YUM! Brands Inc. (NYSE:YUM)

Inventory Turnover

The inventory turnover ratio generally demonstrates positive momentum over the analyzed periods. Starting at 32.14 in early 2012, it experienced minor fluctuations but shows an overall increase, reaching a peak of 44.26 in early 2016 before slightly declining to around 35 towards September 2016. This pattern suggests an improvement in inventory management efficiency, as the company is able to sell and replenish its inventory more frequently over time, particularly from 2014 to 2016.

Receivables Turnover

The receivables turnover ratio displays a downward trend throughout the periods. Initially, it was relatively strong, reaching nearly 40 in late 2012. However, from 2013 onwards, the ratio declined steadily, dropping to approximately 24.77 by September 2016. This indicates a slower collection of receivables, which could imply extended credit terms or potential issues with collecting payments from customers.

Working Capital Turnover

Working capital turnover data is limited, with a few sporadic entries showing very high ratios early on, such as 329 and 536.59, then markedly dropping to a very low 6.4 in mid-2016. The inconsistency and lack of continuous data make trend analysis difficult, but the sharp decrease in the last available data point may suggest reduced efficiency in utilizing working capital during that period.

Average Inventory Processing Period

The average inventory processing period shows a gradual reduction over time. Starting around 11 to 12 days in early 2012, it improved to approximately 8 to 10 days by 2016. This decrease corroborates the increasing inventory turnover rate, indicating faster movement of inventory through the supply chain.

Average Receivable Collection Period

The average receivable collection period has increased modestly over the years. From roughly 9 to 11 days in early periods, it lengthened to 13 to 15 days by 2016. This elongation aligns with the decrease in receivables turnover, suggesting customers take longer to pay, which could adversely affect cash flow.

Operating Cycle

The operating cycle remained relatively stable within a range of approximately 20 to 25 days throughout the periods. Although there are minor variations, the cycle does not display significant upward or downward trends, indicating consistent operational efficiency in combining inventory holding and receivables collection durations.

Company Restaurant Expenses

The company restaurant expenses demonstrate a cyclical pattern with noticeable increases in the fourth quarters of each year, reflecting seasonal cost variations. Expenses ranged roughly between 1,700 million and 3,100 million US dollars. Each year, the fourth quarter peaks are consistently the highest within the respective year, while the first quarters show the lowest expenses. Although there is some fluctuation quarter-over-quarter, the overall expense level appears relatively stable across the observed periods, without clear long-term upward or downward trends.

Inventories

Inventories exhibit a generally stable trend with moderate fluctuations. Values mostly fluctuate between approximately 210 million and 320 million US dollars. There is no evidence of a strong upward or downward trajectory over the periods. Seasonal patterns are less pronounced compared to restaurant expenses, although minor quarterly variations exist. The inventory levels tend to decline slightly toward the later periods, particularly after mid-2015, suggesting a marginal reduction or more efficient inventory management.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates a mild upward trend over the course of the periods. Starting near 32 times in early 2012, the ratio experiences some variability but generally increases, reaching mid-40s by mid-2016 before slightly moderating. This increase in turnover indicates an improvement in how efficiently inventories are being utilized or sold relative to their levels, implying enhanced operational performance. The ratio also displays seasonal effects, often peaking in the third quarter before declining in the subsequent quarters.

The financial data demonstrates notable fluctuations in sales revenue over the observed periods. Sales exhibited an overall pattern of seasonal variation with peaks commonly occurring in the fourth quarter each year. However, there is a general declining trend in company sales from early 2012 to late 2016, with quarterly sales decreasing from a high exceeding US$3500 million in late 2012 and 2013 to figures closer to US$2800 million by late 2016. This decline suggests challenges in maintaining or growing revenue levels over the given timeframe.

Accounts and notes receivable, net, reveal a gradual upward trend in absolute terms. Starting near US$340 million in early 2012, the receivables balance increases steadily to over US$430 million by the third quarter of 2016. This increase in receivables despite declining sales may indicate a lengthening of credit terms or slower collection efforts.

The receivables turnover ratio, an efficiency metric, shows a declining trajectory throughout the periods. Starting above 39 in the third quarter of 2012, the turnover ratio decreases steadily to below 25 by the third quarter of 2016. This decline corroborates the observation regarding receivables, indicating that the company is collecting its outstanding receivables less frequently over time. The decreasing receivables turnover ratio may point to worsening credit management or increasing customer payment delays.

Sales Revenue

Exhibited seasonal patterns with consistent fourth-quarter peaks, but overall demonstrated a downward trend from over US$3500 million in late 2012 to near US$2800 million by late 2016.

Accounts and Notes Receivable, Net

Showed a steady increase from approximately US$340 million in early 2012 to above US$430 million by late 2016, potentially indicating extended credit terms or collection challenges.

Receivables Turnover Ratio

Declined from a high of about 39 in late 2012 to below 25 by late 2016, suggesting reduced efficiency in converting receivables into cash.

In summary, the data indicate revenue pressures alongside increasing receivables and diminishing turnover efficiency, which could signal operational or market challenges impacting cash flow and credit management effectiveness over the analyzed period.

Working Capital

The working capital exhibits considerable volatility over the observed periods. Initially, it starts at a positive value but quickly declines into negative territory by mid-2012. The negative trend persists with significant fluctuations, reaching substantial negative extremes around late 2015 and early 2016, with the lowest point near -1400 million US dollars. However, a marked recovery is observed towards the later periods, culminating in a positive working capital of 1704 million US dollars by the last recorded date. These fluctuations suggest periods of strained short-term liquidity and subsequent improvement.

Company Sales

Company sales show a consistent overall growth trend throughout the examined quarters. Sales figures fluctuate seasonally but generally increase from approximately 2.3 billion US dollars in early 2012 to around 2.8 billion US dollars by late 2016. There are discernible cyclical peaks near year-end quarters, indicating potential seasonal demand impacts. Despite occasional short-term decreases, the sales trajectory remains upward, reflecting successful revenue growth over time.

Working Capital Turnover

The working capital turnover ratio data is largely incomplete, with values reported only at the beginning and at the end of the period. The initial ratio is extremely high, indicating that sales are generated rapidly relative to the working capital, which could imply efficient asset utilization or very low working capital. The last ratio reported is considerably lower at 6.4, pointing to a reduction in efficiency or a relative increase in working capital compared to sales. Given the sparse data, caution should be applied in interpreting this ratio's trend.

Summary Insights

The data suggests that the company faced challenges managing its working capital in the earlier years, as evidenced by the deep negative working capital values, potentially signaling liquidity pressures. Over time, a recovery period is evident, with working capital moving back into positive territory, which may indicate improved capital management or operational adjustments. Concurrently, the steady increase in sales underscores consistent business growth. Seasonal patterns influence sales, which is typical in retail-focused operations. The limited working capital turnover data hint at changing capital efficiency, but more data would be needed for a definitive conclusion.

The analysis of the quarterly financial ratios indicates notable trends in inventory management efficiency over the observed periods.

Inventory Turnover

The inventory turnover ratio exhibits fluctuations yet depicts an overall upward trend from March 2012 through September 2016. Initially, the ratio oscillated around the low 30s, ranging from approximately 29.9 to 33.78. Starting from March 2014, there is a marked increase, peaking at 44.26 in March 2016, which suggests enhanced efficiency in inventory utilization and faster sales relative to inventory levels. However, this peak is followed by a decline to values in the mid-30s by the end of the period.

Average Inventory Processing Period

The average inventory processing period, measured in days, inversely reflects the inventory turnover trends. This period mostly remained stable between 9 and 12 days, with a gradual decrease in recent years. From initial values of 11 to 12 days, the duration shortens to 8 to 10 days towards the end of the timeline, indicating an improvement in the speed with which inventory is converted into sales. The lowest values around 8 and 9 days correspond with the highest inventory turnover ratios, reinforcing the interpretation of improved inventory management efficiency.

Overall, the patterns suggest that inventory management became more effective over time, particularly from 2014 onwards, with quicker inventory turnover and reduced processing duration. This trend could reflect operational improvements, stronger demand, or optimized supply chain management strategies implemented during the period analyzed.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a fluctuating but overall declining trend over the observed periods. Initially, the ratio rose from 32.8 to a peak of 39.31, indicating improved efficiency in collecting receivables. However, subsequent data shows a general decline, with the ratio decreasing to 24.77 by the last recorded quarter. This downward trend suggests a gradual slowdown in the effectiveness of receivables collection over time.

Average Receivable Collection Period

The average receivable collection period inversely mirrors the receivables turnover ratio, starting around 11 days, then briefly improving to 9 days, indicating faster collections. Over time, the period lengthens steadily, reaching 15 days by the final quarter. This increase implies that the company is taking longer to convert receivables into cash, signaling potential deteriorations in credit management or customer payment behavior.

Overall Insights

There is a clear inverse relationship between the receivables turnover ratio and the average collection period across the timeline. Early periods show stronger performance with rapid collections, but the latter periods denote a weakening position in receivables management. The trends could be indicative of external factors affecting customer payments or internal changes in credit policies. Continuous monitoring and analysis are advisable to address the extended collection periods and improve cash flow management.

The financial data reveals notable trends in the management of inventory, receivables, and overall operating cycle over the observed periods. The average inventory processing period exhibited a gradual improvement, decreasing from 11-12 days in earlier periods to a low of 8-9 days in 2015 and 2016. This suggests enhanced efficiency in inventory turnover and potentially better supply chain management.

Conversely, the average receivable collection period displayed a slight upward trend over time. Initially fluctuating around 9 to 12 days, it eventually increased to values ranging from 12 to 15 days by the later periods. This elongation indicates a slower collection of receivables, which could impact cash flow and working capital management.

The operating cycle, which combines inventory processing and receivable collection, remained relatively stable around the low twenties in number of days during the earlier years. However, toward the final periods, a modest increase was observed, rising to 25 days at the latest measurement. The increase in the operating cycle likely reflects the lengthening of the receivable collection period, although the improving inventory turnover partially offsets this effect.

Average Inventory Processing Period

Improved from approximately 11-12 days down to a range of 8-10 days, indicating better inventory management.

Average Receivable Collection Period

Increased from about 9-12 days initially to 13-15 days, suggesting slower receivables turnover.

Operating Cycle

Relatively steady in the low twenties for most periods but rose to 25 days in the latest quarter, influenced mainly by longer receivable collection periods despite reduced inventory processing times.