Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Kraft Foods Group Inc., long-term (investment) activity ratios
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Net fixed asset turnover | 4.34 | 4.43 | 4.36 | |
| Total asset turnover | 0.79 | 0.79 | 0.79 | |
| Equity turnover | 4.17 | 3.51 | 5.13 |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
The analysis of investment activity ratios from 2012 to 2014 indicates a period of high stability in asset utilization efficiency, contrasted by notable volatility in equity-based performance.
- Net Fixed Asset Turnover
- The ratio remained relatively stable over the three-year period, recording 4.36 in 2012, a slight increase to 4.43 in 2013, and a minor decline to 4.34 in 2014. This consistency suggests a steady efficiency in utilizing fixed assets to generate sales revenue.
- Total Asset Turnover
- A stagnant trend is observed, with the ratio remaining unchanged at 0.79 across all three reporting years. This indicates a rigid correlation between the total asset base and the volume of sales generated, reflecting no improvement or decline in overall asset productivity.
- Equity Turnover
- Significant fluctuation is evident in the utilization of equity. The ratio fell sharply from 5.13 in 2012 to 3.51 in 2013, before recovering to 4.17 in 2014. This variance indicates instability in how effectively shareholder equity was employed to drive revenue, potentially stemming from changes in the company's capital structure or equity levels.
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Net Fixed Asset Turnover
Kraft Foods Group Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net revenues | 18,205) | 18,218) | 18,339) | |
| Property, plant and equipment, net | 4,192) | 4,115) | 4,204) | |
| Long-term Activity Ratio | ||||
| Net fixed asset turnover1 | 4.34 | 4.43 | 4.36 | |
| Benchmarks | ||||
| Net Fixed Asset Turnover, Competitors2 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Net fixed asset turnover = Net revenues ÷ Property, plant and equipment, net
= 18,205 ÷ 4,192 = 4.34
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a period of high stability in asset utilization and revenue generation. Between 2012 and 2014, a consistent relationship was maintained between net fixed assets and the revenue produced from those investments, indicating a steady state of operational efficiency.
- Net Revenue Performance
- Net revenues exhibited a marginal downward trend, decreasing from US$ 18,339 million in 2012 to US$ 18,205 million by 2014. This represents a stable top-line performance with minimal volatility over the three-year window.
- Net Fixed Asset Investment
- Property, plant, and equipment, net, showed slight fluctuations, starting at US$ 4,204 million in 2012, decreasing to US$ 4,115 million in 2013, and returning to US$ 4,192 million in 2014. This movement suggests a capital expenditure strategy focused on maintenance rather than significant capacity expansion.
- Net Fixed Asset Turnover Efficiency
- The net fixed asset turnover ratio remained stable, oscillating between 4.34 and 4.43. The peak efficiency observed in 2013, where the ratio rose to 4.43, was driven by the decrease in net fixed assets rather than an increase in revenue. By 2014, the ratio declined to 4.34 as net fixed assets increased slightly while revenues remained nearly flat.
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Total Asset Turnover
Kraft Foods Group Inc., total asset turnover calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net revenues | 18,205) | 18,218) | 18,339) | |
| Total assets | 22,947) | 23,148) | 23,329) | |
| Long-term Activity Ratio | ||||
| Total asset turnover1 | 0.79 | 0.79 | 0.79 | |
| Benchmarks | ||||
| Total Asset Turnover, Competitors2 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Total asset turnover = Net revenues ÷ Total assets
= 18,205 ÷ 22,947 = 0.79
2 Click competitor name to see calculations.
The analysis reveals a consistent pattern in the company’s asset utilization over the observed period. Net revenues remained remarkably stable, fluctuating minimally between US$18.205 billion and US$18.339 billion. Simultaneously, total assets experienced a slight, gradual decrease from US$23.329 billion to US$22.947 billion. This movement is reflected in the total asset turnover ratio.
- Total Asset Turnover
- The total asset turnover ratio remained constant at 0.79 for each of the three years examined. This indicates that for every dollar of assets, the company generated US$0.79 in revenue consistently. The stability of this ratio suggests a consistent operational efficiency in utilizing assets to generate sales. The lack of variation, despite the slight decline in total assets, implies that the company maintained its sales level relative to its asset base.
The consistent total asset turnover ratio, coupled with stable revenues, suggests a predictable and potentially efficient asset management strategy. Further investigation might explore the components of asset changes to understand if the reduction in total assets represents strategic divestitures or depreciation, and how these changes impact specific operational areas. However, based solely on these figures, the company demonstrates a stable ability to generate revenue from its assets.
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Equity Turnover
Kraft Foods Group Inc., equity turnover calculation, comparison to benchmarks
| Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net revenues | 18,205) | 18,218) | 18,339) | |
| Equity | 4,365) | 5,187) | 3,572) | |
| Long-term Activity Ratio | ||||
| Equity turnover1 | 4.17 | 3.51 | 5.13 | |
| Benchmarks | ||||
| Equity Turnover, Competitors2 | ||||
| lululemon athletica inc. | — | — | — | |
| Nike Inc. | — | — | — | |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Equity turnover = Net revenues ÷ Equity
= 18,205 ÷ 4,365 = 4.17
2 Click competitor name to see calculations.
The analysis of long-term activity ratios reveals a period of revenue stagnation accompanied by significant volatility in the equity base, which directly impacted the efficiency of capital utilization over the three-year period.
- Net Revenue Performance
- Net revenues remained nearly flat across the observed period, moving from 18,339 million USD in 2012 to 18,205 million USD in 2014. This marginal decline indicates a lack of top-line growth, establishing a constant numerator for the equity turnover calculation.
- Equity Base Volatility
- The equity position experienced substantial fluctuations, increasing from 3,572 million USD in 2012 to a peak of 5,187 million USD in 2013, before contracting to 4,365 million USD in 2014. This instability in the equity base is the primary driver of the changes observed in the activity ratios.
- Equity Turnover Analysis
- The equity turnover ratio exhibited a U-shaped trend. A sharp decline from 5.13 in 2012 to 3.51 in 2013 occurred as the equity base expanded while revenues remained stagnant, suggesting a temporary decrease in the efficiency of equity in generating sales. The subsequent recovery to 4.17 in 2014 was not a result of revenue growth, but rather a consequence of the reduction in total equity.
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