5. For this question you must use the excerpts from the financial statements of The Wendy's Company, found in Appendix 1. a. What amount of accounts payable did Wendy's have at December 30, 2018? Did this account increase or decrease over the past year? Why do you think this change occurred? b. On its Balance Sheet Wendy's lists 'current portion of long-term debt'. What does this account represent? c. Did Wendy's long-term debt increase or decrease over the past year? Why do you think this change occurred? Behind Wendy's financial statements you will see a few pages of information. This information is known as the 'notes' to the financial statements. The pages in your file only represent a small portion of the total notes to Wendy's statements. The notes to these financial statements contain important information that is not, or cannot be disclosed on the financial statements themselves. d. Look at the third page of Wendy's notes, at the section called 'commitments and contingencies'. What are contingencies? What characteristics do contingent liabilities have to have in order to be described in the notes? 10:57 AM Thu Apr 16 sanjosesu grep.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Sandhold of To the Board of Di The Wendy's DO Opinion on the Financial Statements howed he ce her of The Weds Commune the "Company of December 30, 2018 and December 31, 2017, the related consolidated statements of operations, campech e com holde quity and flows for each of the three years the period ended December 30, 2018 and the and not collectively red to as the financi m e . In our opinion, the financial p i mar the financial position of the Company of December 2015 and December 31, 2017. and the row of in perioad a few for each of the three years in the period ended December 30, 2018, in conformity with accounting principles g ally accepted in the United States of Am We have also add in accordance with the standards of the Public Company Accounting Overige Board (United S R CACB, the Company's internal control over financial reporting of December 2015, had on ceria established in Go l d Fawr 2013 and by the Committee of Sponsoring Organisations of the Treadway Commission du pont de F ary 27, 2019. pred nunqualified opinion on the Company's internal control over financial reporting Change in Accounting Principle As discussed in Noel to the financial statements, the Company has changed its method of accounting for revenue in 2018 due to the adoption of Accounting Standards Codification No. 606, w e w w w Basis for Opinion These financial Matements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our We are a public counting firm registered with the PCAOB and are required to be independent with respect to the Company in one with the US. federal securities low and the applicable rules and regulations of the Securities and Exchange Commission and the CAOB We conducted our was in accordance with the standards of the NCAR The standardering that we plan and perform the audit to obtain reasonable asurance out whether the financial st ats are free of material mitment, whether due to fad. Our its included performing pedures to the risk of material miatement of the financial statements, whether due to or fraud and performing procedures that respond those risks. Such procedures included amining on a bus evidence rending the amounts and disclosures in the financial statements. Our audits also induded evaluating the accounting principles and significant estimates made by management as well as w ing the overall presentation of the financial a s we believe that our adies provide a reasonable basis for our opinion Del & Touche LLP Columbus, Ohio February 27, 2019 We have served as the Company's auditor since 1994 THE WENDYS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Thow we ASSETS 10:57 AM Thu Apr 16 sarjasesu grep.com THE WENDY'S COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS in Tho r va) ASSETS $431.05 29 MO 109.05 C hand cash equivalen ...... Rew a ............ Accounts and mo b ile net Inventories.. Prepaid exp a nd cher current Advertising fun c tie Tocal current 76 1916 361 114190 16 20.125 62.602 40453 1.261,099 74.134 1.321,585 665.718 12112 747,854 1294153 Goodwill ..... Other intangible ... Investments.. Net investment in direct financing less Other Town 226,477 229,089 2.516 $ 4,026938 $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Current Current portion of long-term debt... Accounts payable ...... Accrued expenses and other current liabilities Advertising and restricted ties ..... Total current abilities.... 31,655 21,741 150.6 NO.153 0.172 2764 111,024 2752785 26.160 37.162 2.734.290 29.053 JONNI 222109 3.523.795 245.226 Dunedincome Deemed franchise fees..... Others Teliabilities Commis coming Senholdet Commonweck, S. 10 per value 1.500.000 shares wuthod: 470,424 shares sed: 231 23 and 240,512 whares and respectively A l pailin capisal.. .. Resined caming defici) ....... Commonweck in , 29.191 and 229 912 shares respectively... Acumulheresie loss Toale ty Toallilities and sockholders' equity 4704 284.66 25.955 12.367.893) 2.150207 (46.19 4 2035 $40269 See accompanying notes to consolidated financial statements THE WENDY'S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTEN 10:57 AM Thu Apr 16 sarjasesu grep.com THE WENDY'S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS in Thewandte Per Share Amount 651.577 6 025930,758 410503 71.545 190.103 143.115 Franchise rental income Advertising funds 1.589.936 1.2008 1.435.418 548,5 25.01 517935 16125 BROIS 09 6, 67,760 Coses and expenses Cost of Franchise support and ocher costs Franchise en Advertising and expenses General and administrative Depreciation and action. System operation ains) ose net Reorganisation and realignment costs Impairment of long-lived at Other operating in het 201593 12567 39,076 22574 217449 12.79 (463) 9.00 4,697 16.387) 1.340,044 249,892 4097 (8.652) 1.008 650 214.758 (11.059) 276 122204 (1981) 10. 03 16.241 (19.969 1.120,638 314.780 (114.802 L Operating profit... Interest pense net ocaly extinguishen of debt Investment income Other income, et Income before income (Provision for benefit from income taxe Ne income Net income per share Basic Dikused 574,916 101019 91010 $ 460,115 S 194029 101.00 672.066 129.624 19355 49 See accompanying not to consolidated financial statements 10:58 AM Thu Apr 16 sarjasesu grep.com 4 of 6 THE WENDY'S COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Nei ... .................... .. (119 Impo Dded income a Non-cash w in Netrece of deliv ering 9006191) D 11.713 1146 i ved from Timmt w Equity in caring inj e t. Long term detected activitietee bew) ............ Changes in pering 4213 Pandaher curs Advertising funds estradas and liabilities Acable Accred and we can abilities Net cash provided by operating activities Cash flows from investing activities Capital 2 191 Proceeds from we of investments Notes recent Netcash provided by (ned in investing Cahfws from financing activities Proceeds from long-term debt... Hapalong web 5.721 Repucs of common stock... Dividende Proceeds from caption Pays w a x withholding for share base Coming Natch in financing activities Nachwed by to change 6412060) change Elfecoaching changes ... Nerin de in cash equivale and w e Catchi n g of Cachir ed and operiod cach 52 And Ninh N Accounts and c omprimarily o principally from fronde credit card do w ed a specifici in p erty and frie foede the for for ad en dhe financiare d The Company's in cordance with the fine and the lower o or wale wale without dermined in s de soli