Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Price to Sales (P/S) since 2005
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Liquidity Ratios (Summary)
YUM! Brands Inc., liquidity ratios
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
- Current Ratio
- The current ratio demonstrates a consistent downward trend over the observed five-year period, decreasing from 0.95 in 2011 to 0.55 in 2015. This steady decline suggests a reduction in the company's short-term liquidity position, indicating a shrinking buffer between current assets and current liabilities.
- Quick Ratio
- The quick ratio also follows a significant downward trajectory, falling from 0.61 in 2011 to 0.36 in 2015. The more pronounced decline compared to the current ratio indicates a relatively larger decrease in liquid assets excluding inventory. This suggests the company might be experiencing a tightening in readily available liquid resources.
- Cash Ratio
- The cash ratio decreases from 0.49 in 2011 to 0.24 in 2015, showing a halving of the company's immediate cash resources relative to current liabilities. The relatively stable figures between 2014 and 2015 imply that the cash reserves remained flat at a low level towards the end of the period.
- Overall Insight
- Collectively, the liquidity ratios indicate a declining trend in the company's capacity to meet short-term obligations using its available assets. Both the current and quick ratios suggest increasing pressure on liquidity, while the declining cash ratio points to reduced immediate cash availability. This could signal a need for management to examine working capital management and possibly improve liquidity to mitigate financial risk.
Current Ratio
YUM! Brands Inc., current ratio calculation, comparison to benchmarks
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets showed a consistent decline from 2011 to 2014, decreasing from 2321 million US dollars to 1646 million US dollars. In 2015, there was a slight increase to 1688 million US dollars, but the overall trend over the five-year period was downward.
- Current Liabilities
- Current liabilities initially decreased from 2450 million US dollars in 2011 to 2188 million US dollars in 2012. However, from 2013 onwards, liabilities increased progressively each year, reaching 3088 million US dollars in 2015, indicating a growing short-term obligation load.
- Current Ratio
- The current ratio demonstrated a steady decline over the period, moving from 0.95 in 2011 to 0.55 in 2015. This downward trend indicates a weakening short-term liquidity position, as the company's current assets have become increasingly insufficient to cover its current liabilities.
Quick Ratio
YUM! Brands Inc., quick ratio calculation, comparison to benchmarks
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Accounts and notes receivable, net | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Trend in Total Quick Assets
- The total quick assets exhibited a declining trend from 2011 through 2014, decreasing from 1,484 million US dollars in 2011 to a low of 892 million US dollars in 2013. In 2014, the quick assets stabilized around 903 million US dollars and showed a moderate recovery in 2015, increasing to 1,114 million US dollars.
- Trend in Current Liabilities
- Current liabilities decreased initially from 2,450 million US dollars in 2011 to 2,188 million US dollars in 2012. However, from 2012 to 2014, current liabilities gradually increased, reaching 2,411 million US dollars. In 2015, a notable rise occurred with current liabilities climbing to 3,088 million US dollars, representing the highest level in the observed period.
- Quick Ratio Analysis
- The quick ratio continuously declined throughout the five-year period, dropping from 0.61 in 2011 to 0.36 in 2015. This indicates a deterioration in the company's ability to cover short-term obligations with its most liquid assets over time.
- Overall Observations
- The combined data suggests tightening liquidity conditions for the company over the five years. Despite a slight increase in quick assets towards the end of the period, the simultaneous and more substantial increase in current liabilities, especially in 2015, contributed to the declining quick ratio. This trend points to potential challenges in short-term financial flexibility and liquidity management.
Cash Ratio
YUM! Brands Inc., cash ratio calculation, comparison to benchmarks
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-26), 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Cash Assets
- The total cash assets exhibit a declining trend from 2011 through 2013, dropping significantly from 1,198 million USD to 573 million USD. Following this period, there is a slight increase to 578 million USD in 2014 and a further rise to 737 million USD in 2015, indicating some recovery after the initial decrease.
- Current Liabilities
- Current liabilities decreased from 2,450 million USD in 2011 to 2,188 million USD in 2012, showing an improvement in short-term obligations. However, liabilities then rose slightly to 2,265 million USD in 2013, followed by a further increase to 2,411 million USD in 2014, and a sharper rise to 3,088 million USD in 2015. This suggests an increasing burden of current liabilities over the latter years.
- Cash Ratio
- The cash ratio steadily declined from 0.49 in 2011 to 0.24 in 2014, and it remained at 0.24 in 2015. This indicates a reduction in liquidity measured by the company's ability to cover current liabilities solely with cash and cash equivalents, suggesting a relatively weaker liquidity position over time.
- Overall Insights
- There is a clear pattern of declining cash assets and liquidity ratio throughout the period, with current liabilities increasing especially in the final year. The widening gap between cash assets and current liabilities reflects a deteriorating short-term financial position, potentially increasing reliance on other forms of current assets or external financing to meet obligations.