University of the Philippines in the Visayas

College of Management

Iloilo City, Philippines, Iloilo, 5000

Jollibee Foods Corporation: Case Analysis

In partial fulfilment of the requirements in BA 141

Business Finance 1

Submitted by:

Albay, Alisa Mae

Gonzales, Karenza Marie

Vegafria, Bernalyn

Submitted to:

Ms. Iarl Chrystille D. Ilusorio

February 06, 2018

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 Table of Contents
I. Company Background ..................................................................................................................... 3
A. General Information ................................................................................................................... 3
B. Business Groups .......................................................................................................................... 3
C. Vision, Mission, and Goals .......................................................................................................... 7
D. Market Leadership ...................................................................................................................... 7
E. History ......................................................................................................................................... 8
F. Culture......................................................................................................................................... 9
II. Analysis ......................................................................................................................................... 11
A. Total Asset Turnover Ratio........................................................................................................ 12
B. Current Ratio ............................................................................................................................. 13
C. Debt Ratio ................................................................................................................................. 14
D. Debt Equity Ratio ...................................................................................................................... 15
E. Gross Profit Margin ................................................................................................................... 17
F. Operating Profit Margin ............................................................................................................ 18
G. Net Profit Margin ...................................................................................................................... 20
III. Conclusion/ Recommendation ................................................................................................ 21
IV. References ................................................................................................................................ 23
V. Appendices ................................................................................................................................... 25
.............................................................................................................................................................. 33
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 I. Company Background

A. General Information

Jollibee Foods Corporation (JFC or the Company) is a corporation primarily engaged in

the business of developing, operating, and franchising of quick-service restaurants under

various trade names, the most popular of which is “Jollibee.”

Quick-service restaurants or QSRs are restaurants where food is served as quickly and

efficiently as possible. The term ‘quick-service’ was coined to replace ‘fast food’ which has

gained a negative association to unhealthy food amongst consumers.

Jollibee Foods Corporation was incorporated on January 11, 1978 and has since then

expanded globally with affiliates and subsidiaries which develop and operate its international

brands.

B. Business Groups

In the Philippines, Jollibee Foods corporation owns, operates and franchises its brands

through various subsidiaries.

FRESH N’ FAMOUS FOODS, INC.

Fresh N’ Famous Foods, Inc., a wholly-owned subsidiary, develops, operates and

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franchises quick service restaurants under the tradenames “Chowking” and “Greenwich”.
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 Chowking is the fastest-growing QSR brand in its young market segment. Its flagship

products include Pork Chao Fan, Lauriat, Sweet and Sour pork and Wanton Mami. In 2017, it

has reached its 500th store mark, and has pushed to win over its target millennial market

segment. Over all, there are 526 Chowking stores within the country, 265 of which are

franchised and the remaining 261 are company owned. Of these stores, 59 were opened in

2017, while the existing stores where renovated to have the modern Chinatown food street

theme to attract more customers.

On the other hand, Greenwich, who is engaged in the pizza segment, focused mainly

on its growth strategies, and opened a total of 40 new Pizzerias in 2017, despite the stiff

competition from other major players who all fought for market shares amidst a high inflation

economic environment. Its’s bestsellers include the Ultimate overload, Hawaiian overload, and

lasagna supreme. As of December 2017, Greenwich has a total of 272 stores, 102 of which are

franchised and the remaining 170 are company owned.

RED RIBBON BAKESHOP INC.

Red Ribbon Bakeshop Inc. through RRB HOLDINGS INC. develops, operates and

franchises restaurants under the “Red Ribbon” trade name.

For the past five years, Red Ribbon has expanded into double its size, having a total of
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427 stores nationwide, 237 of which are franchised and the remaining 190 are company -
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owned. It also has successfully expanded to the United States with 31 stores as of December

2017. Its strategic focus is on positioning its products for it to be suitable for everyday snacking.

The flagship products include the Chocolate Dedication cake and Black Forest cake.

MANG INASAL PHILS., INC.

Mang Inasal Philippines, Inc. develops, operates and franchises restaurants under the

“Mang Inasal” trade name. Mang Inasal is a leader among QSRs, bagging the Franchise

Excellence award in 2017 and becoming a hall of fame awardee. Its flagship and core products

include Chicken inasal, pinoy halo-halo and pork sisig, which, according to their annual report,

have managed to double their sales in 2017.

PERF RESTAURANTS INC.

Perf Restaurants Inc., through holding companies of which the company owns 54%,

franchises restaurants under the “Burger King” trademark in the Philippines. Burger king’s

mission is to deliver the best burger experience. Its flagship products include the four-cheese

whopper and the lame-grilled cheeseburger. It has strengthened its product line for the past

years and was recognized as the “beset fast-food burger” for three years in a row, gaining hall

of fame status among food enthusiasts.

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International Subsidiaries and affiliates

International subsidiaries and affiliates of JFC include brands such as “Yonghe king”,

“Hong Zhuang Yuan”, “Dunkin Donuts” and “12 Hotpot”. Yongheking’s Flagship products

include Freshly ground Soya milk, crispy chicken thigh rice and tomato beef noodle soup. Hong

Zhuang Yuan’s flagship products are Lean Pork and preserved egg congee and sautéed assorted

vegetable served with pancake.

JFC also owns Dunkin Donuts in China. It has positioned itself as an American coffee

and bakery shop serving great tasting offer and donuts at price that are for people of middle-

and-up income. 12 hotpot, on the other hand, features hot pot dishes cooked by customers

themselves on fast heating stone hotpots. It highlights safe and fresh food for low prices.

However, on November 2, 2017, JFC announced that it will discount the operations of the 12-

hotpot brand in the People’s Republic of China.

JFC also owns the Superfoods Group which operates various brands which include

Highlands Coffee, Vietnam’s leading cafe chain; highlands coffee packaged products; Pho 24,

a fast-casual dining restaurant: and Hard Rock Cafe franchised stores in Macau, Hongkong and

Vietnam.
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 C. Vision, Mission, and Goals

 Mission

To serve great tasting food, bringing the joy of eating to everyone.

 Vision

To be one of the Top 5 Restaurant Companies in the World

 Goals

To become the largest homegrown quick service restaurant chain in Asia by 2020.

To be the best Tasting QSR. To be the most endearing Brand. To provide FSC excellence

To have 4000 stores worldwide in the year 2020. To be a global Brand.

D. Market Leadership

The company competes in the quick service restaurant industry and its competitive

edge is its strict adherence to its policy of maintaining high standards in the food quality,

reasonable price, excellent serve and cleanliness in every store. It is currently a market leader

in the industry, despite competitors such as McDonalds, Wendy’s KFC, and other burger, pizza
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and pasta chains, among others. According to a statement released by the corporation, its sales

in the Philippines are double that of the next largest competitor.

E. History

In 1975, the Tan Family opened ice cream parlors in Cubao and Quiapo. These ice cream

parlors were the first Jollibee outlets. Three years later, in 1978, Jollibee incorporated as a

100% Filipino-owned company.

In July 13, 1993, the company had listed its shares in the Philippine Stock Exchange with

an initial offering of Php 9.00/share which rapidly grew to Php 20.00/share in October of the

same year. One year later, it acquired Greenwich Pizza Corporation.

In the year 2000, It also acquired the Chowking Food Corporation and four years later,

it had its first foreign brand, Yonghe King, a fast-food in China. It also opened the largest

commissary in Asia, Zenith Foods Corporation and established the Jollibee Foundation. The

next year, JFC acquired Red Ribbon Bakeshop and in 2006, the company established the

Jollibee Worldwide Services (JWS).

In 2008, it completely purchased Hong Zhuang Yuan, a chain of restaurants located

mostly in Beijing, and launched its own TV show, Jollitown to celebrate its 30th year. The year
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after that, they had opened their first store in Qatar and managed to acquire 75% of Mang

Inasal.

In 2011, JFC acquires majority stake of Chow Fun, which operates the Jinja Bar and

Bistro in New Mexico, USA. It also acquired majority stake in Burger King Philippines’ franchise

and built the Jollibee Foods Processing commissary in China. In 2012 JFC purchased San Pin

Wang business, acquired 50% of Superfoods Group, which owns and operates Highlands

Coffee and Pho 24. It also entered into a joint venture agreement to own and operate 12

Shabu, a restaurant serving low-priced, hot-pot dishes in China.

In 2013, the Jollibee Foundation is renamed Jollibee Group Foundation and JFC

inaugurated the JFC Distribution Center, which is the Philippines’ largest automated Quick

Service Restaurant (QSR) logistics facility. JFC also made it into Forbes Asia’s Fab 50 (Asia-

Pacific’s best 50 big listed companies). The years following marked steady growth evidenced

by numerous awards, partnerships, and successful viral campaigns. Currently, Jollibee Foods

corporation celebrates its 40th year.

F. Culture

The core values of Jollibee Foods Corporation are Customer Focus, Speed with

Excellence, Integrity, Spirit of Family and Fun and Humility to Listen and Learn. These values

have shaped the company culture of Jollibee foods corporation which is characterized by its
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strict adherence to high standards when it comes to its operations. This is further symbolized
by three letters, F.S.C., that is, Food (F) served to the public must meet the company’s

excellence standards or it will not be served at all; the Service (S) must be fast and courteous;

and Cleanliness (C), from kitchen to utensils, must always be maintained. These three are

always strictly maintained to assure the highest quality food and service.

As stated in their website, Jollibee also recognizes the contributions of its employees

to its success. In the fast-food industry, Jollibee foods corporation provides the highest

compensation, benefits package, and modern and comprehensive training programs. They are

trained on various store stations and food-service innovations while managers are regularly

updated on the latest store operations systems and people-oriented management skills. For

qualified and exceptional crew members, Jollibee offers career opportunities so that the

employees could further their food-service careers as managers.

Outside the corporation, JFC also shows its commitment to serve its host communities

through socio-civic projects, these projects are administered by the Jollibee Group Foundation.

True to its mission of, spreading the joy of eating to everyone, the foundation has focused its

work on feeding programs for undernourished children in poor communities. They also sought

to make developing farmers become better entrepreneurs and suppliers of agricultural

products and have provided disaster relief for calamity-stricken regions.

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 II. Analysis

Notes: The Ratios of McDonalds and Yum Brands (KFC and Pizza Hut ) would
sometimes be significantly larger compared to Jollibee Foods Corporation due to
the fact that both brands (McDonalds and Yum) are globally renowned fast food
corporation owner that have way more stores worldwide compared to JFC.

Table 1. Summarized Financial Information of Jollibee Foods Corporation

Jollibee Foods Corporation

2015 2016 2017

Total Assets ₱ 64,763,048 ₱ 72,728,352 ₱ 89,783,895

Total Current Assets 27,169,166 30,368,735 37,141,016

Total Non-Current 37,593,882 42,359,617 52,642,879

Assets
Total Current 21,068,154 23,831,415 26,694,605
Liabilities
Total Non-Current 11,938,305 14,615,533 20,507,311
Liabilities
Total Liabilities 33,006,459 38,446,948 47,201,916

Total Shareholders’ 31,756,589 34,281,404 42,581,979

Equity
Net Sales 100,779,718 113,811,470 131,576,551

Gross Profit 17,888,017 20,995,987 23,918,411

Operating Income 5,355,031 6,465,047 6,669,655

Net Income 5,046,333 6,053,509 6,672,582

Operating Cashflow 13,485,112 14,760,321 12,843,628

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 A. Total Asset Turnover Ratio

𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔
Total Asset Turnover=
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

2015 2016 2017

Net Sales ₱ 100,779,718 ₱ 113,811,470 ₱ 131,576,551

Total Assets 64,763,048 72,728,352 89,783,895

Total Asset Turnover 1.56 1.56 1.47
Ratio
McDonalds 0.82 0.74 0.62
Yum Brands 1.51 1.09 1.33

Analysis:

For three years, Jollibee’s net sales are continuously increasing. For two consecutive

years, 2015 and 2016, the asset turnover ratio is 1.48 but in 2017 it decreased by .09 which is

not very substantial. According to this ratio, for every peso of assets it generates 1.48 pesos

of sales which shows that the company is using its assets efficiently and has a good

management and production.

Comparing this ratio to its competitors like McDonald and Yum Brands. Yum Brand has

the highest turnover in the year 2015 which is 1.51, 0.05 higher than Jollibee’s turnover while

McDonald only has 0.82 turnover which is the lowest among the three companies. But in
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2016, Jollibee has increased its sales having the highest turnover among the three followed
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by Yum and still McDonald as having the lowest turnover. For 2017, Jollibee continues to be

the company with highest asset turnover among its two competitors. This concludes that

Jollibee generates sales in every peso of its assets than its competitors.

B. Current Ratio

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
Current Ratio=
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚

2015 2016 2017

Total Current Assets ₱ 27,169,166 ₱ 30,368,735 ₱ 37,141,016

Total Current 21,068,154 23,831,415 26,694,605
Liabilities
Current Ratio 1.29 1.27 1.39
McDonalds 1.84 1.4 3.27
Yum Brands 0.55 1.15 1.66

Analysis:
Banks, lending companies or other financial institutions and investors are interested

to the current ratio of the company that they’re going to invest or to lend money. It is

important for them to know if Jollibee will be able to pay its current liabilities especially its

short-term liabilities with its current assets because it shows how liquid and efficient its

current assets. With the current ratios of Jollibee in 2015, it is evident that it can pay off its

current liabilities with its ratio of 1.29 because it has a sufficient liquid asset and is making
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enough from operations to support activities. Even though it has decreased by .02 in the year
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2016, it recovered its assets in the succeeding year and increased by much higher compare to

2015, with the ratio of 1.39.

Using the same competitors used in this case study, McDonald has the highest current

ratio and most liquid in the year 2015 which is 1.84 followed by Jollibee with a ratio of 1.29.

Yum Brand have the lowest ratio of 0.55 which is very risky for the investors. For 2016 and

2017, McDonald maintains to have the highest current ratio of 1.4 and 3.28, respectively.

Jollibee was still following McDonald being in the second highest. But on 2017 Yum Brand

have a sudden increase in its current ratio which is 1.66 thereby replacing Jollibee as more

liquid. With these ratios, investors would want to invest in McDonald because it is the most

liquid company, and creditors will be willing to lend their money to McDonald.

C. Debt Ratio

𝑻𝒐𝒕𝒂𝒍 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Debt Ratio=
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔

2015 2016 2017

Total Liabilities ₱ 33,006,459 ₱ 38,446,948 ₱ 47,201,916

Total Assets 64,763,048 72,728,352 89,783,895
Debt Ratio 0.51 0.53 0.53
McDonalds 0.81 1.07 1.09
Yum Brands 0.89 2.03 2.19
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Analysis:
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 Highly leveraged companies are not favorable for investors and lenders because of

higher risk that they may not be paid on time or when the liability is already due. Jollibee’s

debt ratio on the year 2015 is .51 while on 2016 and 2017 they have the same ratio of .53.

Having close to .5 of debt ratio, it is considered a reasonable ratio because it is less risky. This

means that the company’s assets are twice its liabilities. Essentially, only half of the assets of

the company are owned by the creditors and the other half are owned by its shareholders.

So, with this, Jollibee will continue to operate in case it cannot pay some of its creditors.

In contrast with its competitor’s debt ratio for three years, only Jollibee maintains to

be the less risky and have a reasonable ratio. McDonald and Yum Brand have a range of 0.80

– 2.19 debt ratio which is very risky for a company to have. This means that Jollibee’s

competitors have higher liabilities than their assets which might be due to less investors that’s

why they are borrowing more money to creditors. In conclusion, more investors are willing to

invest in Jollibee.

D. Debt Equity Ratio

𝑻𝒐𝒕𝒂𝒍 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Debt Equity Ratio=
𝑻𝒐𝒕𝒂𝒍 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔′ 𝑬𝒒𝒖𝒊𝒕𝒚
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 2015 2016 2017

Total Liabilities ₱ 33,006,459 ₱ 38,446,948 ₱ 47,201,916

Total Shareholders’ 31,756,589 34,281,404 42,581,979
Equity
Debt Equity Ratio 1.04 1.12 1.11
McDonalds -11.13 -15.07 1.35
Yum Brands 7.84 -1.97 -1.84

Analysis:

Creditors and investors compose the liability and stockholder’s equity section. They

are the one who finances the company. The debt-to-equity ratio of Jollibee from 2015-2017

are almost the same which are all close to 1 ratio. This means that creditors and investors

have almost equal stake in the business assets, only that its debt is slightly higher than its

equity by 0.04 – 0.12. Since this is the case, it is risky for other investors to decide if the

company’s performance or business operations were good or not. Lack of performance might

be the reason why the company is seeking out for a little extra debt financing.

Compare to its competitors in the year 2015, Yum Brand has the highest ratio which

is not favorable because of greater debts than its equity. While Jollibee hast the lowest ratio

among them which 1.04 and for McDonald’s ratio, it is 1.35. The lower the debt-to-equity

ratio, the more favorable it is for the creditors and investors. For 2016 and 2017 only Jollibee

maintains its ratio to be favorable because Yum Brand and McDonald have a negative

stockholder’s equity which means that there is a deficit.

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 E. Gross Profit Margin

𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
Gross Profit Margin =
𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔

2015 2016 2017

Net Sales ₱ 100,779,718 ₱ 113,811,470 ₱ 131,576,551

Gross Profit ₱ 17,888,017 ₱ 20,995,982 ₱ 23,918,411

Gross Profit Margin 17.75% 18.45% 18.18%

McDonalds 38.52% 41.45% 46.54%

Yum Brands 43% 45% 50%

Breakdown for cost of sales can be found on Appendix Table 1

Analysis:
Gross Profit Margin indicates how much of each sale of peso is left after deducting the

cost of sales to cover expenses and provide a profit. The higher the GPM the better the

profitability of the company. It measures the how profitable the company sells its inventory

it is basically the percentage mark-up on merchandise from its cost (Shaun,2019).

As can be seen in the table above JFC is not slowing down on their sales anytime soon.

Its revenues have been steadily increasing by 13% in 2016 and by 15% in 2017 and in

connection to this its gross profit also increase by almost 3 million from 2015 to 2017.
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 The gross profit margin increased from 2015 to 2016, but in 2017 it decreased by a

quarter of a percentage. JFC’s cost of sales takes up almost four fifths (80%) of the company’s

revenue and less than a fifth (20%) is left to cover their other expenses and profits. It seems

that from 2015 to 2016 Jollibee was able to minimize its cost of sales resulting to an increase

in their gross profit margin. In the next year, 2017, it decreased from 18.45% to 18.18% but

this isn’t too bad considering that it is still higher than their 2015 gross profit margin.

From 2015 to 2017, the highest gross margin is Yum Brands, followed by McDonalds,

and then Jollibee Foods. Its competitors have a GPM twice as large. Jollibee invests too much

on the cost of their sales, but in exchange for that the effort that they put in their services

does reflect in their revenues.

F. Operating Profit Margin

𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑷𝒓𝒐𝒇𝒊𝒕𝒔
Operating Profit Margin=
𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔

2015 2016 2017

Net Sales ₱ 100,779,718 ₱ 113,811,470 ₱ 131,576,551

Operating Profit ₱ 5,355,031 ₱ 6,465,047 ₱ 6,669,655

Operating Profit 5.31% 5.68% 5.07%

Margin (%)
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 McDonalds 28.12% 31.45% 41.36%

Yum Brands 22% 26% 47%

Breakdown for expenses can be found on Appendix Table 2

Analysis:
Operating Profit Margin measures pure profit, which is the profit that is earned on

from its core or main business(es). The higher the OPM the better this only mean that the

company can make enough money to pay for its variable and fixed costs. If a company can

earn enough to from their operations to support its business, then it is considered to be stable

by creditors and investors (Shaun,2019).

JFC has a positive Operating Market Margin, which means that it generates enough

money for its operation. From 2015 to 2016 it increased its operating profit by 20% and in

2017 it managed to increase its operating profit by only 3.16%. As a result from this increase

and decrease, these movements were also reflected in its Operating Profit Margin. The OPM

increased in 2016, even if the general and advertising expense increased it was still offset by

the decrease in cost of sales. In 2017, the OPM decreased by 0.61% due to the increase in

cost of sales, general expenses, and advertising.

JFC already has a low gross profit margin so it is expected that the percentage will

further to go down as its expenses add app. From 2015 to 2017, the highest operating margin
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profit is McDonalds, followed by Yum Brands then Jollibee Foods. Now its competitors have
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an OPM six times as profitable than Jollibee’s. It has already invested almost 80% in their cost
of sales and they further invest almost 10% and 2% for their general expenses and advertising

leaving a 5% operating profit margin.

G. Net Profit Margin

𝑬𝒂𝒓𝒏𝒊𝒏𝒈𝒔 𝑨𝒗𝒂𝒊𝒍𝒃𝒂𝒍𝒆 𝒇𝒐𝒓 𝒄𝒐𝒎𝒎𝒐𝒏 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔

Net Profit Margin=
𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔

2015 2016 2017

Net Income ₱ 5,046,333 ₱ 6,053,509 ₱ 6,672,582

Net Sales 100,779,718 113,811,470 131,576,551

Net Profit Margin 5.01% 5.32% 5.07%

McDonalds 17.82% 19.03% 22.75%

Yum Brands 20% 26% 23%

Analysis:

Net Profit Margin measures the percentage of each sale dollar remaining after all cost and

expenses including interest, taxes, and preferred stock dividends are deducted. The higher the firm’s

net profit margin the better.

After adding up JFC’s other income and expenses, including tax and dividends, its Net Profit

Margin didn’t change that much if you compare it to their operating margin. Seeing that it is positive

means that the companies has the ability of converting sales into actual profit and of course if you
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compare it to other companies NPM Jollibee’s is significantly lower compare to their competitors.
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Jollibee only has an average of 5.13% while McDonalds and Yum Brands have an average of 19.87%

and 23%, which is four times higher than JFC.

III. Conclusion/ Recommendation

Jollibee Foods Corporation has always been stable in the Philippines, which is one of those

rare countries in which McDonalds is not the leading fast food chain. But if it is truly dedicated

to pursuing its goal in being a global brand, JFC still has a long way to go. When it comes to

international sales McDonalds are still way ahead. JFC should not be contented with its

current standing and should try to make improvement in its operations.

JFC’s liquidity, activity, and debt ratios are favorable even if compared to international

competitors, but it is completely a different story when it comes to its profitability ratios. Even if the

results are positive and JFC does have the capacity to operate while generating profit, when compared

to its international counterparts a huge gap between their profit margins can be seen.

Its total asset turnover is high meaning that it has been using its assets well, the only thing to

do is to maintain and improve it by generating more revenue’s. Using smart advertising and marketing

plans/tools can be one of the recommendations. Also due to its contractualization problem in 2017, it

should put forward that image that JFC is not only a costumer friendly corporation but also a

responsible employer. This issue didn’t really reflect in their statements when it comes to revenue,

but it is still wise to put forward an image that would go well with the general public.

When it comes to its liquidity, Jollibee is liquid it has enough money to pay off its short-term
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debts its current ratio is 1.5, this can be furthered improved by increasing their assets by strict
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collection of its receivables and other short term- assets, and extension of credit should be minimized.

Also, decreasing its short-term assets will also result in a higher current ratio. Then these assets should

be allocated in long term investments to have a higher return thus, increasing the company’s total

assets.

With this the company’ debt ratio could further decrease; 0.50 average is healthy but with

long term investments it can further be improved. They should also focus on increasing the number

of its investors and stockholders while decreasing its total liabilities. The greater the total assets than

its total liabilities will have a more favorable outcome. Creditors and investors will be attracted if this

is the case. But the company should also consider that proportional number of investors and creditors

is more attractive. Having 0.3 – 2.0 debt-to-equity ratio is the average but the lower the ratio is better

like less than 1.0 ratio. To attain this, investors and stockholders should have a higher number,

resulting to higher stockholder’s equity, than its creditors which represents the total liabilities.

Jollibee Foods are doing a good job in using their assets at generating revenue, but the main

problem lays on its expenses. They spend almost 80% on cost of sales and 13% on general expenses

and advertising. It has a constant net operating margin that averages at 5% but this can be increased

by minimizing their cause of sales while steadily increasing their revenue. Expenses can be decreased

by changing to more cheaper suppliers, or even investing more to increase their interest income to

increase their other income. Analyzing its business expenses in order to know what can be minimize,

for them to save money and to increase its revenues.

Jollibee maybe a stable corporation in the Philippines but when it comes to the international
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market it is still at a disadvantage and it needs to make big steps for it to actual become a globally
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known brand.
 IV. References

Annual Report. (2019). Retrieved from

http://edge.pse.com.ph/openDiscViewer.do?edge_no=425dfe253b2f5bbb43ca035510b6ec
2b#sthash.WRDOMrqX.dpbs

Annual Report. (2019). Retrieved from

http://edge.pse.com.ph/openDiscViewer.do?edge_no=425dfe253b2f5bbb43ca035510b6ec
2b#sthash.hWnX73e0.dpbs

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 YUM! Brands Inc. (YUM) | Profitability. (2019). Retrieved from https://www.stock-
analysis-on.net/NYSE/Company/YUM-Brands-Inc/Ratios/Profitability#Operating-Profit-
Margin

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V. Appendices

Table. 1 Breakdown of Cost of Sales for Operating Margins

2015 2016 2017

Net Sales ₱ 100,779,718 ₱ 113,811,470 ₱ 131,576,551

Cost of Sales (82,891,701) (92,815,488) (107,658,140)

Gross Profit ₱ 17,888,017 ₱ 20,995,982 ₱ 23,918,411

Gross Profit Margin 17.75% 18.45% 18.18%

Cost of Sales (%) 82.25% 81.55% 81.82%

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 Table. 2 Breakdown of Expenses for Operating Margin Ratio

2015 2016 2017

Net Sales ₱ 100,779,718 ₱ 113,811,470 ₱ 131,576,551

Cost of Sales (82,891,701) (92,815,488) (107,658,140)

Gross Profit 17,888,017 20,995,982 23,918,411

Expenses:

General and Admin (10,288,043) (11,861,440) (13,905,845)

Advertising (2,244,943) (2,669,495) (3,342,911)

Operating Profit ₱ 5,355,031 ₱ 6,465,047 ₱ 6,669,655

Cost of Sales (%) 82.25% 81.55% 81.82%

General & Admin (%) 10.21% 10.42% 10.57%

Advertising (%) 2.23% 2.35% 2.54%

Operating Profit 5.31% 5.68% 5.07%

Margin (%)

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