Chipotle's Financial Analysis

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

* Taking on debt gives the company the ability to use cash for projects and short term investments.

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

Chipotle’s quick ratio is 3.28, slightly lower than its current ratio. Yum! Foods quick ratio is .62, which is also slightly lower than their current ratio. Both ratios are acceptable as long as A/R is not expected to slow. Chipotle appears to be a significantly stronger company than Yum! Foods. The industry average is not given.

One key aspect for Chipotle is their ability to cover debt. They maintain very liquid assets to cover the costs of

The restaurant industry in the United States had annual sales of $ 631.8 billion and employs 12.9 million people in 2012. Even in times of recession there is little evidence that this industry has seen a decline especially in its fast food and quick service segment. But with a depressed economy with no immediate upward trend in the near future, majority of the customers indicated that they would either curtail their spending on eating or best maintain its current level which is certainly going to affect the future of many restaurants in the industry. Chipotle is part of the fast casual segment of the U.S industry with over 1,600 restaurants.

has an asset base of $2.235 million for this line and it currently sells $3.54 million and earns

Chipotle has recently approved the project for a new product expansion. The products that will be now offered will be red chile and green chile. This project was approved for many reasons. The project will help boost Chipotle’s sales overall. It will also add more menu items to Chipotle’s current offerings. Chipotle can capitalize and eventually also add more locations pending project success. There are so many more benefits from product expansion than risk. This definitely makes the project more feasible. I am confident that this new product expansion will bring favorable results. It will result as the stepping stone to more successful product launches.

Czarnecki published an article in PRWeek on January 5, 2017 that consisted of the timeline of Chipotle’s crisis. This timeline is easy to follow and provides links to further detail. It starts off on November 1, 2015 when Chipotle temporarily shut down dozens of its West Coast locations after public health officials linked the restaurant to an E. coli outbreak. The last event posted was on December 16, 2016 when Chipotle and Ackman reached a settlement that gave his firm two seats on the company’s 12-member board. Czarnecki discusses how this PR crisis damaged their reputation and failed to get customers back into stores. Czarnecki also discussed the key takeaways. These include that although CGI shorts are cute, they don’t fix the problem

Chipotle’s is a fast-casual dining concept that has proven people care about their food. Chipotle has been at the forefront of the healthy fast casual concept for years now. They have continually pushed the envelope when it comes to the locally sourced, locally grown movement. Since the launch of Chipotle other companies have tried jumping on board with this movement, some have done well and others not.

Based on the brief research, Chipotle bases its long term goals around the three basic marketing strategies: Concentrated growth, Market development and Product development.

The company makes money through the investments they make in purchases, which is the source of cash and cash equivalents.

Chipotle is facing numerous challenges due to the fact that E. coli outbreak which requires the corporation from the key stakeholders to keep it under control and apply the new food safety protocols which can aid to bring the regular customers back. Although the main cause remains a mystery, Chipotle’s E. coli outbreak has been authoritatively declared officially over by the experts. However, since the poisoning outbreak, the impact of the reduced number of customers affects the profit which the company used to enjoy before such eventuality (Scholes 27).

Operating cash flow was not enough to cover capital investments (this firm does not to appear to pay dividends as it does not show in the prior 3 years). The firm is financing it operations from the issuance of common stock. $23,082 was raised during the period, which is covering its investments in capital expenditures.

2. New bank credit facility, 600 million cash on hand to take advantage of opportunities that may arise