Yum! Brands Inc (YUM)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.47 | 1.37 | 1.44 | 1.49 | 1.26 | 1.13 | 1.02 | 0.99 | 0.97 | 1.28 | 1.21 | 1.04 | 1.08 | 1.52 | 0.97 | 0.98 | 1.01 | 1.31 | 1.63 | 1.33 |
| Quick ratio | 1.21 | 1.11 | 1.10 | 1.15 | 0.99 | 0.89 | 0.76 | 0.64 | 0.64 | 0.81 | 0.85 | 0.71 | 0.80 | 1.14 | 0.69 | 0.72 | 0.78 | 1.05 | 1.34 | 1.11 |
| Cash ratio | 0.56 | 0.46 | 0.46 | 0.57 | 0.40 | 0.46 | 0.32 | 0.24 | 0.24 | 0.34 | 0.35 | 0.28 | 0.34 | 0.74 | 0.35 | 0.38 | 0.44 | 0.71 | 0.98 | 0.77 |
Yum! Brands Inc's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet its short-term financial obligations.
The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, fluctuated over the analyzed period. It showed a general trend of improvement from March 2020 to March 2024, indicating a strengthening liquidity position. However, there were some fluctuations along the way, with a notable decrease at the end of 2021 and a subsequent recovery by the end of 2024. The ratio generally stayed above 1, which suggests that Yum! Brands Inc had more than sufficient current assets to cover its current liabilities.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio showed fluctuations during the period but remained relatively stable overall. It generally followed the trend of the current ratio, indicating that the company had a solid base of liquid assets to cover its short-term obligations.
Lastly, the cash ratio, which specifically measures the company's ability to cover its current liabilities with cash and cash equivalents, also experienced fluctuations but demonstrated an upward trend over the period. This indicates that Yum! Brands Inc had been building up its cash reserves relative to its short-term liabilities, which can be a positive sign for financial health.
Overall, the liquidity ratios of Yum! Brands Inc suggest that the company maintained a reasonable level of liquidity throughout the analyzed period, with improvements in its ability to meet short-term obligations, especially in terms of having sufficient cash on hand.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 40.13 | 38.56 | 37.66 | 35.62 | 39.05 | 33.45 | 34.25 | 32.71 | 87.27 | 31.48 | 32.68 | 31.03 | 35.81 | 31.07 | 30.52 | 31.56 | 36.75 | 34.00 | 35.21 | 33.27 |
The cash conversion cycle of Yum! Brands Inc has fluctuated over the periods provided. It represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 30.52 days to a high of 87.27 days. A lower cash conversion cycle indicates that the company is able to quickly convert its investments into cash, which can improve liquidity and operational efficiency. Conversely, a higher cash conversion cycle may suggest inefficiencies in inventory management or slower collections on sales.
It's worth noting that there was a significant increase in the cash conversion cycle from December 31, 2022, to December 31, 2024, which may indicate potential challenges in managing working capital efficiently during that period. Further analysis into the components of the cash conversion cycle, such as days sales outstanding and days inventory outstanding, could provide more insights into the reasons behind these fluctuations.