Project Overview Find two consecutive years of financial statements from a publicly-traded company. Conduct a financial analysis and calculate financial ratios. Deliverable You have two deliverables...

Introduction
We have selected Dineequity Inc. as the subject of our study in this paper. It is an NYSE listed
company which operated into the restaurant industry. Dineequity Inc. is into restaurant business
and operates mainly in two categories i.e. casual dining and family dining. Dineequity operates
in both these divisions by its two wings which are:-
a) IHOP (international house of pancakes©.
) Applebee’s.
With more than 3,500 restaurants combined in 18 countries and over 400 franchisees, Dineequity
is one of the largest full-service restaurant companies in the world. The reason behind choosing
Dineequity as the subject matter of study is its unique concept of running two separate style of
food chain across the world. Dineequity run two separate food chains which are as under:-
1) International house of pancakes (IHOP).
2) Applebee’s Neighborhood Grill and Bar.
The basic intent of the company behind running two different types of food chains is to entertain
two different types of customers. IHOP is dedicated to the family dining whereas Applebee’s
neighborhood grill and bar is dedicated to casual dining.
Income statement analysis
The income statement exhibits a negative trend of companies’ revenue over the period of three
years i.e. 2011, 2010 and 2009. The negative trend in the companies’ revenue shows that
company is unable to manage its operations efficiently and due to inefficient management of the
companies’ operations the company has lost a significant market share.
Due to fall in the revenue the gross profit has also fall during last three years. Gross profit of
every organization is directly linked to the sales made by them, and if the sales amount of any
company reduced then the amount of its gross profit will also reduce.
If we analyze the net profit figures of last three years carefully then we will come to know that
the reason for low profitability during 2009 and loss during 2010 are the high interest expenses
during both these years and loss on extinguishment of debt and temporary equity. During 2010
amount of loss on extinguishment of debt and temporary equity was very high due to which the
companies’ income statement shows net loss during that year.
Trend in profit margin during all three years is same as that of net profit figures during all these
years because the profit margin is directly related to the net profit figures of the year.
During year 2011 companies restaurant sales has reduced significantly which has led to low
profit for year 2011. Company has incu
ed debt modification cost during 2011 which is not
eing incu
ed during any of two previous year, debt modification is done to provide relief to the
o
ower, sometimes due to the inability of the bo
ower the lender modifies the debt agreement
in order to provide the relief to the bo
ower by either extending the time period for repayment of
loan or by either reducing the interest charges.
Cash flow Analysis
Cash flow statement of the company shows that the cash flows of the company have not
emained stable during past few years. The net cash flows of the company have remained
negative for year 2011 and 2009. Main reason for the net negative cash flows is the negative cash
flow from financing activities.
Major activities in operating section of the statement of cash flow are Depreciation and
amortization expenses, Gain on disposal of asset and net income. All non-cash expenditure
which is deducted from the income statement is added in the statement of cash flow to a
ive the
net cash flow from operations.
Major investing activity in...