Company Research
Company Selection
1. What company did you choose (give your companys complete name)?
Dine equity is the company selected for the analysis; initially it was called ihop Corp
2. What internet sites were used to get your companys information?
Website used: .dineequity.com/”>http://www.dineequity.com/
3. What is the companys headquarters address?
405, North Brand Boulevard, Glendale, California 91203-2306
4. Why did you select this particular company?
Random
5. Where is the company incorporated?
The company was incorporated under the laws of the state of Delaware in 1976.
Company Profile
1. What is the nature of the companys business? Are they a manufacturer or merchandiser?
The company is into dinning and restaurants. The company has engaged in the development, franchising and operations of IHOP restaurants. The company owns and operates two restaurant concepts i.e. Casual dining and Family dining. The company focuses on retail sales, franchisees and area licensees.
2. What is the companys industry?
The company is in Restaurant and dining industry
3. What is the SIC – Standard Industrial Classification Code for your company? What is the NAICS Code?
The SIC code of the company is 5812 and NAICS is 72210
4. What are the primary products/ brands of the company?
The primary brands of the company are Applebees and IHOP, the company is into casual dining and family dining.
5. Who are the primary customers of the company?
The company focuses on attracting casual as well as family dining.
6. Corporations experience many wide-ranging social, political, economic and technological issues. List and discuss risks and uncertainties that could materially affect the companys business.
There are different risks associated with the company are:
· General economic conditions in respect to national, regional and local conditions, the conditions affecting the demographics of the guests visiting Apple bee or IHOP. Economic conditions do affect the income disposal of the company, with the change in economic conditions the traffic of the customer is affected which in turn affects the sales of the company.
· Indebtedness affects the financial health of the company.
· Decline in the financial conditions of the company, affects the financial health and impairment of the company.
· The restaurant industry is one of the most competitive industry, the competition affects the revenues, margins and market share of company.
· The restaurant is highly affected by traffic patterns, demographics and location of the competing restaurants.
· The risk in respect to meeting the needs and requirements of the consumers, the company is affected by the food quality, taste and innovative menu items in the restaurant.
· Experiencing shortage or interruptions in the supply or delivery of food which includes fresh produce, groceries and other food products.
· Change in the preferences of the consumers in terms of health and dietary food items.
· Dependency of the organization on the franchisee.
· Risks associated with the franchisee, business with the franchisee, business partners and vendors in the foreign markets.
· Recognition of different franchisee also affects the reputation of the brand.
7. Who are the Company Chairman and CEO?
Julia A. Stewart is the chairman and CEO of the company.
8. How many board members does your company have?
The number of board members of the company are 11.
9. Who is the companys independent auditor?
Ernst and Young are the independent auditor of the firm.
10. Does the company discuss any recent accounting pronouncements that they are in compliance with? Briefly list and describe them.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and Other – Testing Goodwill for Impairment (“ASU 2011-08”). The amendments in ASU No. 2011-08 are intended to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2011-08 will be effective for our fiscal years beginning after December 15, 2011; earlier adoption is permitted. As the amendments do not change the underlying principle that the carrying value of goodwill should not exceed its implied fair value, the adoption of ASU 2011-08 is not anticipated to have a material impact on our consolidated balance sheets, statements of income or statements of cash flows.
11. Does the company have any foreign operations? If so, what are they?
The company does not have foreign operations.
12. List and briefly discuss any legal proceedings.
The company has one legal proceeding i.e. Gerald Fast v. Applebee’s, a legal proceeding under Fair labor standards act in which named plaintiffs claim that tipped workers in company restaurants perform excessive amounts of non-tipped work for which they should be compensated at the minimum wage.
Stock Market Information
1. What is the companys stock exchange ticker symbol?
The companys stock exchange ticker symbol is DIN.
2. On what stock exchange is your company listed?
NYSE
3. What is the current stock price, 52 week high, low? (Give the date.)
Current Stock Price: $ 52.14 (08/02/12)
52 week high: 54.74
52 week low: 35.20
Articles about the Company
(Attached to end of the document)
1. Find recent articles (3) about your company, attach a copy to this report and provide a written summary of each article. (Indicate the source and date of each article below.)
2. Find recent press releases (3) from your company, attach a copy to this report and provide a short written summary of each press release. (Indicate the source and date of each press release below.)
Annual Report Overview
1. Review the Management Discussion and Analysis. Summarize the major points
made in the analysis.
The management discussion and analysis brings into picture the overview of the company, the company has two concepts of business i.e. casual dining and family dining, the company operates in retail outlets and franchisee operates restaurants.
The company has about 3500 restaurants operating worldwide, majorly in united states. The report also brings into picture the overall strategy of Dine equity and Applebees which has a strong focus on reducing debt and improving its profitability.
The company also have a strong focus on improve margins and restaurant level economics. The company focuses on capturing the energy and innovation so as to keep its brand relevant, dynamic and enticing. The report also brings into picture the highlights of the performance of company in 2011. The company brings into picture its rental, franchisee and owned operations.
2. Locate the Managements Report on Internal Control. Answer the following questions:
a. Who is responsible for establishing and maintaining adequate internal control over financial reporting?
The companys management is responsible for maintaining the internal control which is audited by the independent auditor.
b. Does the company maintain a system of internal controls? Why?
Yes, the company maintains the internal control as it is important for the company to have adequate internal control which helps in safeguarding its assets.
c. Who has signed this report?
The independent auditor, Ernst and Young LLP signed the report
3. Locate the Report of Independent Registered Public Accounting Firm. Answer the following questions.
a. Who is responsible for
preparation and integrity of the financial statements?
The companys management is responsible for preparation and integrity of the financial statements.
b. According to this report what is an audit?
The audits as per the PCAOB, i.e. the statements are free from any misstatement of financial reporting.
c. According to the audit report, what is the auditors responsibility?
The auditors responsibility is to analyze the appropriation of the financial statement and analyzing its truthfulness.
d. Summarize the auditors opinion.
The auditor has classified it as an unqualified opinion.
e. What standards were used to conduct the audit?
The standards presented by PCAOB are used to conduct the audit.
4. Locate the Report of Independent Registered Public Accounting Firm. Answer the following questions.
a. Have the auditors conducted an audit of managements assessment on internal controls?
Yes, the auditors conducted an audit of managements assessment on internal controls.
b. What standards were the audit conducted in accordance with?
The company conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
c. What is the auditors opinion with regards managements assessment on the firms internal controls?
In the auditors opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DineEquity, Inc. and Subsidiaries at December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.
d. Who has signed this report?
The independent auditor, Ernst and Young LLP signed the report
5. Does the company have a corporate mission? Summarize and discuss it.
The company mission is to provide best dining experience to the target audience. Its mission is to achieve for its members the benefit of continuously available goods, equipment and distribution services in adequate quantities at the lowest possible sustainable prices.
6. Has your company undergone any reorganization in the past 3 years? If so, discuss.
The company has acquired Applebee and had renamed its brand from ihop to dineequity.
7. Does your company have a corporate governance (code of ethics) section on its website? If so, briefly summarize its contents.
Yes, the company has a strong focus on corporate governance which takes into consideration different committee charters and governance documents which displays the corporate governance guidelines and the global code of conduct of the company.
Balance Sheet
1. What years are you using for the balance sheet date?
The balance sheet used is for year 2011.
2. Is this a fiscal year or a calendar year?
This is the fiscal year of the company.
3. The accounting equation is Assets = Liabilities + Stockholders Equity. Give the companys accounting equation at the end of the current and prior years.
Assets
Liabilities
Equity
Current Year:
2614294
=
2459074
+
155220
Prior Year:
2856641
=
2773062
+
83579
Two Years Ago:
3100868
=
2843914
+
69904
4. List the total amount of the following subtotals for the past three years.
Current Year:
Prior Year:
Two Years Ago:
Current Assets
276947
351102
337144
Current Liabilities
257644
265082
257967
5. Calculate the companys current ratio for the past three years. (Show your computation.)
Current Year:
Prior Year:
(351102/265082) = 1.32
Two Years Ago:
(337144/257967) = 1.30
a. Explain what these numbers mean. (Use complete sentences.)
The current ratio tells into picture the short term liquidity of the firm. The current assets is 1.07 times that of current liabilities in 2012.
b. Has the current ratio improved or worsened? Explain. (Use complete sentences.)
The current ratio has deteriorated in 2011 as compared to 2010. The ideal ratio should be 2 times, the current ratio has decreased to 1.07 from 1.32.
6. Calculate the companys quick or acid-test ratio for the past three years. (Show your computation.)
Current Year:
(Current Assets Inventory prepaid expenses)/ current liabilities
(276947-12031-13922-36643)/257644 = 0.83
Prior Year:
(351102-10757-34094)/265082 = 0.79
Two Years Ago:
(337144-12236-7702-19878-13425)/257967 = 1.10
a. Explain what these numbers mean. (Use complete sentences.)
It is a more conservative measure of liquidity. It refers to the extent to which current liabilities are covered by current assets except inventories. This means that excluding inventories and prepaid expenses the company has its current assets 0.79 times that of current liabilities.
b. Has the quick ratio improved or worsened? Explain. (Use complete sentences.)
The quick ratio of the company has deteriorated in 2010 as compared to 2009, it has improved in 2011.
7. Calculate the companys working capital for the past three years. (Show your computation.)
Current Year:
276947 257644 = 19303
Prior Year:
351102 265082 = 86020
Two Years Ago:
337144 257967 = 79177
a. Explain what these numbers mean. (Use complete sentences.)
Working capital is current assets less current liabilities i.e. the available cash or liquid assets that is available with the company.