Final Project Milestone 2
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Final Project Milestone 2: Chipotle Mexican Grill Inc.
Tyesha Williams
Southern New Hampshire University
FIN 320
February 11, 2024
Suleman Braimah
After carefully inputting all the accurate numbers into the Excel worksheet, a determination of many differences was discovered and the scale used for the worksheet are in millions. Chipotle’s total revenue in the third quarter of 2023 was 2471.948 million which was approximately 11.3% higher than the revenue for 2022. Expansion and an increase in sales were the sole result of this growth. Factually, “The increase in total revenue was driven by new restaurant openings, and a 5.0% increase in comparable restaurant sales attributable to higher transactions and, to a lesser extent, an increase in average check” (Chipotle, 2023). Furthermore, net income increased from 257.138 million (2022) to 313.217 million (2023). The EPS was also impacted due to a 0.04 after tax in 2023 causing the EPS to be 11.37, however in 2022 third quarter was 9.26. In addition, the company’s profit margin in 2023 was 12%, which was higher than the 10% in 2022. The table below shows more differences amongst the two third quarters and it should be noted that Chipotle Mexican Grill does not pay dividends, yet they invest it back
into the company. Chipotle Mexican Grill is financially healthy based on the assumptions and or facts that they have 0 debt and there has been an 11.3% increase in sales for the company. It is expected to continue to grow in sales, bringing the company more and more revenue. The net income for the company is also up 37% from 2022. Chipotle is successful financially because the company only
Item
2023
2022
Current Ratio
1.53
1.32
Working capital
581.723
259.575
Debt Ratio
.64
.66
Earnings Per Share
11.39
9.26
Price Earnings Ratio
168.33
155.28
Total Asset Turnover
Ratio
.31
.33
Financial Leverage
2.74
2.93
Net Profit Margin
.13
.12
Return on Assets
.04
.04
Return on Equity
0
0
offers a small menu of items. Furthermore, they offer fresh ingredients, allowing the customer to receive quick service as well as know exactly what is available and on sale every visit. Chipotle is also successful financially because they are a corporate-owned company which allows the company to have complete control over all facets of its operations. In addition, with the company
having a low financial leverage also determines the financial success of the company. There could be more information to determine whether the company is financially healthy. Moreover, using the cash flow statement determines the sustainability of the company’s finances and will ultimately illustrate whether Chipotle is financially healthy. Short-term financing sources are essential for businesses as they present immediate resources that can be sourced to address many financial necessities. These sources can be influential in enhancing a company's financial health. Furthermore, trade credits, bank overdrafts, short-term loans, factoring, and commercial paper are just a few options for short-
term financing. Being that Chipotle at this time is financially healthy, it is not necessary to look for any short-term financing. However, since the company is expected to open more restaurants, it can be determined that the best options for immediate funds would be for short-term loans, factoring, and commercial paper. Because Chipotle is debt-free they would want to maintain that freeness so by using factoring would allow the company to improve its cash flow and on the other hand reduce any bad debt risk. In addition, the company could apply for a short-term loan and due to its success would be able to pay off that loan within the one-year time frame. Commercial paper is also an option as it provides substantial capital at a reduced cost. Overall, short-term financing sources assist in managing cash flow, taking advantage of opportunities, and
addressing instant financial necessities. Chipotle would need to evaluate the costs and risks correlated with whichever source of financing they would consider.
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References
Chipotle announces third quarter 2023 Results - Oct 26, 2023. (n.d.). https://ir.chipotle.com/2023-10-26-CHIPOTLE-ANNOUNCES-THIRD-QUARTER-
2023-RESULTS#:~:text=Total%20revenue%20in%20the%20third%20quarter%20was,to
%20higher%20transactions%20and%2C%20to%20a%20lesser
Mergent online. (n.d.). https://www.mergentonline.com/login.php
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