Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
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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), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-03), 10-Q (reporting date: 2011-06-11), 10-Q (reporting date: 2011-03-19).
- Current Ratio Trend Analysis
- The current ratio exhibits a general downward trend from early 2011 through most quarters of 2015, descending from an initial level slightly above 1.0 to a low point of 0.42 in March 2016. This decline indicates a gradual decrease in the company's short-term liquidity position over this period. However, a notable rebound occurs in the quarters following March 2016, with the ratio increasing sharply to 0.82 and subsequently 1.74 by September 2016. This late recovery suggests an improvement in the company’s ability to cover its current liabilities with current assets.
- Quick Ratio Trend Analysis
- The quick ratio also shows a consistent decline starting at 0.80 in March 2011 and falling to a low of 0.29 by June 2016. This downward movement reflects a reduction in the company's more liquid assets relative to current liabilities, excluding inventory. Similar to the current ratio, the quick ratio experiences a significant recovery in the last quarter observed, rising to 0.52 and then sharply to 1.45 by September 2016. This suggests a substantial increase in liquid asset coverage relative to current liabilities toward the end of the period.
- Cash Ratio Trend Analysis
- The cash ratio follows the same downward pattern as the other liquidity measures, starting at 0.67 in March 2011 and dropping to a low of 0.20 in June 2016. This reflects a decline in cash and cash equivalents relative to current liabilities over time, indicating tighter immediate liquidity. The last two data points show a marked recovery with values climbing to 0.35 and then substantially to 1.25 by September 2016. The increase in the cash ratio near the end of the data series highlights a significant enhancement in the company's cash reserves relative to short-term obligations.
- Overall Liquidity Insight
- Across all three key liquidity ratios—current, quick, and cash—there is a clear pattern of gradual decline in liquidity from 2011 through early 2016, implying increasing pressure on the company’s short-term financial flexibility during that time frame. The sudden and sharp improvement in all ratios in the last two observed quarters indicates a strategic or operational shift, possibly involving asset restructuring, improved cash management, or debt reduction efforts that materially strengthened the company's liquidity stance.
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 | Dec 31, 2011 | Sep 3, 2011 | Jun 11, 2011 | Mar 19, 2011 | ||||||||
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| 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. | ||||||||||||||||||||||||||||||
| 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), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-03), 10-Q (reporting date: 2011-06-11), 10-Q (reporting date: 2011-03-19).
1 Q3 2016 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several trends related to liquidity and working capital management over the observed periods.
- Current Assets
- Current assets fluctuated throughout the periods, with values ranging from a high of 2,436 million USD in March 2011 to a notable low around 1,605 million USD in June 2013. There is a visible pattern of decline from mid-2011 into early 2014, followed by some recovery and volatility. The most striking increase occurs in September 2016, where current assets surge to 4,003 million USD, representing a substantial jump compared to previous quarters.
- Current Liabilities
- Current liabilities also show variations, generally following a less consistent pattern compared to assets. Starting around 2,288 million USD in March 2011, liabilities exhibit several peaks and troughs, with the highest figure notably occurring in March 2016 at 4,648 million USD before settling back to lower levels around 2,279 and 2,299 million USD towards the end of the observed period. This uptick in liabilities in early 2016 indicates a temporary increase in short-term obligations.
- Current Ratio
- The current ratio, an indicator of liquidity and ability to meet short-term obligations, mostly remains close to or below 1.0 across the majority of quarters, indicating tight liquidity conditions. There is a downward trend from just above 1 in early 2011 to lows as low as 0.42 in March 2016, suggesting increasing pressure on liquidity during this timeframe. However, by September 2016 the current ratio dramatically improves to 1.74, reflecting the simultaneous sharp increase in current assets and a reduction in current liabilities. This improvement signals a substantial strengthening of short-term financial health at the end of the period.
Overall, the data reveal a period of constrained liquidity with occasional fluctuations in working capital components. The substantial improvement in the current ratio by the final quarter analyzed suggests either a strategic financial maneuver or an extraordinary event impacting short-term resources and liabilities. Continuous monitoring of these components is essential for understanding the company's operational liquidity and risk profile.
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 | Dec 31, 2011 | Sep 3, 2011 | Jun 11, 2011 | Mar 19, 2011 | ||||||||
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| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||||||||
| Accounts and notes receivable, net | ||||||||||||||||||||||||||||||
| Short-term investments | ||||||||||||||||||||||||||||||
| Total quick assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Quick ratio1 | ||||||||||||||||||||||||||||||
| 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), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-03), 10-Q (reporting date: 2011-06-11), 10-Q (reporting date: 2011-03-19).
1 Q3 2016 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
The quick ratio exhibited a general downward trend from March 2011 through March 2016, indicating a weakening in the company's short-term liquidity position over this period. Initially, the ratio stood at 0.8, which gradually declined with intermittent fluctuations, reaching lows around 0.29 by mid-2016, before a substantial increase to 1.45 in the last quarter reported.
Quick assets consistently decreased over most quarters, with some periods showing slight recoveries. For example, quick assets dropped from 1840 million US dollars in March 2011 to below 1000 million by late 2014 and mid-2015, followed by a notable increase to 3325 million in the last quarter. These fluctuations reflect variability in the liquid asset base available to cover immediate liabilities.
Current liabilities generally maintained a high level throughout the timeline, often exceeding quick assets. While there were some declines, such as from 4648 million in early 2016 to around 2279–2299 million in the latest periods, current liabilities mostly remained within a range of approximately 2000–3000 million, indicating sustained short-term obligations.
The sharp increase in the quick ratio to 1.45 towards the end signifies a marked improvement in liquidity, driven by a substantial rise in quick assets coupled with a reduction in current liabilities. This suggests a potential strategic shift or one-time event enhancing the company's ability to meet short-term liabilities promptly.
Overall, the data points to a period marked by liquidity challenges with gradual deterioration up to early 2016, followed by a pronounced recovery in the final quarter reported. The variability in quick assets and the relatively stable but high current liabilities highlight areas of focus for liquidity management and operational efficiency.
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 | Dec 31, 2011 | Sep 3, 2011 | Jun 11, 2011 | Mar 19, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||||||||||
| Short-term investments | ||||||||||||||||||||||||||||||
| Total cash assets | ||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Cash ratio1 | ||||||||||||||||||||||||||||||
| 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), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-03), 10-Q (reporting date: 2011-06-11), 10-Q (reporting date: 2011-03-19).
1 Q3 2016 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets demonstrate notable fluctuations across the examined quarters. Starting at 1,529 million US dollars in March 2011, there is a noticeable decline through mid-2014, with intermittent volatility. The lowest points are observed around December 2014 and June 2015, with values under 600 million US dollars. A marked increase occurs toward the end of the period, peaking significantly at 2,885 million US dollars in September 2016, representing a substantial cash buildup.
- Current Liabilities
- Current liabilities show a generally fluctuating pattern without a clear sustained trend upward or downward. Initial values near 2,288 million US dollars in March 2011 drop to around 1,711 million US dollars mid-2011, then recover and hover around 2,000 to 2,500 million US dollars over subsequent quarters. There is a discernible spike in March 2016, reaching 4,648 million US dollars, which is the highest value in the timeframe. After this spike, liabilities stabilize to near previous levels by September 2016.
- Cash Ratio
- The cash ratio consistently declines from 0.67 in March 2011 to a trough of 0.2 around March 2016, indicating a reduction in the company's immediate liquidity relative to current liabilities during this period. A recovery trend is evident towards the last quarter analyzed, culminating in a substantial increase to 1.25 in September 2016, which suggests a significant strengthening of liquidity towards the end of the period, likely driven by the sharp increase in cash assets.
- Summary and Insights
- Overall, the data indicate that liquidity, as measured by the cash ratio, deteriorated steadily for most of the period, implying increasing short-term liability coverage challenges. However, the final quarter displays a significant liquidity improvement. The sharp rise in total cash assets in the last quarter is a primary factor behind this enhanced liquidity position. Current liabilities experienced short-term fluctuations but spiked notably in early 2016 before normalizing. The overall pattern suggests cautious liquidity management, with potential operational or strategic changes implemented late in the period to bolster the cash position significantly.