Ratio Analysis - Yum! Brands

Yum! Brands consolidated net profit margin lies within the manufacturing average and for 2 years have shown slow insofar steady growth. While sales from US operations declined by 5%, the company continued to gain momentum in China, where operating profit increased at an average of 26% year-on-year. Meanwhile, their Return on Assets fairs better than competitors such as McDonalds and Dominos Pizza, showing that management efficiently manages its addition base. The companys efficiency can be seen in its Cash Conversion Cycle, with -49.12 in 2009. This number is much dishonor from its competitors, which suggests a liquid working capital position. Yum gene calculates sales from its record and cash from its sales at a faster rate than the time its pays its suppliers. This means that it utilizes the average 60-day period before it has to to the exuberant purchases with suppliers, giving them free cash in principle. However, while this suggests slight need to borrow, the company still received cash by issuing long-term debt in 2008 and 2009. Due to the nature of the business, on average, 56% of its total assets are headstrong. And as Yum ventures into Asian countries, peculiarly China and India, it allocates part of its cash to capital spending.

However, in utilizing its fixed assets to generate sales, Yum scores lower compared to Wendys and McDonalds. This may be due to its focus on aggressively adding new stores, with 2008 and 2009 serve as introduction years, before sales can to the full pick up. One could likewise note, however, that sales in the US and International Divisions (ex-China) have decreased from 2007 to 2009. The companys solvency, however, provides some other story. As mentioned, Yum reported negative equity in 2008 in the main due to repurchase of sales. The company used its cash overindulgence to repurchase sales at a time when its song price decreased, making it gain economic profits. This may also show the companys belief and commitment that the beginning price will increase... If you want to get a full essay, order it on our website: Orderessay

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