Eat at my restaurant - liquidity review
With this case, we review the liquidity of several restaurant companies. The restaurant com- panies reviewed and the year-end dates are as follows:
1. Yum Brands, Inc. (December 30, 2006; December 30, 2005)
"Yum consists of six operating segments; KFC, Pizza Hut, Taco Bell, LJS/A&W, Yum Restaurants International . . . and YUM Restaurants China." 10-K
2. Panera Bread (December 26, 2006; December 27, 2005)
"As of December 26, 2006 we operated directly and through area development agree- ments with 41 franchise groups, bakery cafes under Panera Bread® and Saint Louis Bread® names." 10-K
3. Starbucks (October 1, 2006; October 2, 2005)
"Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related accessories and equipment, a selection of premium teas and a line of compact discs, primarily through Company-operated retail stores." 10-K
Yum Brands, Inc. Panera Bread Starbucks
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Data Reviewed
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2006
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2005
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2006
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2005
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2006
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2005
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Current ratio
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0.52
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0.53
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1.16
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1.18
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0.79
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0.99
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Acid test
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0.32
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0.27
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0.83
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0.91
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0.35
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0.41
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Required:
a. For each company, indicate the trend in liquidity.
b. Give your opinion as to the relative liquidity of each of these companies. How would you rank these companies?