Assignment 2 FIN

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Southern New Hampshire University *

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320

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Finance

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Apr 3, 2024

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1 Final Project Milestone One: Chipotle Mexican Grill Tyesha Williams Southern New Hampshire University FIN-320-R3823: Principles of Finance Suleman Braimah January 15, 2024

2 Chipotle Mexican Grill is a restaurant chain that operates in various cities throughout the United States as well as internationally. The company offers its customers a variety of Mexican- style dishes such as burritos, burrito bowls (no tortillas), quesadillas, tacos, salads, and lifestyle bowls. Furthermore, the customer chooses either of those options and then chooses what type of meat, rice, beans, and other toppings they want to include in their dish. The customer has the option to choose carne asada, chicken, steak, barbacoa, carnitas, sofritas, and veggies as their base meat. Next, the customer chooses either white or brown rice, black or pinto beans, and tops it off with guacamole, fresh tomato salsa, roasted chili-corn salsa, sour cream, fajita veggies, cheese, lettuce, and queso. Looking over the balance sheet, income statement, and cash flow statement for the latest fiscal quarter for Chipotle, I can accurately report the total assets, total liabilities, current assets, current liabilities, net income, shares outstanding, earnings per share (EPS), total revenue, and shareholders' equity. Below is a chart to illustrate the requested information from the financial statements. Total Assets 7911 million Total Liabilities 5025 million Current Assets 1669 million Current Liabilities 1088 million Net Income 1170 million Shares Outstanding 28 million Earnings per share (EPS) 42.16 Total Revenue 9536 million Shareholder’s equity 2886 million Organizations utilize financial statements to offer important findings about the effects of a company’s operations, financial standing, and cash flow. The information found within these statements allows an organization to make important decisions for the company. Each financial

3 statement offers different information concerning the company’s financial records. The income statement discloses a company’s total revenue, total expenses, and whether the company has a net income or net loss. Statement of stockholder equity discloses the owner’s contributions, net income, or net loss and decreases to the capital such as the owner withdrawing from its equity. Lastly, the balance sheet discloses current and non-current assets, current and long-term liabilities, and the total equity taken from the statement of stockholder equity. Financial statements are prepared in a specific order because the statements are interconnected. This actively illustrates the importance of the interrelationship between these financial statements since they play the role of verifying that the statements are completed accurately. The income statement offers beneficial perceptions into our company’s operations, therefore aiding in making profitable decisions about production capacity, sales, closing and opening new departments, and if there is a need for a new target audience. In addition, the stockholder’s equity statements show the performance of the company, specifically the company’s net value. The balance sheet helps a company decide if the company will have the ability to pay current and future operating activities and or obligations. Lastly, the statement of cash flow details the company’s cash payments and cash receipts and whether it is from investing, operating, and financing activities (Warren and Jones, 2019). Unfortunately, I could not locate a news story within two months to explain why cash flow management is important to a business and its financial health. However, cash flow management is vital to a company’s financial health for various reasons. It makes certain that a company has a sufficient amount of money to cover its operational expenses and short-term obligations. In addition, it gives a clear image of the company's financial health, allowing beneficial decision-making and aiding in detecting potential financial risks and taking preventive

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4 measures. An example that can be provided is how inflation has impacted small businesses’ cash flow. The article talks about how over 500 small businesses were interviewed to see how inflation has impacted their cash flow and as a result, it was “revealed that higher inflation and rising interest rates have resulted in tangible physical and emotional consequences for small business leaders, with 45% stating they have had to sacrifice their own paychecks and 43% noting they have lost potential business opportunities” (O’Neill, 2023). Therefore, the present economic doubt highlights the critical significance of financial strength and the focal responsibility of effective cash flow management to the success of a small business. References O’Neill, L. (n.d.). 2023 money matters report for US Small Businesses . Xero. https://www.xero.com/us/resources/money-matters-report/ Warren, C. S., & Jones, J. P. (2019). Corporate Financial Accounting. Cengage.