Yum Finance

Alejandro Caballero

Doctor Norcio

Financial Management

Due 11/7/2015

YUM! Inc

The Yum Inc. organization is what seems to be a very healthy and profitable company. They currently own the more restaurants than anyone in the world but McDonalds still takes up a little more than half of the market shares. Currently Yum Inc owns about 37,000 restaurants across the globe in 110 different countries or territories. “Its leading brands are KFC, Pizza Hut, Taco Bell, and Long John Silver’s. These four brands are global leaders in the categories of chicken, pizza, Mexican-style food, and seafood.” (Chew 2010). The company is doing quite well for themselves in a very competitive market.

The Dupont Identity of the company Yum Inc came out to 0.66. The Dupont Identity breaks down return on equity into three parts and can show where the company is lagging. 0.66 is the amount that Yum Inc generated for every dollar invested.

The Current Ratio of the company is 0.68 and the Quick Ratio is 0.55. These two ratios are a part of the liquidity ratio which measures a firm’s ability to meet its short term obligations. Meaning for every dollar owed they have $0.68 to pay for it.

The inventory holding period is 11.17. This indicates how long on average it takes to sell products. The Average Collection period came out to be 10. This is “The approximate amount of time that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients.” (Investopedia)

The Debt Ratio of Yum Inc came out to be 0.81. This indicates “the proportion of a company’s assets that are financed by debt.” (Investopedia) The Dividend yield, “which is the relation between a stock’s annual dividend payout and its current stock price.” (Dividend), came out to 2.42%

By using the capital asset pricing model the required rate of return came out to 12.38%. The required rate of return is the minimum annual percentage investors require to select an investment. The Free...