The comparative segment revenues for Yum! Brands, a global quick-serve restaurant company, are as follows:
Recent Year (in millions) Prior Year (in millions) China$ 6,909 $ 6,934 KFC2,948 3,193 Pizza Hut1,145 1,148 Taco Bell1,988 1,863 India115 141 Total$13,105 $13,279
a. Provide a horizontal analysis of the segment revenues using the prior year as the base year. Round whole percents to one decimal place.
b. Provide a vertical analysis of the segment revenues for both years. Round whole percents to one decimal place.
c. What conclusions can be drawn from your analyses?
Answer:
a. Horizontal analysis:
Amount Percent
China$ 6,909 $ 6,934 $ (25) –0.4%
KFC 2,948 3,193 (245) –7.7%
Pizza Hut1,145 1,148 (3) –0.3%
Taco Bell1,988 1,863 125 6.7%
India115 141 (26) –18.4%
Total revenues $13,105 $13,279 $(174) –1.3%
b. Vertical analysis:
China$ 6,909 52.7% $ 6,934 52.2%
KFC 2,948 22.5% 3,193 24.0%
Pizza Hut1,145 8.7% 1,148 8.6%
Taco Bell1,988 15.2% 1,863 14.0%
India115 0.9% 141 1.1%
Total revenues $13,105 100.0% $13,279 99.9%
*The sum is less than 100% due to rounding errors in the percentage calculations.
c. The total revenues have declined by 1.3% between the two years. The largest
declines occurred in the KFC (−7.7%) and India (−18.4%) segments. These
declines more than offset the increase in the Taco Bell segment. Thus, overall,
there was a small decline in revenue. The vertical analysis indicates that China
represents the largest segment as a percent of revenues (52.7%), followed by
KFC (22.5%) and Taco Bell (15.2%). The KFC segment dropped significantly as a
percent of revenues between the two years (24.0% vs. 22.5%), while Taco Bell
grew as a percent of total revenues between the two years (14.0% vs. 15.2%).
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