Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
YUM! Brands Inc., profitability ratios
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Return on Sales | ||||||
| Operating profit margin | ||||||
| Net profit margin | ||||||
| Return on Investment | ||||||
| Return on equity (ROE) | ||||||
| Return on assets (ROA) | ||||||
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).
- Operating Profit Margin
- The operating profit margin exhibited fluctuations over the observed five-year period. Starting at 14.38% in late 2011, it increased to a peak of 16.83% in 2012, indicating improved operational efficiency. However, it then declined to 13.74% in 2013 and further to 11.73% in 2014, suggesting potential challenges in controlling operating costs or revenue pressures. By the end of 2015, the margin recovered to 14.66%, nearing its initial level, which may imply some operational improvements or cost management efforts.
- Net Profit Margin
- The net profit margin followed a somewhat similar trend to the operating profit margin but remained consistently lower, as expected due to additional expenses such as taxes and interest. Starting at 10.45% in 2011, it increased modestly to 11.71% in 2012, then declined more sharply to 8.34% in 2013 and 7.91% in 2014. In 2015, it improved to 9.87%, indicating a partial recovery in profitability at the net income level, possibly driven by improved operational results or favorable financial activities.
- Return on Equity (ROE)
- Return on equity showed significant variability, starting from 72.35% in 2011 and slightly increasing to 74.14% in 2012. The metric then decreased notably to 50.37% in 2013 but rose sharply again to 67.94% in 2014. The most substantial change occurred in 2015, with ROE surging dramatically to 141.93%. This marked increase might reflect higher profitability relative to shareholders' equity or significant changes in capital structure, warranting further investigation into equity levels and net income components.
- Return on Assets (ROA)
- The return on assets maintained a generally positive trend with some variability. It increased from 14.93% in 2011 to 17.72% in 2012, indicating enhanced asset utilization and profitability. This was followed by a decline to 12.55% in 2013, remaining stable at 12.59% in 2014. By 2015, ROA improved to 16.01%, suggesting better asset efficiency or increased earnings relative to total assets. This pattern aligns with trends observed in operating and net margins, reflecting overall operational profitability dynamics.
Return on Sales
Return on Investment
Operating Profit Margin
YUM! Brands Inc., operating profit margin 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) | ||||||
| Operating profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, 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
Operating profit margin = 100 × Operating profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenues
- The revenue figures exhibit a generally stable trend over the five-year period. Revenues increased from 12,626 million USD in 2011 to 13,633 million USD in 2012, marking the highest point within these years. Subsequently, revenues declined slightly to 13,084 million USD in 2013, then advanced to 13,279 million USD in 2014, and decreased marginally to 13,105 million USD in 2015. Overall, revenue fluctuated within a narrow range around 13,000 million USD without demonstrating a clear upward or downward trajectory.
- Operating Profit
- Operating profit shows more pronounced fluctuations compared to revenues. After an initial increase from 1,815 million USD in 2011 to 2,294 million USD in 2012, operating profit sharply declined to 1,798 million USD in 2013 and decreased further to 1,557 million USD in 2014. However, in 2015, operating profit rose again to 1,921 million USD. This pattern indicates volatility in operating profitability that is not entirely aligned with the relatively stable revenue levels.
- Operating Profit Margin
- The operating profit margin percentages mirror the operating profit fluctuations. The margin improved from 14.38% in 2011 to a peak of 16.83% in 2012, reflecting enhanced profitability efficiency that year. Following the peak, the margin dropped substantially to 13.74% in 2013 and further to 11.73% in 2014, indicating a deterioration in profit generation efficiency relative to revenues. By 2015, the margin rebounded to 14.66%, suggesting a positive recovery in operational efficiency, though still below the highest recorded margin in 2012.
- Summary of Trends
- Overall, the data reveals that revenues remained relatively steady with slight fluctuations, while operating profit and profit margins experienced more significant variability. The peak operating profit and margin in 2012 suggest a year of stronger cost control or operational effectiveness. The subsequent decline and partial recovery could be indicative of changing operational challenges or cost structures. The decline in operating profit margin in 2013 and 2014 despite stable revenues highlights potential pressures on costs or pricing power during those periods.
Net Profit Margin
YUM! Brands Inc., net profit margin 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) | ||||||
| Net income, YUM! Brands, Inc. | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, 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
Net profit margin = 100 × Net income, YUM! Brands, Inc. ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income experienced fluctuations over the observed period. It increased from 1,319 million US dollars in 2011 to a peak of 1,597 million in 2012. Following this peak, net income declined significantly in 2013 and 2014, reaching 1,091 million and 1,051 million US dollars respectively. In 2015, there was a recovery, with net income rising again to 1,293 million US dollars.
- Revenues
- Revenues showed a general upward trend initially, increasing from 12,626 million US dollars in 2011 to 13,633 million in 2012. However, revenues then experienced a decline in subsequent years, dropping to 13,084 million in 2013 and 13,105 million in 2015, with a moderate peak of 13,279 million in 2014. This indicates a relatively stable but slightly decreasing revenue base after 2012.
- Net Profit Margin
- The net profit margin followed a pattern consistent with net income trends. It increased from 10.45% in 2011 to 11.71% in 2012, marking the highest profitability ratio during the period. After 2012, the margin decreased quite notably to 8.34% in 2013 and further to 7.91% in 2014. By 2015, the profit margin had improved to 9.87%, though it did not return to the peak levels observed in 2012.
- Summary of Trends
- Overall, the financial data indicates that the company experienced its strongest financial performance in 2012 across net income, revenues, and profit margin. Following this peak, both profitability and revenues declined over the next two years, reaching the lowest points in 2014. The year 2015 showed signs of recovery, particularly in net income and profit margin, although revenues did not surpass previous highs. This pattern suggests possible operational or market challenges after 2012, with partial recovery efforts visible by the end of the period.
Return on Equity (ROE)
YUM! Brands Inc., ROE 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) | ||||||
| Net income, YUM! Brands, Inc. | ||||||
| Shareholders’ equity, YUM! Brands, Inc. | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, 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
ROE = 100 × Net income, YUM! Brands, Inc. ÷ Shareholders’ equity, YUM! Brands, Inc.
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company's performance over the five-year period ending in 2015.
- Net Income
- The net income experienced fluctuations throughout the observed years. It rose from $1,319 million in 2011 to a peak of $1,597 million in 2012, subsequently declined to $1,091 million in 2013, and slightly decreased further to $1,051 million in 2014. In 2015, net income increased again to $1,293 million, indicating some recovery but still below the 2012 peak.
- Shareholders’ Equity
- Shareholders' equity showed a declining trend over the period. It increased from $1,823 million in 2011 to $2,154 million in 2012 and remained relatively stable in 2013 at $2,166 million. However, it then decreased significantly to $1,547 million in 2014 and further declined to $911 million by the end of 2015. This represents a considerable reduction in equity base, which may affect financial stability and leverage.
- Return on Equity (ROE)
- The ROE percentage exhibited high volatility. It was very strong in 2011 and 2012, with values above 70%, then dropped to around 50.37% in 2013. An increase to 67.94% was seen in 2014, followed by an exceptional surge to 141.93% in 2015. This spike in ROE in 2015, despite lower equity, suggests that the company generated significantly higher profit relative to its equity base, possibly due to the reduced equity or improved profitability margins.
In summary, the company showed fluctuating profitability with a peak in net income in 2012 and some recovery in 2015. The consistent decline in shareholders' equity is a concern for the company's capital structure, while the ROE fluctuations indicate varying efficiency in using equity to generate profits, culminating in an exceptionally high ROE in 2015 due to decreased equity and reasonably strong net income.
Return on Assets (ROA)
YUM! Brands Inc., ROA calculation, comparison to benchmarks
| Dec 26, 2015 | Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income, YUM! Brands, Inc. | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, 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
ROA = 100 × Net income, YUM! Brands, Inc. ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrated some variability throughout the period. Starting at 1,319 million USD in 2011, it peaked at 1,597 million USD in 2012. Subsequently, there was a decline to 1,091 million USD in 2013 and a slight further decrease to 1,051 million USD in 2014. However, the figure rebounded to 1,293 million USD in 2015, approaching the initial levels observed.
- Total Assets
- Total assets displayed a steady downward trend over the five-year span. Beginning at 8,834 million USD in 2011, the asset base slightly increased to 9,011 million USD in 2012 but then consistently decreased each year to 8,695 million USD in 2013, 8,345 million USD in 2014, and finally 8,075 million USD in 2015.
- Return on Assets (ROA)
- Return on assets showed a pattern that somewhat mirrors net income fluctuations. The ROA was 14.93% in 2011, rising significantly to 17.72% in 2012. It then declined to 12.55% in 2013 and stabilized around 12.59% in 2014 before increasing again to 16.01% in 2015. This indicates fluctuating efficiency in asset utilization over the period.