Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
YUM! Brands Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
- Current Ratio
- The current ratio exhibits a generally declining trend from early 2012 through mid-2016, decreasing from near parity at around 1.01 in March 2012 to a low point of approximately 0.42 by March 2016. This indicates a gradual reduction in the company's short-term liquidity, suggesting increasing challenges in covering current liabilities with current assets. Notably, there is a sharp improvement in the most recent quarter observed, rising significantly to 1.74, which may suggest a strategic focus on strengthening liquidity levels or an accumulation of current assets relative to liabilities during this period.
- Quick Ratio
- The quick ratio also demonstrates a downward trajectory over the analyzed timeframe, falling from about 0.60 in early 2012 to a trough of around 0.29 in mid-2016, signalling a contraction in the company's most liquid assets excluding inventories. Similar to the current ratio, there is a pronounced rebound in the final quarter, with the ratio increasing sharply to approximately 1.45, reflecting an enhanced ability to meet short-term obligations without relying on inventory liquidation.
- Cash Ratio
- The cash ratio follows a comparable pattern of decline from roughly 0.46 at the start of 2012 to a low near 0.20 by early 2016, indicating a shrinking cushion of cash and cash equivalents against current liabilities. The final quarter data illustrates a marked recovery to around 1.25, which points to a significant improvement in the company's immediate liquidity position, emphasizing an increase in cash holdings relative to short-term debt obligations.
Current Ratio
YUM! Brands Inc., current ratio calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Current assets | 4,003) | 1,879) | 1,963) | 1,688) | 1,919) | 1,729) | 1,783) | 1,646) | 2,070) | 1,882) | 1,809) | 1,691) | 1,830) | 1,605) | 1,898) | 1,909) | 2,079) | 2,231) | 2,425) | ||||||
| Current liabilities | 2,299) | 2,279) | 4,648) | 3,088) | 2,642) | 2,689) | 2,290) | 2,411) | 2,112) | 2,153) | 2,150) | 2,265) | 1,989) | 1,990) | 2,089) | 2,188) | 2,057) | 2,313) | 2,391) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Current ratio1 | 1.74 | 0.82 | 0.42 | 0.55 | 0.73 | 0.64 | 0.78 | 0.68 | 0.98 | 0.87 | 0.84 | 0.75 | 0.92 | 0.81 | 0.91 | 0.87 | 1.01 | 0.96 | 1.01 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= 4,003 ÷ 2,299 = 1.74
2 Click competitor name to see calculations.
The analysis of the current assets and current liabilities over the observed periods reveals several notable trends affecting the liquidity position as measured by the current ratio.
- Current Assets
- Current assets exhibit a generally declining trend from early 2012 through mid-2016, starting at approximately $2,425 million and reaching a low point near $1,646 million by the end of 2014. There are intermittent recoveries seen in some quarters, with values fluctuating between roughly $1,600 million and $2,000 million, indicating periods of asset replenishment. Notably, there is a significant surge in the latest quarter observed, with current assets nearly doubling to about $4,003 million, suggesting a substantial increase in short-term resources available.
- Current Liabilities
- Current liabilities display a more fluctuating pattern with some upward pressure over time. Initial values are around $2,391 million, remaining relatively stable until mid-2013 before gradually increasing. A peak is observed in early 2016 with current liabilities reaching approximately $4,648 million, indicating a notable increase in short-term obligations. Subsequently, liabilities fall sharply to levels near $2,298 million in the most recent quarter, reflecting a significant reduction.
- Current Ratio
- The current ratio, a key liquidity indicator, generally stayed below 1.0 for much of the period, confirming that current liabilities frequently exceeded current assets. Early measurements fluctuate close to parity, ranging between 0.81 and 1.01, but from 2014 onward, the ratio declines further, reaching a low of 0.42 in mid-2016, indicating a potential liquidity strain. However, in the most recent quarter, the current ratio markedly improves to 1.74, a substantial increase above unity, signaling a significantly strengthened ability to cover short-term obligations with current assets.
Overall, the data reveal that the company encountered moderate liquidity challenges during the period, with current liabilities overtaking current assets and depressions in the current ratio. The sharp rise in both current assets and the current ratio in the final quarter highlights a meaningful reversal in this trend, suggesting enhanced liquidity and potentially improved working capital management or a change in financial policy to bolster short-term financial resilience.
Quick Ratio
YUM! Brands Inc., quick ratio calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Cash and cash equivalents | 2,885) | 795) | 934) | 737) | 861) | 636) | 675) | 578) | 685) | 597) | 734) | 573) | 753) | 500) | 762) | 776) | 942) | 984) | 1,099) | ||||||
| Accounts and notes receivable, net | 440) | 395) | 418) | 377) | 355) | 350) | 373) | 325) | 373) | 352) | 354) | 319) | 348) | 352) | 368) | 301) | 302) | 323) | 341) | ||||||
| Short-term investments | —) | —) | —) | —) | —) | —) | —) | —) | 326) | 234) | —) | 10) | —) | —) | —) | —) | —) | —) | —) | ||||||
| Total quick assets | 3,325) | 1,190) | 1,352) | 1,114) | 1,216) | 986) | 1,048) | 903) | 1,384) | 1,183) | 1,088) | 902) | 1,101) | 852) | 1,130) | 1,077) | 1,244) | 1,307) | 1,440) | ||||||
| Current liabilities | 2,299) | 2,279) | 4,648) | 3,088) | 2,642) | 2,689) | 2,290) | 2,411) | 2,112) | 2,153) | 2,150) | 2,265) | 1,989) | 1,990) | 2,089) | 2,188) | 2,057) | 2,313) | 2,391) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Quick ratio1 | 1.45 | 0.52 | 0.29 | 0.36 | 0.46 | 0.37 | 0.46 | 0.37 | 0.66 | 0.55 | 0.51 | 0.40 | 0.55 | 0.43 | 0.54 | 0.49 | 0.60 | 0.57 | 0.60 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 3,325 ÷ 2,299 = 1.45
2 Click competitor name to see calculations.
- Quick Assets Trend
- The total quick assets demonstrate some fluctuation over the observed periods. Starting at 1440 million USD, there is a general downward trend until late 2013, reaching a low of 852 million USD in mid-2013. Subsequently, there is a recovery with intermittent increases, peaking notably at 3325 million USD in early September 2016, which represents a significant spike compared to previous quarters.
- Current Liabilities Trend
- Current liabilities also show varying behavior throughout the timeline. The levels begin at 2391 million USD and generally decline slightly through 2012 and 2013, though there are periods of increase such as in late 2014 and through 2015. A pronounced increase is observed in early 2016 where current liabilities sharply rise to 4648 million USD before decreasing again toward the third quarter of 2016.
- Quick Ratio Analysis
- The quick ratio fluctuates between 0.29 and 0.66 for most of the periods, indicating that quick assets were less than current liabilities and thus implying lower immediate liquidity. The ratio experienced its lowest points around mid-2016, hitting 0.29, before sharply rising to 1.45 by the third quarter of 2016. This sudden increase suggests a substantial improvement in short-term liquidity, coinciding with the noted surge in quick assets and normalization of current liabilities.
- Overall Financial Liquidity Insights
- The company’s short-term liquidity, as measured by the quick ratio, generally indicates a tight liquidity situation, with quick assets consistently below current liabilities until the third quarter of 2016. The significant jump in quick assets near the end of the dataset appears to have alleviated liquidity pressures markedly during that period. The synchronization of increased quick assets and a decreased level of current liabilities contributes to the improved quick ratio, signaling enhanced capacity to cover immediate obligations.
- Conclusion
- Throughout the analyzed quarters, the financial position in terms of liquidity showed variability with periods of constrained short-term asset coverage over liabilities. The notable liquidity improvement in late data points highlights a positive shift in the company’s ability to meet current liabilities promptly, which may be indicative of strategic financial adjustments or operational improvements during that timeframe.
Cash Ratio
YUM! Brands Inc., cash ratio calculation (quarterly data)
| Sep 3, 2016 | Jun 11, 2016 | Mar 19, 2016 | Dec 26, 2015 | Sep 5, 2015 | Jun 13, 2015 | Mar 21, 2015 | Dec 27, 2014 | Sep 6, 2014 | Jun 14, 2014 | Mar 22, 2014 | Dec 28, 2013 | Sep 7, 2013 | Jun 15, 2013 | Mar 23, 2013 | Dec 29, 2012 | Sep 8, 2012 | Jun 16, 2012 | Mar 24, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||
| Cash and cash equivalents | 2,885) | 795) | 934) | 737) | 861) | 636) | 675) | 578) | 685) | 597) | 734) | 573) | 753) | 500) | 762) | 776) | 942) | 984) | 1,099) | ||||||
| Short-term investments | —) | —) | —) | —) | —) | —) | —) | —) | 326) | 234) | —) | 10) | —) | —) | —) | —) | —) | —) | —) | ||||||
| Total cash assets | 2,885) | 795) | 934) | 737) | 861) | 636) | 675) | 578) | 1,011) | 831) | 734) | 583) | 753) | 500) | 762) | 776) | 942) | 984) | 1,099) | ||||||
| Current liabilities | 2,299) | 2,279) | 4,648) | 3,088) | 2,642) | 2,689) | 2,290) | 2,411) | 2,112) | 2,153) | 2,150) | 2,265) | 1,989) | 1,990) | 2,089) | 2,188) | 2,057) | 2,313) | 2,391) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Cash ratio1 | 1.25 | 0.35 | 0.20 | 0.24 | 0.33 | 0.24 | 0.29 | 0.24 | 0.48 | 0.39 | 0.34 | 0.26 | 0.38 | 0.25 | 0.36 | 0.35 | 0.46 | 0.43 | 0.46 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||
| Airbnb Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Booking Holdings Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Chipotle Mexican Grill Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| DoorDash, Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| McDonald’s Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Starbucks Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2016-09-03), 10-Q (reporting date: 2016-06-11), 10-Q (reporting date: 2016-03-19), 10-K (reporting date: 2015-12-26), 10-Q (reporting date: 2015-09-05), 10-Q (reporting date: 2015-06-13), 10-Q (reporting date: 2015-03-21), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-06), 10-Q (reporting date: 2014-06-14), 10-Q (reporting date: 2014-03-22), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-07), 10-Q (reporting date: 2013-06-15), 10-Q (reporting date: 2013-03-23), 10-K (reporting date: 2012-12-29), 10-Q (reporting date: 2012-09-08), 10-Q (reporting date: 2012-06-16), 10-Q (reporting date: 2012-03-24).
1 Q3 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 2,885 ÷ 2,299 = 1.25
2 Click competitor name to see calculations.
- Trend in Total Cash Assets
- The total cash assets exhibit fluctuations over the observed periods with an overall pattern of decline initially, dropping from 1,099 million USD in early 2012 to a low range around 500 to 600 million USD in mid to late 2013. Subsequently, cash assets show intermittent recovery phases, peaking notably at 2,885 million USD in the final quarter observed, indicating a significant increase in liquidity towards the end of the timeframe.
- Trend in Current Liabilities
- Current liabilities demonstrate variability, with values ranging approximately between 1,989 million USD and peaking sharply at 4,648 million USD in early 2016. Periods of increase and decrease are observed, but a notable spike occurs towards the end of the dataset, signaling a substantial rise in short-term obligations during that quarter. Prior to this peak, liabilities generally hovered below 3,100 million USD.
- Trend in Cash Ratio
- The cash ratio, calculated as cash assets divided by current liabilities, fluctuates correspondingly with changes in these two variables. Initial ratios range between 0.35 and 0.46 in early 2012, followed by declines to as low as 0.20 in mid-2016. The ratio exhibits volatility, occasionally dropping below 0.25, indicating lower liquidity coverage of current liabilities at times. However, the final period shows a substantial increase to 1.25, reflecting a dramatic improvement in liquidity and a strong cash position relative to current liabilities.
- Overall Insights
- The financial data suggests periods of cash asset reduction relative to liabilities early in the timeframe, leading to lower liquidity ratios. The sharp rise in both cash assets and current liabilities in the final quarter results in a marked increase in the cash ratio, indicating a significant enhancement in liquidity. This may reflect strategic financial decisions to accumulate cash reserves or reduce short-term liabilities. The volatility in cash ratio across the quarters suggests variable liquidity management, with potential implications for short-term financial flexibility.