You are on page 1of 81

A FINANCIAL ANALYIS OF

JOLLIBEE FOODS CORPORATION AND GOLDEN ARCHES


DEVELOPMENT CORPORATION
FOR THE YEARS 2000 2004

A Paper Submitted
In Partial Fulfillment of the Requirements for the Course
ACT611M (Financial Analysis)

MC REYNALD SIMBAJON BANDERLIPE II

Candidate for the degree of


MASTER OF SCIENCE IN ACCOUNTANCY

Mr. MICHAEL ANGELO CORTEZ


Professor

De La Salle University - Manila


Term 3, SY 2005-2006

Table of Contents

LIST OF TABLES

LIST OF FIGURES

ii

LIST OF APPENDICES

iii

ABSTRACT

iv

CHAPTER 1 BACKGROUND OF THE STUDY


Introduction
Statement of the Problem
Statement of Objectives
Statement of Assumptions
Scope and Limitations
Significance of the Study

1
2
3
3
4
5

CHAPTER 2 REVIEW OF RELATED LITERATURE


Historical Account for Jollibee Foods Corporation
Historical Account for McDonalds
GADC, Home to McDonalds Philippines
A Short Discourse on the Philippine Fast Food
Industry
Conceptual Framework
Operational Framework

12
15
16

CHAPTER 3 METHODOLOGY
Research Design
Data for the Study/Method of Data Analysis

17
17

CHAPTER 4 RESULTS AND DISCUSSION

20

CHAPTER 5 CONCLUSION AND RECOMMENDATIONS

50

REFERENCES
APPENDICES

7
10
11

List of Tables
Table No.
1

Timetable of Selected Jollibee Products from the Years 1978 2005

Timetable of Selected McDonalds Products from the Years 1981 2005

Working capital for JFC and GADC

Current ratio for JFC and GADC

Quick ratio for JFC and GADC

Inventory turnover and average sale period for JFC and GADC

Debt to equity ratio for JFC and GADC

Debt ratio for JFC and GADC

Times interest earned for JFC and GADC

10

Earnings per share for JFC and GADC

11

Dividends per share, Dividend yield per share of common stock, and
Dividend payout ratio for JFC and GADC

12

Price-earnings ratio for JFC and GADC

13

Book value per share for JFC and GADC

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

Proposed Balanced Scorecard for the Fast Food Restaurant in the


Philippines

18

Proposed Balanced Scorecard for the Fast Food Restaurant in the


Philippines

List of Figures

Figure No.
1

Conceptual Framework on the Analysis of Financial Statements

Operational Framework for the Financial Analysis of Jollibee and


McDonalds

ii

List of Appendices
Appendix No.
1

Balance Sheet of Jollibee Foods Corporation for the years 2000 2004

Balance Sheet of Golden Arches Development Corporation for the years


2000 2004

Income Statement for Jollibee Foods Corporation for the years 2000
2004

Income Statement for Golden Arches Development Corporation

Common Size Balance Sheet for Jollibee Foods Corporation

Common Size Balance Sheet for Golden Arches Development


Corporation

Common Size Income Statement for Jollibee Foods Corporation

Common Size Income Statement for Golden Arches Development


Corporation

Working Capital for Jollibee and McDonalds

10

Current ratio of Jollibee and McDonalds

11

Earnings per share of Jollibee and McDonalds

12

Inventory turnover for Jollibee and McDonalds (Year 1 is 2001)

13

Average sale period for Jollibee and McDonalds (Year 1 is 2001)

14

Debt to equity ratio for Jollibee and McDonalds

15

Debt ratio for Jollibee and McDonalds

16

Times interest earned for Jollibee and McDonalds (Year 1 is 2001)

17

Earnings per share for Jollibee and McDonalds

18

Book value per share for Jollibee and McDonalds

19

Return on total assets for Jollibee and McDonalds

20

Return on common stockholders equity for Jollibee and McDonalds

21

Gross margin percentage for Jollibee and McDonalds

22

Operating margin percentage for Jollibee and McDonalds

23

Net profit margin percentage for Jollibee and McDonalds

24

Du Pont computation for Jollibee and McDonalds

iii

A FINANCIAL ANALYSIS FOR JOLLIBEE FOODS COPORATION AND


GOLDEN ARCHES DEVELOPMENT CORPORATION
FOR THE YEARS 2000 - 2004

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 the Problem


Competition of Jollibee and McDonalds is a fierce battle for supremacy in the
Philippine fast food industry. The performance of these companies, however, does not
rest solely on the acceptance of the similar product lines and innovations each has to
offer. An analysis of their respective financial statements will help users broaden their
understanding about the companys financial position and the results of operations. Thus,
the research questions for this study will be:
RQ: Based on the analysis of the financial statements of Jollibee and McDonalds
for the years 2001 - 2004, who is likely to lead in terms of financial
performance and why?

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.

3) Competition between the two fast food chains is fierce.


4) Both companies are expecting growth in terms of sales and results of
operations.
Scope and Limitations
The following statements comprise the scope and limitations on the analysis of
financial statements of Jollibee and McDonalds in the Philippines:
1) The ratios analyzed are those commonly used in the fast food industry.
Information generated through various data sources was also utilized to
understand these ratios.
2) The study used consolidated financial statements for the years 2000 2004.
Data for the years 2000 2003 used restated balances found in the subsequent
financial statements. Only 2004 data will use the audited balance for the year
2004 since the audit for the 2005 financial statements is still ongoing.
3) Due to time constraints, the subsidiaries of both fast food companies were not
excluded; however, since 95 percent of their subsidiaries are also engaged in
food service, then this might tolerable for the research. Moreover, the parent
companys financial statements of the two companies cannot be retrieved
from the Securities and Exchange Commission (SEC).
4) Benchmarking is important in order to compare the financial ratios of each
company with the prescribed industry average. However, there is difficulty in
obtaining the industry averages for the Philippine fast food industry since the
Hotel and Restaurant Association of the Philippines (HRAP) cannot provide
that information. In this case, the average data for the United States fast food

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.

Significance of the study


Understanding the financial statements of Jollibee and McDonalds would be
valuable for the following:
Present and Future Investors will be able to evaluate the performance of the
two companies for reassessing and making sound investment decisions.

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

Before making a thorough analysis of Jollibee and McDonalds financial


statements, it is necessary to provide a historical summary that shaped these two
companies to lead the fast food (QSR) industry in the Philippines. The review also
includes a brief discourse on the Fast Food Industry in the Philippines.

Historical Account for Jollibee Foods Corporation


After graduating with a degree in Chemical Engineering, Tony Tan Caktiong
decided not to compete with fellow new yuppies at his time searching for jobs after
graduation. Having gained first-hand experience in managing a family eatery in Davao
during his childhood years, he decided to pursue a food business that would be simple to
operate. Thus, he borrowed P200,000 from his father to commence a Magnolia ice cream
franchise beside Coronet Theater in 1975. With his ingenuity and passion to satisfy the
cravings of his customers, the idea of serving American foods such as hamburgers and
fries that is quick, tasty and affordable (Acuna, et al., 2004) became his vision that he
never thought would be one of the entrepreneurial successes in the Philippines.
In 1978, the vision became a reality when Tony and his family decided to
incorporate and saw the birth of Jollibee Foods Corporation. One year after, the company
posted P2 Million peso sales. It also marked the establishment of a first Jollibee franchise
in Sta. Cruz, Manila and its first TV advertisement.

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

Jollibee Foods Corporation


Timetable of Selected Products
1978 2005
YEAR
1978
1979
1980
1982
1985
1986
1988
1990
1991
1992
1994
1995
1996
1999
2000
2001
2004
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

Historical Account for McDonalds


The name McDonalds refers to Dick and Mac McDonald, who, after World War
II, desired to improve their little drive-in restaurant in California. Improvement, for them,
means speedy service, low prices and big volume (Acuna, et al., 2004). This requires
slashing off some items in their menu and limiting it to the popular hamburgers, soft
drinks, French fries and milkshakes. This also triggered the reduction of the prices of
hamburgers while inducing improvements in their kitchen facility to accommodate mass
production.
Since 1952, the company received numerous inquiries for franchising because of
its success. It is also when McDonalds launched its Golden Arches logo, inspired by
the red and white building with an angled roof owned by its first franchisee, Neil Fox.
However, in 1954, a person by the name Ray Kroc, approached the brothers and
offered to expand their restaurant upon knowing that the brothers are running 8 multimixers for their milk shakes. This eventually led to the expansion of McDonalds from
San Bernardino, California to Des Plaines, Illinois. Their Hamburger University trained
McDonalds personnel in the science of Hamburgerology. People who graduated from
this University became successful in managing the operations of McDonalds stores in
the United States and in other countries (Boas and Chain, 1976).
In the Philippines, the first two McDonalds restaurants opened in Morayta and
New Frontier in 1981. Since 1982, the restaurants branched out to different parts of the
country like Greenhills (1982); Dau, Pampanga (1983); Roxas Boulevard (1985); Makati
(1988); Subic (1989); Tarlac (1991); Baguio (1991); Cagayan (1992); Cebu, (1992); and
Marikina (1997), the 100th store of McDonalds in the Philippines. At present,

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).

GADC, Home to McDonalds Philippines


On July 16, 1980, Golden Arches Development Corporation (GADC) in the
Philippines was established. Its business is to acquire and develop real and personal
properties for the use of McDonalds restaurants. The companys business focuses on
operating fast food restaurants under the McDonalds brand and in accordance with a
franchise agreement with McDonalds Corporation USA. McDonalds Restaurant
Operations, Inc. (MRO), a US-based company, owned the major segment of the
company.
All McDonalds restaurants in the Philippines either are operated by GADC, by
independent entrepreneurs under the terms of a franchise agreement with GADC, or
affiliated restaurants operating under joint venture agreements between the GADC and
the local executives.
In 2002, GADC became the surviving entity under the approved merger of GADC
and McGeorge, the former licensee of McDonalds in the Philippines. Under the terms of
an approved Articles of Merger, the stockholders of record will not receive shares of
stock from McGeorge due to capital deficiencies of both parties. Soon, GADC absorbed
all assets, liabilities, licenses, privileges, and rights of McGeorge.
In 2003, the subsidiaries of Golden Arches Development Corporation approved
the merger of involved companies, with GADC as the surviving corporation. At this time,

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

A Short Discourse on the Philippine Fast Food Industry


Fast food restaurants have continued to thrive in the Philippines. These
establishments, also known as Quick Service Restaurants (QSR), will remain very strong
and continuously growing despite the political and economic problems in the country.
According to Bautista (2002), the QSR industry will be the last to succumb from

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.

Data for the study / Method of Data Analysis


The study required the procurement of financial statements for Jollibee Foods
Corporation and Golden Arches Development Corporation for the years 2000 2004.
The annual reports containing the financial statements of Jollibee were obtained via
referral while the financial statements of Golden Arches Development were retrieved
upon visiting the Public Reference Section of the Securities and Exchange Commission
(SEC). Because GADC is not listed in the Philippine Stock Exchange (PSE), GADC has
no obligation to provide SEC Form 17-A (Annual Report) to PSE.
The researcher encoded the financial statements, particularly the balance sheet
and the income statement in an Excel spreadsheet. Because of the difference in the line
items of the financial statements, some items were aggregated based on similar
classification. Retained earnings are reconciled for the years covered in the study.

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

The objective of the study is to conduct a financial analysis of the financial


statements for Jollibee Foods Corporation and Golden Arches Development Corporation
for the years 2000 2004. Issues such as benchmarking, Du Pont Model, Balanced
Scorecard, and Corporate Social Responsibility will be included in the paper.
Appendix 1 presents the balance sheet for Jollibee Foods Corporation. As can be
seen, there is an increasing trend in the current assets and total assets for JFC. Total assets
range from P8.89 Billion in 2000 to P15.38 Billion in 2004. The liabilities and
stockholders equity section of the balance sheet has the same trend. Moreover, the
company provides minority stockholders a share in their earnings ranging from P8.8
Million in 2000 to around P238 Million in 2004.
On the other hand, GADC did not show a constant movement in its cash accounts.
In Appendix 2, the same movement was visible in the current assets and total assets of
the business, ranging from P4.12 Billion in 2001 to P4.12 Billion in 2004. Total
liabilities, on the other hand, increased from P5.17 Billion in 2000 to P6.56 Billion in
2001, but decreased to P5.70 Billion in 2004. On the average, GADC suffered a P1.75
Billion deficit for the past five years.
Appendix 3 depicts the results of operations of JFC. As can be seen, the company
is consistent with an increasing trend in terms of revenues, operating costs and expenses.
Furthermore, in 2003, JFC hit the P1 Billion peso net income, the first among the fast
food industries to attain a very remarkable net profit, with a net income of P1.18 Billion.

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

Working capital measures the capability of a business to settle its current


obligations using current assets (Garrison and Noreen, 2000). Table 3 shows the working
capital of JFC and GADC. JFC maintained a positive working capital ranging from P402
Million to P1.312 Billion. On the other hand, GADC started with a negative working
capital of P3.9 Billion in 2000, to a positive P181.7 Million in 2004. Louderback,
Holmen, and Dominiak (2000) argue that a positive working capital is a rough measure
of liquidity. Instead, variations in working capital supplements other calculations that
considers the size of the company. Thus, the following table presents a more adequate
measure using the current ratio.

II. Current ratio


Current ratio measures the firms ability to meet its short-term obligations by
determining how much pesos of assets are likely to be converted into cash within one
year in order to pay debts that come due during the same year (Kennon, 2006). The
proxies for this ratio are current assets and current liabilities of the enterprise.
Table 4
Current ratio for JFC and GADC
Ratio

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.

III. Quick ratio


Table 5
Quick ratio for JFC and GADC
Ratio

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.

IV. Inventory turnover and Average sale period


Inventory turnover measures the number of times the companys inventory is sold
during the year. It shows how fast the inventory is sold, thereby reducing obsolescence
and spoilage. Average sale period, on the other hand, identifies the number of days to sell
inventory one time. Table 6 displays the inventory turnover and average sale period for
JFC and GADC.
As shown in Table 6, JFCs inventory sells faster, with increasing turnover ratios
from 15.6 to 21 times and decreasing average sale period from 23 days to 17 days.
Conversely, GADC has to manage its slow movement of inventory. Because of its low

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)

Debt to equity ratio


JFC
GADC

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.

VI. Debt ratio


Table 8
Debt ratio for JFC and GADC
Ratio

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

Debt ratio focuses on the fraction of debt in a companys financial structure


(Louderback, et al., 2000). There is risk in the company if there are higher proportions of
total liabilities in the company. Table 8 presents the debt ratios for JFC and GADC. As
27

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.

VII. Times interest earned


Times interest earned measures the companys ability to make interest payments.
It determines the extent to which operations cover interest expense. Louderback, et al.
(2000) further claims that the higher the ratio, the more likely the company will be able
to continue meeting the interest payments.
Table 9
Times interest earned for JFC and GADC
Ratio

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

Times interest earned


JFC
GADC

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.

Profitability ratios and Stock Market ratios


VIII. Earnings per share
Table 10
Earnings per share for JFC and GADC
Ratio

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


JFC
GADC

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

Dividend per share of common stock


JFC
GADC

0.20
N/A

Dividend yield per share of common stock


JFC
GADC
Dividend payout ratio
JFC
GADC

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.

X. Price earnings ratio


Table 12
Price-earnings ratio for JFC and GADC
Ratio

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.

XI. Book value per share


Book value per share measures the amount allocated to each share of common
stock after all assets are realized at their balance sheet carrying amounts and after all
liabilities are settled (Garrison and Noreen, 2000). Table 13 presents the book values per
share of JFC and GADC.
Table 13
Book value per share for JFC and GADC
Ratio

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)

Book value per share


JFC
GADC

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.

XII. Return on total assets and Return on common stockholders equity


Garrison and Noreen (2000) define return on total assets as a measure of how
efficient the company employs the resources under their control to generate income.
Conversely, return on common stockholders equity, when faced off with the return on
total assets, measures the extent to which the financial leverage is working for or against
common stockholders since return on investments are affected by operations, debt and
preferred stock in the capital structure of the company (Louderback, et al., 2000). Table
14 displays the summary of return on total assets and return of common stockholders
equity for JFC and GADC.
As shown in the table, JFC has a positive return on assets and equity because of
its profitable operations and its capital structure. Meanwhile, GADC has negative ROA

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

Return on total assets


JFC
GADC

Return on common stockholder's equity


JFC

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.

Jollibee Foods Corporation


The company posted increasing sales from P15.6 Billion in 2000 to P26.2 Billion
in 2004, 92.6% of which came from food sales. This resulted from the intensified across

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

Golden Arches Development Corporation


Jollibees fiercest competitor in the QSR industry, McDonalds (GADC),
maintains an average of at least P4 Billion in its total assets, majority of which is
composed of cash and cash equivalents and property, plant, and equipment. The
continuous decrease of the composition of fixed assets, as shown in the common-size
financial statements, pertains to the continuous recognition of depreciation and
impairment losses in its buildings, leasehold improvements, signs, and seats.
The mainstream of its receivables came from related party transactions and
sublicense agreements to its franchisees.

Non-current assets consists of long-term

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

Benchmarking with the US Industry Averages for the


QSR Industry

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

Note:* obtained from http://www.investor.reuters.com


**obtained from the common size financial statements

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

Increase Customer Satisfaction


with our products and people

Market share in the Industry, Market


share in every food segment

Increase Satisfaction After Sale

Customer Satisfaction Survey

Understand our Customers

Market feasibility studies, Market


Survey
Product Development Cycle Analysis,
New Product Revenue, Quality
Assessment Reports

Introduce New Products

Ensure Product Quality


Minimize Operational Problems
Deliver Food Quickly
Internal Learning and
Growth 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

Quality Assessment Reports


Service Error Rate and Customer
Complaints
Delivery time Reports

Systematic Approach to Training

Training audit grades, Training log of


number and levels of training activities,
Staff turnover rates, and Mystery
customer audit grades

Align Personal Goals

Employee Satisfaction Survey Grades,


Revenue per Employee

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.

Corporate Social Responsibility and the Corporate Social Responsibility Scorecard


for the QSR Industry in the Philippines
In the modern business world, businesses must also endeavor not only to make
profits but also, to contribute to the welfare of the society. Thus, corporate social
responsibility was born to address the need for socially responsible business
organizations.
This section focuses on the activities conducted by Jollibee and McDonalds in
promoting Corporate Social Responsibility.

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

As part of the social responsibility especially to the people with hearing


disabilities, Jollibee, in 1997, began hiring, hearing-impaired people to work as staff and
crew of its Jollibee stores. They tied up with a non-government organization called
STEAM Foundation, Inc. (Special Training, Employment, Advocacy and Management,
Inc.) to promote this project after Aga Muhlach witnessed the donation of toys by a deaf
young sales clerk of Jollibee.
More than giving good food and toys to the children, it is the ultimate thrust of
Jollibee to harness their innate creativity and Filipino values. This led them to the
implementation of a program that will promote positive values and provide venues for
unleashing their talents and potentials. Thus, in 1996, Jollibee spearheaded a campaign
called Sabi ng Jollibee, Kaya Mo Kid Its first three commercials in 1997 depict the
values of love to brothers/sisters, perseverance and self-confidence. In the same year,
Jollibee launched a nationwide contest entitled Sabi ng Jollibee, Kaya Mong MagDrawing Kid! The contest selected 10 winners from among 3,000 submitted entries.
In 1998, the centennial year of Philippine independence, the campaign was
dubbed as Sabi ng Jollibee, Kaya Mong Maging Bayani Kid! in order to promote
children heroism even in small ways. Jollibee also launched another contest to develop
the writing skills of the Filipino children.
Other projects include the launching of Kaya Mo Kid Ang Aklat showing
various drawings an essays submitted in their nationwide contests, and the Kaya Mong
Mag-kuwento Kid promoting close family ties and strengthening family relationships. In
addition, a mixed-media art contest showcasing visual representations of happiness.
Another contest, Kaya Mong Ilarawan Kid! was designed to promote the imaginative

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

Corporate Social Responsibility Scorecard


Van der Woerd and Van den Brink (2004) claims that sustainability should be
included in the preparation of the balanced business scorecard. Hence, they proposed a
Responsive Business Scorecard (RBS) that integrates chain management (society) and
environmental performance (planet). It also involves community-driven strategies to
promote the welfare of the society, which is an integral part of the corporate social
responsibility of every business organization.
Table 18
Proposed CSR Scorecard for the Fast Food Restaurants in the Philippines

Society and Planet

Material Usage, Energy and


Water Consumption

Energy consumption data, Water


consumption data, Use of renewable
energy, Gas Emission Reports, Efficiency
reports

Sale points with waste


collection

Waste disposal system, Bulk cooking oil


initiative

Health and nutrition

Product nutritional information, Balanced


menus

Support Local Communities


and Charitable Programs

Participation in social initiatives, Charity


donations, Expenses for social initiatives,
Relations with the global communities,
Diverse hiring

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

References
Acuna, C., Bernaldo, R., Dy, L., Malabanan, R., & Young, L. (2004). A comparative
study on the performance and financial position of Jollibee and McDonalds for
the years 1999 2006. Unpublished undergraduate thesis. Manila, Philippines: De
La Salle University.
Atkinson, Kaplan & Young. (2004). Management accounting. New Jersey: Pearson
Education.
Bautista, J. (2002). Strategic paper for Jollibee Foods Corporation. Unpublished project
paper. Manila, Philippines: De La Salle University.
Boas, M. & Chain, S. (1976). Big Mac: The unauthorized story of McDonalds. New
York: E.P. Dutton.
Cabacungan, G. (1995). Recession-proof industry: Fast food firms brace for stiff
competition, Philippine Daily Inquirer, March 14, 1995, B1 & B4.
Corporate handbook Philippines: The definite guide to listed companies. (2004).
Hongkong, China: CEIC Data.com.
Fast food. (2006). Wikipedia, The Free Encyclopedia. Retrieved March 28, 2006 from
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.

Gibson, C. (1997). Financial statement analysis: Using financial accounting information.


Ohio: South-Western College.
Kaplan, R. & Norton, D. (1996). The balanced scorecard: Translating strategy into
action. Boston: Harvard Business School.
Kennon, J. (2006). Investing for beginners. Retrieved February 23, 2006 from
http://beginnersinvest.about.com/od/financialratio/.
Louderback, J., Holmen, J., & Dominiak, G. (2000). Managerial accounting. Cainta,
Philippines: Jemma.
Medina, R. (2003). Principles of economics. Manila, Philippines: Rex Book Store.
Mejorada, N. (2002). Introduction to management accounting for non-accounting
majors. Quezon City, Philippines: JMC Press.
Mohamad, P. (1996). Vertical analysis of statements. New Straits Times. Retrieved
February 16, 2006 from ProQuest database.
Palma, A. (2001). An update on the Philippine fast food industry. Retrieved March 24,
2006 from http://atn-riae.agr.ca/asean/e3395.htm.
Palma, A., & Bernardino, R. (1999). The Philippine fast food industry: Performance and
future directions. Food and Agri Business Papers, 16, A1 A4.
Plewa, F., & Friedlob, T. (2002). New ways to analyze cash flows. The National Public
Accountant. Retrieved February 16, 2006 from ProQuest database.
Van der Woerd, F., & Van den Brink, T. (2004). Feasibility of a responsive business
scorecard: A pilot study. Journal of Business Ethics, 55 (2), 173 186.

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

Short-term receivables, net

1,276,900,695

960,440,878

864,927,511

860,042,210

838,548,511

Inventories, net of inventory obsolescence

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

Prepaid expenses and other current assets


Total current assets
Long-term receivables
Long-term investments and interest in joint
venture
Property, plant and equipment, net
Deferred tax assets
Refundable deposits and other noncurrent assets
TOTAL ASSETS
LIABILITIES

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

Current portion of provisions

656,195,285

17,000,000

5,500,000

Other current liabilities

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

Provisions - net of current portions

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

Total Current Liabilities

Operating lease payable


Other noncurrent liabilities
Total Liabilities

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)

Additional paid-in capital

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

Less: Treasury stock


Total stockholder's equity
TOTAL LIABILITIES AND EQUITY

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

Short-term receivables, net

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

Prepaid expenses and other current assets

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

Total current assets


Long-term receivables
Investments, advances and interest in joint venture

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

Deferred tax assets

140,090,880

27,166,792

Refundable deposits and other noncurrent assets

634,280,211

731,387,128

755,283,892

761,013,864

396,268,805

Property, plant and equipment, net

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

Current portion of long-term debt

66,666,667

Income tax payable

11,438,467

17,080,898

Total Current Liabilities

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

Advances from affiliates

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

Deferred tax liability


Total Liabilities

66,666,667

Stockholder's equity (capital deficiency)


Capital Stock, P1,000 par value
Additional paid-in capital
Retained earnings (deficit)
Total stockholder's equity (capital deficiency)
TOTAL LIABILITIES AND EQUITY (DEFICIENCY)

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

Less: Cost of Sales

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

Less: Operating costs and expenses

3,255,518,125

2,976,354,986

2,457,742,884

2,570,295,449

2,245,789,430

Income from Operations

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

Other income (charges)


Income before interest and taxes
Add: Interest income

122,669,155

129,509,729

63,289,019

45,676,771

Less: Interest expense


Equity in net loss of a joint venture and
amortization of goodwill
Income before income tax and minority
interest

(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)

Benefit from (Provision for) income tax


Current
Deferred
Income before minority interest
MINORITY INTEREST
Net income

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

Total dividends paid

444,120,359

344,420,209

272,870,250

229,782,492

199,232,812

Net income retained

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)

Effect of changes in accounting


Retained earnings, beginning of the year
Retained earnings, end of the year

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

Less: Cost of Sales

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

Less: Operating costs and expenses

3,455,339,057

3,426,476,686

3,573,660,281

3,406,341,168

914,422,969

Income (Loss) from Operations

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)

Income before interest and taxes

268,571,513

45,794,281

(60,841,627)

(353,220,240)

(115,338,456)

Less: Interest expense

(30,149,376)

(40,563,686)

(34,805,117)

(202,917,152)

(517,382,857)

Income (Loss) before income tax


Benefit from (Provision for) income
tax

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)

Total dividends paid

Net income retained

343,298,686

(22,579,127)

(129,588,030)

(587,735,898)

(641,716,572)

Net income (loss)

Effect of changes in accounting


Retained earnings (deficit), beginning
of the year
Retained earnings (deficit), end of the
year

(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%

Short-term receivables, net

8.30%

7.43%

7.72%

8.82%

9.42%

Inventories, net of inventory obsolescence

7.21%

6.82%

7.30%

11.17%

10.09%

Prepaid expenses and other current assets

3.84%

5.36%

9.67%

7.74%

8.07%

Cash and cash equivalents

Total current assets

40.69%

41.18%

45.19%

39.60%

41.27%

Long-term receivables

0.45%

0.49%

0.00%

0.00%

0.06%

Long-term investments and interest in joint venture

0.79%

0.96%

1.43%

0.51%

0.04%

40.99%

44.74%

43.61%

47.16%

39.76%

Property, plant and equipment, net


Deferred tax assets
Refundable deposits and other noncurrent assets
TOTAL ASSETS

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%

Current portion of long-term debt

1.47%

1.75%

2.02%

1.16%

0.00%

Current portion of provisions

4.26%

0.13%

0.05%

0.00%

0.00%

Other current liabilities

3.68%

3.35%

4.45%

5.46%

5.29%

38.07%

33.78%

33.48%

33.03%

33.83%

Accounts payable and accrued expenses

Total Current Liabilities

Long-term debt

0.37%

2.19%

4.55%

7.55%

0.00%

Provisions - net of current portions

0.41%

0.70%

0.18%

0.00%

0.00%

Operating lease payable

5.07%

5.78%

0.00%

0.00%

0.00%

Other noncurrent liabilities

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%

Additional paid-in capital

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%

Less: Treasury stock


Total stockholder's equity
TOTAL LIABILITIES AND EQUITY

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%

Short-term receivables, net

7.30%

8.15%

8.48%

8.56%

20.68%

Inventories

8.44%

6.73%

6.20%

8.26%

3.36%

Prepaid expenses and other current assets

3.30%

2.68%

2.19%

1.64%

1.20%
25.29%

Total current assets

35.81%

28.29%

28.77%

29.77%

Long-term receivables

0.31%

0.56%

0.85%

0.20%

0.00%

Investments, advances and interest in joint venture

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%

Property, plant and equipment, net


Deferred tax assets
Refundable deposits and other noncurrent assets
TOTAL ASSETS

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%

Current portion of long-term debt

0.00%

0.00%

0.00%

1.41%

3.24%

Income tax payable

0.00%

0.00%

0.26%

0.36%

0.00%

Accounts payable and accrued expenses


Advances from a stockholder - current
Payable to affiliates

Total Current Liabilities

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%

Advances from a stockholder

100.44%

113.17%

0.00%

0.00%

Advances from affiliates

1.39%

1.45%

1.32%

1.22%

1.40%

Guaranty deposits

0.89%

0.80%

0.73%

0.51%

0.59%

Deferred tax liability


Total Liabilities

0.00%

0.00%

0.03%

0.03%

0.03%

138.37%

148.50%

142.33%

138.90%

125.67%

Stockholder's equity (capital deficiency)


Capital Stock, P1,000 par value

3.57%

3.71%

3.39%

0.36%

0.42%

Additional paid-in capital

0.02%

0.02%

0.02%

0.00%

0.78%

Retained earnings (deficit)

41.96%

52.22%

45.74%

39.26%

26.87%

Total stockholder's equity (capital deficiency)


TOTAL LIABILITIES AND EQUITY (DEFICIENCY)

-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%

Less: Cost of Sales

80.72%

80.74%

81.12%

82.49%

79.21%

Gross Profit

19.28%

19.26%

18.88%

17.51%

20.79%

Less: Operating costs and expenses

Gross Revenues

12.41%

13.74%

12.13%

13.70%

14.38%

Income from Operations

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%

Income before interest and taxes

7.50%

5.93%

6.84%

4.07%

7.23%

Add: Interest income

0.47%

0.60%

0.31%

0.24%

0.00%

Less: Interest expense

0.19%

0.26%

0.43%

0.42%

0.00%

Equity in net loss of a joint venture

0.23%

0.11%

0.08%

0.01%

0.00%

Income before income tax and minority interest

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%

Benefit from (Provision for) income tax

Income before minority interest


MINORITY INTEREST

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%

Less: Cost of Sales

41.08%

40.20%

41.37%

47.13%

0.00%

Gross Profit

58.92%

59.80%

58.63%

52.87%

0.00%

Less: Operating costs and expenses

56.30%

59.30%

57.46%

59.00%

78.12%

2.62%

0.50%

1.17%

-6.13%

21.88%

Income (Loss) from Operations


Other income

1.75%

0.70%

0.66%

0.00%

0.54%

Other expenses

0.49%

1.11%

2.81%

3.50%

32.28%

Income before interest and taxes

3.88%

0.09%

-0.98%

-9.63%

-9.85%

Less: Interest expense

0.00%

0.00%

-0.56%

0.00%

-44.20%

Income (Loss) before income tax

3.88%

0.09%

-1.54%

-9.63%

-54.05%

-0.69%

Benefit from (Provision for) income tax


Current

-0.13%

-0.47%

-0.55%

-0.55%

Deferred

1.84%

-0.01%

0.00%

0.00%

-0.07%

Net income (loss)

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

GADC -3,981,407,37 -5,072,840,38 -4,836,956,32 -21,465,341

181,711,039

Year

Appendix 10
Current ratio of Jollibee and McDonalds
Curre nt Ratio
1.50

Value

640,773,468 1,312,955,358 957,578,128

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)

Inve ntory Turnove r


25.00

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)

Tim e s Intere st Earned

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

Earnings per Share

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

GADC (37,527.28) (34,370.52) (1,578.42)


Years

Appendix 18
Book value per share for Jollibee and McDonalds

Book Value per Share


50,000.00
Value

(50,000.00)
(100,000.00)
(150,000.00)
JFC

5.80

5.58

6.53

6.97

8.19

GADC (61,788.82) (107,471.55) (22,369.08) (13,087.25) (10,753.47)


Years

Appendix 19
Return on total assets for Jollibee and McDonalds

Return on Total Assets


0.20

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

Return on Com m on Stockholders' Equity


1.00
0.80
Value

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

Gros s Margin Pe rce ntage

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

Ope rating Margin Pe rce ntage

Percentage

30.00%
20.00%
10.00%
0.00%
-10.00%

6.41%

3.82%

6.75%

5.52%

6.87%

GADC 21.88% -6.13% 1.17%

0.50%

2.62%

JFC

Ye ar

Appendix 23
Net profit margin percentage for Jollibee and McDonalds

Ne t Profit M argin Pe rce ntage

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

-10.18 -2.08% -0.39% 5.59%


Ye ar

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)