Case 1: Review the requirements of the Chapter 3 Mini-Case, parts b through j. Do the analysis on the basis of the figures for the most recent year. For part g, use the 2 most recent years.

Download 10K financial statements for the most recent year for Brinker. A good source is the company's home page. Also compare the Brinker ratios to the industry averages and commend on significant differences. You'll note that some of the company's ratios you calculate won't agree with those found on the web page. Ratios are calculated in different ways, however, you should use the formulas in the text. Also, you won't find all of the industry averages, but you will find most of them. You'll need the company's stock price for several of the ratios; use the fiscal year end price. The company's stock symbol is EAT. ? (Visit Brinker web site) (Links to an external site.) http://www.brinker.com/ ? (Access industry averages) (Links to an external site.) http://www.investing.com/equities/brinker-international-inc-ratios Note: All quantitative work must be done in Excel; Word is not acceptable. You can download Brinker's 10K (annual financial statements they send the Securities and Exchange Commission each year) at the following site: http://phx.corporate-ir.net/phoenix.zhtml?c=119205&p=irol-sec b. calculate the 2016 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position? We often think of rations as being useful 1. To managers to help run the business, 2. To bankers for credit analysis, and 3. To stockholders for stock valuation. Would these different types of analysts have an equal interest in the liquidity ratios? c. Calculate the 2016 inventory turnover, days sales outstanding, fixed assets turnover, and total assets turnover. How does Brinker utilization of assets stack up against that of other firms in its industry? d. calculate the 2016 debt ratio, liabilities to assets ratio, times-interest-earned, and EBITDA coverage ratios. How does Brinker compare with the industry with respect to financial leverage: what can you conclude from these ratios: e. Calculate the 2016 profit margin, basic earning power, return on assets, and return on equity. What can you say about these ratios? f. Calculate the 2016 price/earnings ratio, price/cash flow ratio, and market/book ratio. Do these ratios indicate the investors are expected to have a high or low opinion of the company? g. Perform a common size analysis and percentage change analysis (last 2 years). What do these analyses tell you about Brinker? h. use the extended DuPont equation to provide a summary and overview of Brinker's financial condition as projected for 2014. What are the firm's major strengths and weaknesses? i. What are some potential problems and limitations of financial ratio analysis? j. What are some qualitative factors that analysts should consider when evaluating a company's likely future financial performance.

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Krista Wampler Mini Case - Chapter 3 for Brinker Consolidated Balance Sheet 3/20/2016 Mini Case - Chapter 3 Ratio Analysis Liquidity Ratios ASSETS Cash Short-term Investments Accounts Receivable Inventories Total Current Assets Gross fixed assets Less: Accum. Depreciation Net fixed assets Total assets 2014 57,690.00 47,850.00 23,640.00 129,180.00 22,592.70 -12,957.60 35,550.30 59,190.30 46,590.00 23,040.00 124,750.00 23,280.00 -12,028.10 35,308.10 58,348.10 929.50 = Current Assets Current Liabilities = 58,348 = 2,430 24.00859976 x Quick Ratio = Current Assets - Inventory Current Liabilities = 35,308 = 2,430 14.52828869 x Inventory Turnover = COGS Inventory = -111,183 = 23,040 -4.82565104 x = Receivables Annual sales/365 = 46,590 = 761,736 0.061162923 days Fixed Asset Turnover = Sales Net fixed assets = 761,736 = 836,840 8.41 x Total Asset Turnover = Sales Total assets = 7,035,600 = 58,348 120.58 x Total Debt Total assets = 9,708 = 58,348 16.64% = Total liabilities Total assets = 2,430 = 58,348 4.17% = EBIT Interest charges = 680,992 = 7,361 92.51351719 x = EBITDA + lease payments Int+ loan repmt+lease pmts = = x = 737,055 = 761,736 96.76% 680,992 = 58,348 1167.12% Asset Management Ratios 1,029.30 3,123.90 4,053.40 8,323.00 176.20 23,065.30 23,241.50 35,617.90 Current Ratio DSO Liabilities & Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock Retained earnings Total equity Total liabilities & equity 2015 55,120.00 1,401.00 2,430.30 9,708.30 176.20 24,316.80 24,493.00 36,631.60 Debt Management Ratios Mini Case - Chapter 13 Income Statement Debt = Fiscal Years 2014 2015 Liabilities to Assets Sales Cost of goods sold Depreciation Total operating costs EBIT Interest expense EBT Taxes (40%) Net income 734,982.00 761,736.00 24,898.00 22,479.00 -136,081.00 -138,764.00 623,799.00 645,451.00 604,837.00 680,992.00 6,963.00 7,361.00 597,874.00 673,631.00 -58,640.00 -63,424.00 656,514.00 737,055.00 Profitability Ratios 12/31/2014 12/31/2015 Other Data $58.69 $47.95 Stock price 646 606 Shares outstanding $1,016.905 $1,216.463 ** EPS (earnings per share) net income - dividends on preferred stock/shares $0.273 $0.291 DPS (dividend per share) sum of dividend - SD / shares 40% 40% Tax rate $36.000 $40.424 Book value per share equity/shares outstanding Lease payments Sinking fund payments = Net income for common SH Sales = EBIT TA = Net income for common SH Total assets = 737,055 = 58,348 1263.20% = Net income for common SH Common equity = 737,055 = $36,632 2012.07% **note - there are not preferred shares outstanding according to http://www.investing.com/equities/brinker-international-inc-balance-sheet Dupont Equation = = = PM TA T/.O 96.76% 17449.53% 120.58 Equity Multiplier 1.50 Ratio Analysis Current Quick Inventory Turnover Days sales outstanding Fixed Asset turnover Total asset turnover Debt ratio Liabilities to total assets TIE EBITDA coverage Profit margin Basic earning power ROA ROE Price/earnings (P/E) Price/cash flow Market/book SUMMARY 2015 Industry Average 24 2.7x 14.5 1.0x -4.8 6.1x 0.06 32 8.41 7.0x 120.58 2.5x 16.64% 32.00% 4.17% 50.00% 92.51 6.2x 8.0x 96.76% 3.60% 1167.12% 17.80% 1263.20% 9.00% 2012.07% 17.90% 16.2x 7.6x 2.9x Financials Mini Case - Chapter 3 - Brinker Consolidated Balance Sheet (In Thousands) ASSETS 2015 Cash . Accounts receivable, net Inventories Prepaid expenses and other Deferred income taxes Total Assets Property and Equipment: Land Buildings and leasehold improvements Furniture and equipment Construction-in-progress Sub Total Less accumulated depreciation and amortization Net property and equipment Other Assets: Goodwill Deferred income taxes Intangibles, net Other Total other assets Total assets LIABILITIES AND SHAREHOLDERS (DEFICIT) EQUITY Current Liabilities: Current installments of long-term debt Accounts payable Gift card liability Accrued payroll Other accrued liabilities Income taxes payable Total current liabilities Long-term debt, less current installments Other liabilities Commitments and Contingencies (Notes 9 and 14) Shareholders (Deficit) Equity: Common stock 250,000,000 authorized shares $0.10 par value; 176,246,649 shares issued and 60,585,608 shares outstanding at June 24, 2015 and 176,246,649 shares issued and 64,558,909 shares outstanding at June 25, 2014 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Less treasury stock, at cost (115,661,041 shares at June 24, 2015 and 111,687,740 shares at June 25, 2014) Total shareholders (deficit) equity Total liabilities and shareholders (deficit) 2014 55,121.00 46,588.00 23,035.00 62,480.00 2,493.00 189,717.00 57,685.00 47,850.00 23,643.00 65,506.00 16,170.00 210,854.00 147,763.00 1,546,957.00 618,084.00 15,001.00 2,327,805.00 149,184.00 1,483,894.00 593,344.00 32,844.00 2,259,266.00 -1,295,761.00 1,032,044.00 -1,202,812.00 1,056,454.00 132,381.00 30644 16642 133,434.00 30090 18841 34445 40931 214112 223296 1435873 1490604 3,439.00 92,947.00 114,726.00 82,915.00 111,197.00 13,251.00 9/28/3045 $970,825.00 125,033 27,884.00 102,931.00 104,378.00 77,585.00 146,054.00 7,278.00 2/29/3176 $832,302.00 129,098 $17,625.000 $17,625.000 $490,111.000 -$8,630 2431683 2930789 -3009249 $484,320.000 -$940 2306532 2807537 -2744443 -78460 1435873 63094 1490604