Balance Sheet Analysis Applebee's International

1894 WordsJul 31, 20058 Pages
Balance Sheet Analysis Applebee's International 2004 In analyzing the common-size balance sheet for Applebee's, it is noted that the total current assets has jumped from 11% to 14% of the total assets. The total assets for Applebee's has jumped 6% from 2000 to 2001 driven by increased in the total current assets of 28%. Of those 28% increase, they consisted of 88% increase in the Cash & Equivalents (increased of $10.6 millions) caused by the decreased in the Capital Stock repurchasing in 2001 by Applebee's. The repurchase of capital stock has decreased by 31% as noted from the year-to-year percentage changes of the Statement of Cash Flow which equivalent to about $11 million dollars. The other current assets increased was from the…show more content…
The common-size of net property & Equipment jumped from 66% in 2001 to 68% in 2002. There is a consistent trend of Applebee's in repurchasing it's common stock as shown by the increased of Treasury Stock Account. A big jumped in repurchasing was noted in 2004. A year to year comparison has shown Applebee's increased is repurchasing activities by 30% from 2003 to 2004. This is evident from the management intention to distribute it's earnings to the shareholders in order to maximize shareholders' wealth and also to prevent dilution of shares when distributed options and compensations are exercised. However, considering the financial situation of Applebee's is running low in cash reserve, a red flag is raised because it will be in the best interest for the company to scale back it's repurchasing program to conserve cash to pay for it's obligations such as deferred taxes. There is an increasing trend that Applebee's are delaying the accounts payable evident from the consistent increase in the Account Payable amounts. It has been steadily increasing since 2001 to 2004 and may be a potential redflag that Applebee's are delaying the payments in order to conserve and inflate more cash. In 2004 there was also a deferred income tax of $29 million that Applebee's has not paid. From the cash & equivatlents balance, Applebee's does not have enough money to pay the income taxes without tapping into it's available credit line, and there is

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