Critique of Jollibee Foods Corporation Financial Statements

Republic of the Philippines
Carlos Hilado Memorial State College

Brgy. Estefania, Fortune Town, Bacolod City, Negros Occidental
College of Business, Management, and Accountancy
CRITIQUE OF
JOLLIBEE FOODS CORPORATION
Doing business under the name and style of Jollibee
FINANCIAL STATEMENTS
______________________________
Submitted to:
Submitted by:
BARBON, IAN
CABRILLOS, JANINE H.
MORIZO, JAQUELINE B.
SEMBRANO, JENNYLOU
BSA 2-A
I. Background of the Company
Jollibee's story is a classic rags-to-riches tale of a hardworking family seeking success in greener
pastures. Born in a poor family who migrated from Fujian Province in China to the Philippines to
search of a better life, Mr. Tony Tan Caktiong became involved in the restaurant business at an
early age when his father opened a restaurant in Davao. He earned a bachelor's degree in
chemical engineering from the University of Santo Tomas. When he was 22, a visit to an ice
cream factory inspired him to open a Magnolia Dairy Ice Cream franchise - Bankerohan, Davao
City and Cubao, which he did with P350,000 from his family's savings. Tan Caktiong decided
that ice cream wasn't going to be enough, so he added new savories to the menu. Hamburger
sandwiches were introduced, and they were so successful that he ended his franchise in 1978 and
converted his restaurants to the first Jollibee iteration. A year later, the popular spaghetti was
introduced, followed by the much-loved fried chicken. Jollibee continued to dominate the
following decade, introducing the palabok, Champ hamburger, Jolly Twirls, and, in the 1990s,
the Jolly Hotdog and Peach Mango Pie that continues to be the bestsellers in the present
Jollibee Foods Corporation (JFC) was incorporated on January 11, 1978. It grew to sales of 2
million Philippine pesos by 1978 and seven stores operated in the metropolitan Manila area that
same year, with the Yumburger as the flagship product. Jollibee became the Philippines' leading
fast food chain in 1985. The chain opened its first location in Taiwan a year later, followed by
one in Brunei in 1987. In the same year, the company's sales reached 570 million pesos. After
five years, revenues had risen to over 3.3 billion pesos. Jollibee was the first food service firm to
be listed on the Philippine Stock Exchange in 1993, increasing its capitalization and setting the
groundwork for continued growth both locally and internationally. Jollibee's international
operations continue to expand, with 18 new stores opening in 2013 and consistent growth across
all markets.
Currently, Jollibee Foods is now one of Asia's top quick-service restaurant chains by market
value and has become a household name in the Philippines. It is the Philippines' largest fast-food
chain, with over 900 stores. As the Philippines' global market leader, it enjoys the lion’s share of
the local market than all the foreign brands combined. Outside of the Philippines, the company
has opened more than 100 stores in the United States, Vietnam, Hong Kong, and Saudi Arabia.
Kuwait, Brunei, and Singapore is establishing itself as international QSR players.
The Company's principal business is the development, operation and franchising of quick service
restaurants (QSR) under the trade names "Jollibee" chicken-hamburger chain and the company's
flagship chain, "Chowking” the oriental food market, "Greenwich" the pizza-pasta fast food
segment, "Red Ribbon" a bakery chain, “Mang Inasal” which offers its specialty the grilled
chicken "Yong He King" and "Hong Zhuang Yuan" in China, "Burger King", "Highlands
Coffee" and "PHO24" in Vietnam, "Hard Rock Café", "Dunkin' Donuts", "Smashburger", "Tim
Ho Wan", "Tortas Frontera", "The Coffee Bean & Tea Leaf" and "Panda Express". The other
activities of JFC include manufacturing and property leasing in support of the QSR systems and
other business activities. JFC wholly owns Freemont Foods Corporation, which owns and
operates Jollibee stores in Visayas and Mindanao, and Grandworth Resources Corporation, a real
estate firm that owns or leases some of the properties used as store sites, in addition to the
subsidiaries that develop and run the Company's QSR trade names.
II. STATEMENT OF COMPREHENSIVE INCOME / INCOME STATEMENT
A. STRENGTHS
B. WEAKNESSES
III. STATEMENT OF FINANCIAL POSITION
A statement of financial position is a formal statement showing the three elements comprising
financial position, namely assets, liabilities and equity. Investors, creditors and other statement
users analyze this to evaluate such factors as liquidity, solvency and the need of the entity for
additional financing. Assets are what a company uses to operate its business, while its liabilities
and equity are two sources that support these assets. It is important to note that a balance sheet is
a snapshot of the company's financial position at a single point in time. And here are the
strengths and weaknesses of how Jollibee Foods Corporation prepare or present this statement.
A. STRENGTHS
 As you can see from their statement of financial position, it is broken into two main areas.
Assets are on the top, and below them are the company's liabilities and equity. It is also clear
that this financial position is in balance where the value of the assets equals the combined
value of the liabilities and shareholders' equity.
 The assets and liabilities sections of the balance sheet are organized by how current the
account is. So for the asset side, the accounts are classified typically from most liquid to
least liquid. For the liabilities side, the accounts are organized from short to long-term
borrowings and other obligations.
 Amounts are presented and labeled in a clear and understandable manner which is also
consistent from period to period.
 Further sub-classifications of line items presented are made in the notes in order to enhance
the understandability of the financial statement. Redundancy can lead to fair presentation.
Standards have the say. Sometimes, the notes have to be redundant in stressing out the
emergence of applications, measurement, and valuation of items that are covered by a
particular accounting standard.
 It has presented two consecutive years for the users to compare all the line items and to
know what has changed. Comparability increases the utility of financial statements.
B. WEAKNESSES
IV. STATEMENT OF CHANGES IN EQUITY
Also referred to as a statement of owner’s equity or statement of changes in equity – is a

financial statement that contains reconciliation of the beginning and ending balances in a
company’s equity during a reporting period. As per IAS 1, the statement of changes in
equity is one of the five components of complete financial statements counting income
statement, balance sheet, statement of changes in equity, notes to financial statements, and
cash flow statements. This statement's main function is to summarize the activity in take
equity accounts and help users of financial statement to identify the factors that cause a
change in the owners’ equity over the accounting periods. While movement in shareholder
reserves can be seen on the balance sheet, the statement of changes in equity contains
important information about equity reserves that is not presented separately elsewhere in the
financial statements and may be helpful in determining the nature of change in equity
reserves. Share capital issue and redemption during the period, the effects of changes in
accounting policies and correction of prior period errors, gains and losses recognized outside
the income statement, dividends declared, and bonus shares issued during the period are all
examples of such information.
A. STRENGTHS
B. WEAKNESSES
V. STATEMENT OF CASH FLOW
A. STRENGTHS
B. WEAKNESSES
VI. CONCLUSIONS AND RECOMMENDATIONS
A. STATEMENT OF COMPREHENSIVE INCOME / INCOME STATEMENT
B. STATEMENT OF FINANCIAL POSITION
A balance sheet, along with the income and cash flow statement, is an important tool for
investors to gain insight into a company and its operations. It is a snapshot at a single point in
time of the company's accounts—covering its assets, liabilities and shareholders' equity.
The purpose of a balance sheet is to give interested parties an idea of the company's financial
position, in addition to displaying what the company owns and owes. It is important that all
investors know how to use, analyze and read a balance sheet. A balance sheet may give insight
or reason to invest in a stock. Alone, the balance sheet doesn’t provide information on trends,
which is why you need to examine other financial statements, including income and cash flow
statements, to fully comprehend a company’s financial position.
Businesses can read their statement of financial position to better understand the company’s
accounts at a specific moment in time. You need to analyze your business’s reported assets,
liabilities and equity to get a clear picture of what your company owns and owes on a single date.
You need to understand its different elements and what the reported figures tell you about the
health of your business
RECOMMENDATION
 Encode information with accuracy and with precision. Makers of financial statements must
exercise due care in encoding of information in the soon-to-be published financial
statements. Errors resulting from such carelessness may mislead users of financial
information in making economic decisions for the company
C. STATEMENT OF CHANGES IN EQUITY
Statement of Changes in Equity is the reconciliation between the opening balance and
closing balance of shareholder’s equity. It's a financial statement that summarizes the
transactions involving the shareholder's equity over an accounting period. This report tracks
changes in retained earnings, other reserves, and share capital, such as the issuance of new
shares and the payment of dividends. It presented the company's profit or loss for a reporting
period, other comprehensive income for the period, the effects of changes in accounting
policies and corrections of material errors recognized in the period, and the amounts of
investments by, and dividends and other distributions to equity investors during the period.
It is important for financial statement forecasters and critics because it allows them to get
insight into the reasons that cause a change in owner's equity throughout a certain accounting
period. Furthermore, the statement of change in equity provides detailed information about
changes in equity share money throughout a certain accounting period that is not available
from any other financial statement. These facts make it easier for stockholders and investors
to make informed decisions about their reserves and for understanding the nature of variation
in equity investments.
RECOMMENDATION
D. STATEMENT OF CASH FLOW

VII. REFLECTIONS / LEARNINGS
BARBON, IAN
CABRILLOS, JANINE H.
MORIZO, JAQUELINE B.
An ability to understand the financial health of a company is one of the most vital skills
for aspiring investors, entrepreneurs, managers and accountants (like me). Armed with this
knowledge, investors can better identify promising opportunities while avoiding undue risk, and
professionals of all levels can make more strategic business decisions. Reviewing and
understanding these financial statements can provide us with valuable insights about a company.
Accountants, investors, shareholders, need to be keenly aware of the financial health of an
organization, but employees or either a simple person can also benefit from understanding
balance sheets, income statements, cash flow statements, and annual reports. Financial
statements offer a window into the health of a company, which can be difficult to gauge using
other means. While accountants and finance specialists are trained to read and understand these
documents, many business professionals are not, so every company must make their reports
easily readable and understandable for every user. The value of a company is communicated
through its financial statements. And reading these can be very frustrating if you don’t know
what you’re looking at. So every financial statements should convey full and accurate
information about the performance, position, and progress of a company. It is also important that
those who prepare and present the financial statements should not allow their personal prejudices
to distort the facts, as good deal of the information presented in a financial report is required by
law or by accounting standards. Every activity we undertake, especially as an aspiring
accountant, is connected to finances. The more we know about finance, the more insights we
have about a business. When we know the drivers of financial performance, we are able to drive
the respective business activities in order to achieve greater success as being able to interpret this
can also help operationally by identifying areas that may need change. So all in all, whether you
are a new investor, a small business owner, or just trying to keep track of your personal finances,
you need to understand how to read, analyze, and create financial statements so you can get a full
and accurate understanding of your finances. And for the companies preparing financial
statements or annual reports, they should make sure that it is accurate and reliable that is also
understandable of whoever the user may be.
SEMBRANO, JENNYLOU
All business owners should regularly, and closely, evaluate their financial statements to
best understand the health of business since financial statements are written records that convey
the business activities and the financial performance of a company. Financial statements are
often audited by government agencies, accountants, firms, etc. to ensure accuracy and for
tax, financing, or investing purposes. To which, knowing how to work with the numbers in a
company's financial statements is an essential skill for stock investors. As a company or business
owner you must consider numerical data’s to be able to achieve a more accurate decisions and
plans for the welfare of your company and the employees as well. The meaningful interpretation
and analysis of balance sheets, income statements, and cash flow statements to discern a
company's investment qualities is the basis for smart investment choices. The most important
advantage of analyzing your company’s financial statements is that they allow you to make
strategic decisions that support growth and long-term profitability. You can evaluate department
efficiency, profit margins, debt to equity ratios, and more of the business. Also, if you have
investors, or are looking for investors, this information will drive their desire to invest – and
determine if expenditures are worthy investments that create profit. The accuracy of financial
statements helps formulate tax obligations, illustrate that all GAAP (generally accepted
accounting principles) are followed, and support investor’s decision making. Finally, it gives you
– a business owner – an understanding of how healthy your company actually is.

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Republic of the Philippines

Carlos Hilado Memorial State College

I. Background of the Company

II. STATEMENT OF COMPREHENSIVE INCOME / INCOME STATEMENT

III. STATEMENT OF FINANCIAL POSITION

IV. STATEMENT OF CHANGES IN EQUITY

Also referred to as a statement of owner’s equity or statement of changes in equity – is a

V. STATEMENT OF CASH FLOW

VI. CONCLUSIONS AND RECOMMENDATIONS

A. STATEMENT OF COMPREHENSIVE INCOME / INCOME STATEMENT

B. STATEMENT OF FINANCIAL POSITION

C. STATEMENT OF CHANGES IN EQUITY

D. STATEMENT OF CASH FLOW

VII. REFLECTIONS / LEARNINGS

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