of several restaurant companies. The restaurant companies reviewed and the year-end dates are as follows:
1. Yum Brands, Inc.
(December 30, 2008; December 30, 2007)
‘‘Through the five concepts of KFC, Pizza Hut, Taco Bell, LJS, and A & W (the ‘‘Concepts’’) the company develops, operates, franchises and licenses a world system of restaurants which prepare, package and sell a menu of competitively priced food items.’’ 10-K
2. Panera Bread
(December 30, 2008; December 25, 2007)
‘‘As of December 30, 2008, Panera operated and through franchise agreements with 39 franchisee groups, 1,252 cafes.’’ 10-K
3. Starbucks
(September 28, 2008; September 30, 2007)
‘‘Starbucks was formed in 1985 and today is the world’s leading roaster and retailer of specialty coffee.’’ 10-K

Required
a. Comment on the relative times interest earned between the companies.
b. Comment on the relative fixed charge coverage for each company.
c. Comment on the relative times interest earned vs. the fixed charge coverage. Why is the times interest earned materially higher than the fixed charge coverage?
d. Why is the debt/equity materially more than the debt ratio?
e. Considering the debt ratio, comment on the relative debt position of these companies.
f. Why is the debt to tangible net worth usually higher than the debt/equity ratio?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...