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)
YUM! Brands Inc., long-term (investment) activity ratios
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).
The analysis of long-term activity ratios reveals a general improvement in asset utilization efficiency, complemented by a dramatic shift in equity utilization between 2011 and 2015.
- Net Fixed Asset Turnover
- This ratio remained relatively stable over the analyzed period. After a peak of 3.21 in 2012 and a slight contraction to 2.93 in 2013, the ratio recovered to 3.13 by 2015. This pattern indicates consistent productivity of fixed assets in generating sales with minimal volatility.
- Total Asset Turnover
- A steady upward trend is observed, with the ratio increasing from 1.43 in 2011 to 1.62 in 2015. This progression suggests a continuous enhancement in the ability to generate revenue from the total asset base, reflecting improved overall operational efficiency.
- Equity Turnover
- The most significant variance is observed in equity turnover. Following a period of decline from 6.93 in 2011 to a low of 6.04 in 2013, the ratio experienced an accelerated increase, reaching 8.58 in 2014 and surging to 14.39 in 2015. This sharp escalation indicates a substantial increase in the volume of sales generated per unit of shareholder equity, which may point toward a strategic reduction in the equity base or a significant increase in financial leverage.
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Net Fixed Asset Turnover
YUM! Brands Inc., net fixed asset turnover 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) | ||||||
| Revenues | 13,105) | 13,279) | 13,084) | 13,633) | 12,626) | |
| Property, plant and equipment, net | 4,189) | 4,498) | 4,459) | 4,250) | 4,042) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 3.13 | 2.95 | 2.93 | 3.21 | 3.12 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, 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 fixed asset turnover = Revenues ÷ Property, plant and equipment, net
= 13,105 ÷ 4,189 = 3.13
2 Click competitor name to see calculations.
An evaluation of the long-term investment activity between 2011 and 2015 reveals a period of relative stability in revenue generation coupled with fluctuations in asset utilization efficiency.
- Revenue Dynamics
- Revenue reached a peak in 2012 at 13,633 million USD, followed by a moderate decline in 2013. For the remainder of the period, revenues remained relatively stable, concluding 2015 at 13,105 million USD.
- Fixed Asset Investment Trends
- Net property, plant, and equipment showed a consistent upward trajectory from 2011 to 2014, increasing from 4,042 million USD to 4,498 million USD. This growth trend reversed in 2015, with the net fixed asset base contracting to 4,189 million USD.
- Net Fixed Asset Turnover Analysis
- The net fixed asset turnover ratio, which measures the efficiency of fixed assets in generating sales, peaked at 3.21 in 2012. A decline was observed in 2013 and 2014, with the ratio dropping to 2.93 and 2.95 respectively, indicating that the increase in the fixed asset base outpaced revenue growth during those years. However, efficiency recovered in 2015 to a ratio of 3.13, a result of the reduction in net fixed assets coinciding with stabilized revenue levels.
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Total Asset Turnover
YUM! Brands Inc., total asset turnover 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) | ||||||
| Revenues | 13,105) | 13,279) | 13,084) | 13,633) | 12,626) | |
| Total assets | 8,075) | 8,345) | 8,695) | 9,011) | 8,834) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 1.62 | 1.59 | 1.50 | 1.51 | 1.43 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, 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
Total asset turnover = Revenues ÷ Total assets
= 13,105 ÷ 8,075 = 1.62
2 Click competitor name to see calculations.
The analysis of investment activity from 2011 to 2015 reveals a consistent improvement in asset utilization efficiency despite stagnant revenue growth.
- Revenue Trends
- Annual revenues exhibited volatility over the period, peaking at US$ 13,633 million in 2012. Following this peak, revenues declined and remained relatively flat, fluctuating between US$ 13,084 million and US$ 13,279 million through 2015. This indicates a stabilization of top-line performance without significant growth.
- Asset Base Evolution
- Total assets showed a general downward trajectory after 2012. After reaching a maximum of US$ 9,011 million in 2012, the asset base contracted steadily for three consecutive years, ending at US$ 8,075 million in 2015. This reduction suggests a strategic decrease in the company's total resource footprint.
- Total Asset Turnover Efficiency
- The total asset turnover ratio improved steadily from 1.43 in 2011 to 1.62 in 2015. Because revenues remained relatively stable while total assets decreased, the increase in the turnover ratio is attributed to a more efficient use of a smaller asset base to generate sales. This trend indicates an enhancement in operational efficiency regarding the company's long-term investment activity.
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Equity Turnover
YUM! Brands Inc., equity turnover 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) | ||||||
| Revenues | 13,105) | 13,279) | 13,084) | 13,633) | 12,626) | |
| Shareholders’ equity, YUM! Brands, Inc. | 911) | 1,547) | 2,166) | 2,154) | 1,823) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 14.39 | 8.58 | 6.04 | 6.33 | 6.93 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Airbnb Inc. | — | — | — | — | — | |
| Booking Holdings Inc. | — | — | — | — | — | |
| Chipotle Mexican Grill Inc. | — | — | — | — | — | |
| DoorDash, 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
Equity turnover = Revenues ÷ Shareholders’ equity, YUM! Brands, Inc.
= 13,105 ÷ 911 = 14.39
2 Click competitor name to see calculations.
Between 2011 and 2015, the equity turnover ratio exhibited a sharp upward trajectory, particularly in the latter half of the period. This trend is characterized by a decoupling of revenue growth and equity levels, where the increase in the turnover ratio is primarily attributed to a contraction of the equity base rather than an expansion of top-line sales.
- Revenue Stability
- Revenues remained relatively stagnant throughout the analyzed period. Following a peak of 13,633 million USD in 2012, figures fluctuated slightly, ending at 13,105 million USD in 2015. This suggests that the company's ability to generate sales remained constant over the five-year span.
- Equity Contraction
- A pronounced downward trend in shareholders' equity is observed starting after 2013. Equity levels peaked at 2,166 million USD in 2013 and declined precipitously to 911 million USD by 2015. This represents a reduction of approximately 58% in the equity base over a two-year period.
- Equity Turnover Acceleration
- The equity turnover ratio initially experienced a slight decline, moving from 6.93 in 2011 to 6.04 in 2013. However, a rapid acceleration occurred thereafter, with the ratio climbing to 8.58 in 2014 and reaching 14.39 by 2015. Because revenues remained flat, this surge in the ratio is a direct mathematical consequence of the shrinking equity denominator, indicating an increase in financial leverage or an aggressive return of capital to shareholders.
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