Professional Documents
Culture Documents
2015
Current Ratio
= Current Assets
Current liabilities
= 18312
44806
= 0.408 times
For every dollar of short term liability Pizza hut has ability to pay with 0.408 current assets,
which is not quite good state.
Quick Ratio
= C.A-inventory
Current liabilities
=8837
44806
= 0.197times
The quick ratio of 0.197 times indicates that Pizza hut has0.197 in quick assets for every dollar
in current liabilities.
Pizza hut recovery time is 51.3 times, it is granting stricter terms of credit that recover accounts
receivables 51 times in a year.
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Pizza hut takes 7 days to recover a/c receivables, time period is short means restricted policy is
followed up as long collection period reduce the liquidity of receivables& ability to pay short
terms obligations.
Inventory T.O.R
= COGS
Inventory
= 304190
9475
=32.10 times
Pizza hut have a least investment of inventory relative to sales as their inventory time period is
32.10 times in a year.
For every dollar of fixed assets Pizza hut generated 2.95 net sales, as fixed assets are more
productively utilizing. The use of different cost recovery (depreciation) methods will affect the
fixed assets turnover ratio.
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Pizza hut generated 2.57 in net sales for every dollar of assets investment. A high ratio shows
greater efficiency in using assets to produce sales.
Debt Ratio
= Total liabilities
Total assets
= 73395
144605
= 0.507or 50.7%
50.7% investment has been supplied by creditors in Pizza hut & remaining 49.3 % from own
pocket, creating a great doubt on its financial state as its equity huge portion comprises of debts.
Creditors provided amount about 10.3 in financing for every dollar contributed by owner.
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= 34.707 times
Pizza hut earned 34.707 times more than its interest charges.
4. Profitability Ratio:
Gross profit margin Ratio
= Gross profit
Net sales
= 68413
372603
= 0.18 or 18%
A gross profit margin of 0.18 or 18% shows that 18 percent remains from each dollar of sales
after deducting cost of goods sold.
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Pizza hut profit margin is 0.06 or 6% for every dollar in sales, shows that firms sales are too low
but expenses are too high.
Pizza hut operating process generates of 8.9% in operating profit per dollar of net sales.
Return on equity =
Net income
Stock holders equity
= 23830
71210
= 0.334or 33.4%
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About 33.4% returns on equity realize by firm stock holders on their investment.
5. Market Ratio:
Since Pizza hut has no preferred stock in its capital structure, the earning available to common
stockholders equal the firms net income.as its EPS is 24.35.
= 80.44
24.35
= 3.30
Pizza hut P/E ratio shows that the market is willing to pay about 3.30 dollars for every dollars in
earning.
Pizza hut book value is 72.75pershare in this accounting period, without taking preferred stock in
consideration as its value is not available.
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= 9787
978.71090
= 10
Pizza hut pays $ 10 for each share of common stock outstanding, which is quite attractive.
Dividend payout
Pizza hut paid nearly 41%of its earning in dividends. This higher payout ratio may reflects lower
growth opportunities.
Dividend yield
= 10
80.44
= 0.1243 or 12.43%
Pizza hut dividend yield of 12.43 % is the rate earned by shareholders from dividends relative to
the current price of the stock.
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Ratio Analysis
2014
Current Ratio
= Current Assets
Current liabilities
C.R = 6460
39112
= 0.165 times
For every dollar of short term liability Pizza hut has ability to pay with 0.165 current assets,
which is not quite good state.
Quick Ratio
= C.A-inventory
Current liabilities
= 4873
39112
= 0.124
The quick ratio of 0.124 times indicates that Pizza hut has0.124 in quick assets for every dollar
in current liabilities.
= Net sales
A/c receivable
A/R T.O.R
= 330399
1750
= 188.79time
Pizza hut recovery time is 188.79times, it is granting more restricted terms of credit that recover
accounts receivables 188.79 times in a year.
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= 365 days
A/R T.O.R
= 365days
188.79
=1.90 days
Pizza hut takes 1.9 or 2 days to recover a/c receivables, time period is more frequent means
restricted policy is followed up as long collection period has been prohibited as it reduce the
liquidity of receivables & ability to pay short terms obligations.
Inventory T.O.R
= COGS
Inventory
= 273493
1587
=172.33times
Pizza hut have a least investment of inventory relative to sales as their inventory time period is
172.33 times in a year.
= Net sales
Total fixed assets
= 330399
101878
= 3.24times
For every dollar of fixed assets Pizza hut generated 3.24 times net sales, as fixed assets are more
productively utilizing. The use of different cost recovery (depreciation) methods will affect the
fixed assets turnover ratio.
= Net sales
Total assets
= 330399
108338
= 3.049times
Pizza hut generated 3.049 times in net sales for every dollar of assets investment. A high ratio
shows greater efficiency in using assets to produce sales.
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Debt Ratio
= Total liabilities
Total assets
= 43682
108338
= 0.403or 40.3%
40.3% investment has been supplied by creditors in Pizza hut & remaining 59.7% from own
pocket.
= Total liabilities
Stockholders equity
= 43682
64656
= 0.675or 67.5%
Creditors provided amount about 67.5% in financing for every dollar contributed by owner.
= EBIT
Interest Expense
= 28170
774
= 36.395 times
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= 28170
774/0.72
=28170
1075
= 26.2 times
4. Profitability Ratio:
Gross profit margin Ratio =
Gross profit
Net sales
= 56906
330399
= 0.172 or 17.2%
A gross profit margin of 0.172 or 17.2% shows that 18 percent remains from each dollar of sales
after deducting cost of goods sold.
= Net profit
Net sales
= 16470
330399
= 0.049
Pizza hut profit margin is 0.049 or 4.9% for every dollar in sales, shows that firms sales are too
low but expenses are too high.
Pizza hut operating process generates of 8.5% in operating profit per dollar of net sales.
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Return on investment
= Net income
Total assets
= 19953
108338
= 0.184 or 18.4%
Return on equity =
Net income
Stock holders equity
= 19953
64656
= 0.308or 30.8%
About 30.8% returns on equity realize by firm stock holders on their investment.
5. Market Ratio:
Earnings per share
= 19953
978.50110
=20.39
Since Pizza hut has no preferred stock in its capital structure, the earning available to
common stockholders equal the firms net income.as its EPS is 20.39.
= 80.44
20.39
= 3.945
Pizza hut P/E ratio shows that the market is willing to pay about 3.945 dollars for every dollars
in earning.
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= 64656
978.50110
= 66.07
Pizza hut book value is 66.07 per share in this accounting period, without taking preferred stock
in consideration as its value is not available.
= 9299
978.50110
= 9.50
Pizza hut pays $ 9.5 for each share of common stock outstanding, which is quite attractive.
Dividend payout
= 9.5
20.39
= 0.465 or 46.5%
Pizza hut paid nearly 46.5%of its earning in dividends. This higher payout ratio may reflects
lower growth opportunities.
Dividend yield
=0.117 or 11.7%
Pizza hut dividend yield of 11.7 % is the rate earned by shareholders from dividends relative to
the current price of the stock.
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TABULAR COMPARISION
Ratios Title
LIQUIDITY RATIO
Current ratio
Quick ratio
ASSETS MANAGEMENT
RATIO
Accounts receivable
turnover ratio
Average collection period
Inventory turnover
Fixed assets turnover
Total assets turnover
DEBT MANGEMENT
RATIO
Debt ratio
Debt equity ratio
Times interest earned ratio
Fixed-charge-coverage ratio
PROFITABILITY RATIO
Gross profit margin
Operating profit margin
Net profit margin
Return on investment
Return on equity
MARKET BOOK RATIO
Earnings per share
Price/earnings ratio
Book value per share
Dividend per share
Dividend payout
Dividend yield
2015
2014
0.48
0.197
0.165
0.124
51.30
188.79
7.01
32.10
2.95
2.57
1.90
172.33
3.24
3.049
50.7%
10.3%
34.707
24.98
40.3%
67.5%
36.395%
26.20
18%
8.9%
6%
16%
33.4%
17.2%
8.5%
4.9%
18.4%
30.8%
24.35
3.30
72.758
10
41.0%
12.43%
20.39
3.945
66.07
9.50
46.5%
11.7%
DESCRIPTIVE COMPARISION
LIQUIDITY RATIO
Current Ratio:
As per data calculated current ratio of Pizza hut in 2015 was $0.408 but is 2014 was
about $0.165 to pay off its current Liabilities. Pizza hut is progressing towards
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maintaining ability to satisfy the claims of short term Creditors by using only CR as
low ratio suggests that firm may have difficulty in paying its bills. The Quality of this
ratio depends on the composition & timing of Pizza huts current ratios assets &
liabilities.
Quick Ratio:
Measure short term liquidity by removing liquid current assets. It indicates that
Pizza hut has $ 0.197 in 2015 but was $ 0.124 in 2014 so that Pizza hut has no
prepaid items & has more inventories in 2014, so that in 2015 it is more capable to
meet current liabilities.
PROFITABILITY RATIO
Gross Profit Margin:
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Indicates the ability of Pizza hut to afford cost of goods sold in 2014 is 17.2% shows
little bit increase in 2015 & become 18% remains from each dollar of sales after
deducting COGS. Suggesting that the Pizza hut pricing policies & production costs
may be similar to as in 2014.
Return on Investment:
Measures the effectiveness of management in generation profit from its Total
investment in assets in 2014 Return on investment was 18.4% but was decline to
16% in 2015 shows that Pizza hut has increase problem in its management in
securing profit from overall investment so that it should increase its sales relative to
its cost or reduce costs relative to sales.
Return on Equity:
Pizza hut ROE shows an increment from 30.8% to 33.46% in 2014 to 2015.It is
because of effective management performance & shows that it is more risky in 2015
due to higher leverage as its rate of return realized by Pizza hut stockholder on their
investment in 2015 is relatively greater than in 2014.
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Often reflects the markets perceptions of the firms growth thus that Pizza hut PER
was 3.94(4) in 2014 but was decline in 2015 to 3.30 shows that investors believe
that Pizza hut future earning potential is declining , so they may not be willing to
pay higher price for stock.
Dividend payout:
It shows percentage of earning paid to shareholders Pizza hut paid nearly 41% of its
earning in dividend in 2015 but paid 46.5% in 2014 the higher payout ratio in 2014
reflects lower growth opportunities due to its over 46.5% of income distributed to
shareholders however but in 2015 it reduced its rate and reinvested in business
operation.
Dividend yield:
It show rate caused by shareholder caused by dividend relative to the current price
of stock it was about 11.7% in 2014 but shows increment to 12.43% in 2015 the
higher dividend yield may reflects fewer investment opportunities on the part of
Pizza hut.
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