Financial Statement and Cash Flow
Principle of Finance 23EW5
Alexandra Rivera
5/13/2023
Chipotle Mexican Grill Inc (Chipotle)
By: Alexandra Rivera
Business Selection-Restaurant Industry
Chipotle Mexican Grill Inc, a fast-food chain operator in the United States, offers Mexican grill cuisine with a customized menu. Established in 1993, Chipotle (CMG) serves various delicious dishes such as bu
itos, bu
ito bowls (bu
itos without the tortilla), quesadillas, tacos, and salads. The company takes pride in using whole, unprocessed ingredients without artificial colors, flavors, or additives. Chipotle Mexican Grill remains a popular choice for food lovers, with around 3,200 locations across the United States, Canada, the United Kingdom, France, and Germany.
Financial Analysis involves assessing the performance and suitability of businesses, projects, budgets, and other financial transactions. Its main goal is determining whether an entity is stable, solvent, liquid, or profitable enough for a monetary investment.
A balance sheet summarizes the company's assets, liabilities, equity, and debt at a specific moment. However, it does not provide any insights into the events or activities that led to the company’s cu
ent state. That's why the income statement's profit figures are crucial for investors.
Income Sheet, the format of an income statement, includes details on sales, expenses, losses, and profit. These statements are helpful for investors to assess a company's previous performance and predict future cash flow.
The cash flow statement provides information on a business's incoming and outgoing cash flow during a specific financial period. This statement assures investors that a company has sufficient funds to cover its expenses and investments. The cash flow statement is divided.
Into three main categories: Operating, Investing, and Financing, which give a comprehensive overview of the entire business.
Income Statement Analysis The income (loss) figures from operations show a significant increase from USD XXXXXXXXXXthousand as of March 31, 2021, to USD XXXXXXXXXXthousand as of March 31, 2023, reflecting a growth of 22.31%. Moreover, the net income has increased by an impressive 155%, rising from USD XXXXXXXXXXthousand to USD XXXXXXXXXXthousand. Chipotle has witnessed growth in sales and profits. This is because health-conscious customers opt for naturally raised or organically produced food and do not order salads at McDonald's and Wendy's (WEN).
Analyzing the Balance Sheet to determine a company's ability to meet its cu
ent debt and other payables, investors and analysts use the cu
ent ratio. This ratio is calculated by dividing total assets by total liabilities, which results in a value of 1.5 if XXXXXXXXXXis the numerator and XXXXXXXXXXis the denominator. A cu
ent ratio greater than 1 indicates that a company can efficiently use its cu
ent assets to satisfy its short-term liabilities.
Furthermore, the shareholder's fund has steadily increased from XXXXXXXXXXas of March 31, 2021, to XXXXXXXXXXas of March 31, 2022, and XXXXXXXXXXas of March 31, 2023.
Cash Flow Statements- A business’s Operating Cash Flow (OCF) refers to the cash generated by its regular operations within a specific timeframe. For example, in Sept 2022, the business’s Operating Cash Flow increased significantly by 301% from USD XXXXXXXXXXthousand to USD XXXXXXXXXXthousand and reached USD XXXXXXXXXX%) for various reasons.
Chipotle's smaller menu has three advantages. Firstly, the restaurant only stocks fresh ingredients, which reduces the number of components needed and minimizes waste. Secondly, the quick service ensures that the kitchen is manageable with orders, and mistakes are rare. Customers can easily co
ect any e
ors they notice. Finally, Chipotle's consistent menu eliminates the need for frequent product development and flashy advertisements to attract customers.
The Cash flow from investing activities (CFI) - refers to the money spent on purchasing physical assets, investing in securities, or selling assets and securities. As per the records, the investing activities cash flow reflects a negative amount of USD XXXXXXXXXX, which is often perceived as a sign of poor company performance. However, it's important to note that negative cash flow from investing activities results from investments made by the company. For instance, in March, the company invested in Zero Acre Farms.
Cash flow from financing activities-The cash flow from financing activities has displayed a decreasing negative figure due to the acquisition of Treasury stock. Consequently, the paid-up capital has escalated from USD XXXXXXXXXXthousand to USD XXXXXXXXXXthousand. Treasury stock refers to the shares or stocks repurchased by the issuing company. In the past four quarters, the cash flow from financing activities has diminished to USD XXXXXXXXXXthousand due to a decrease in the acquisition of treasury stocks.
Conclusion- Chipotle's strategy of maintaining a concise menu and avoiding franchises has allowed the company to exercise strict oversight over its operations while safeguarding its suppliers, flavor, and culture. In April, the company joined forces with Skip the Dishes to
oaden its reach. In addition, its innovative all-electric restaurant design harnesses renewable energy from wind and solar sources, backed by the purchase of renewable energy credits. With its stock soaring from $42 to over $2000, Chipotle presents a promising long-term investment possibility.
References
Chipotle Mexican Grill - Mexican Food - Restaurant & Catering
CMG: Chipotle Mexican Grill Inc - Stock Price, Quote and News - CNBC
PaperMenu_STANDARD_NoPricing_120221.pdf (chipotle.com)
Chipotle sets sustainable-restaurant design in ca
on footprint move (cnbc.com)
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Chipotle Mexican Grill Inc (NYS: CMG)
Exchange rate used is that of the Year End reported date
As Reported Quarterly Balance Sheet
Report Date 03/31/2023 09/30/2022 06/30/2022 03/31/2022 09/30/2021 06/30/2021 03/31/2021
1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarte
Cu
ency USD USD USD USD USD USD USD
Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Consolidated Yes Yes Yes Yes Yes Yes Yes
Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands
Cash & cash equivalents 409727 366623 520933 615863 721109 668269 694776
Accounts receivable, net 65869 71276 83636 89295 76099 75697 68449
Inventory 34599 33752 29456 29852 28450 25159 24304
Prepaid expenses & other cu
ent assets 98389 76439 73716 70403 72821 71613 61615
Income tax receivable - 112064 97874 50701 318593 284612 244122
Investments 652858 417278 240684 240379 301534 322460 363585
Total cu
ent assets 1261442 1077432 1046299 1096493 1518606 1447810 1456851
Leasehold improvements, property & equipment, net 1981329 1871623 1813348 1779521 1719224 1666184 1613670
Long term investments 368023 442620 359911 333088 188344 150814 110928
Restricted cash 25133 30974 30895 30872 27891 27877 27863
Operating lease assets 3334277 3309051 3209934 3147061 3094045 2945912 2858345
Other assets 61229 63798 63010 58283 57518 59918 59463
Goodwill 21939 21939 21939 21939 21939 21939 21939
Total assets 7053372 6817437 6545336 6467257 6627567 6320454 6149059
Accounts payable 182606 167842 158581 168905 171712 140251 147417
Accrued payroll & benefits 116465 128495 161052 172454 190912 225104 221677
Accrued liabilities 160436 156455 148614 136655 153233 143469 145627
Unearned revenue 157898 133118 132446 132421 120423 113016 110197
Cu
ent operating lease liabilities 239029 231947 230930 223303 214684 213646 209086
Income tax payable 37658 - - - - - -
Total cu
ent liabilities 894092 817857 831623 833738 850964 835486 834004
Long-term operating lease liabilities 3532566 3497221 3393423 3331319 3274875 3134555 3040176
Defe
ed income tax liabilities 98137 133255 126239 127729 148395 133510 135929
Other liabilities 46892 41723 39852 40511 42425 42745 41419
Total liabilities 4571687 4490056 4391137 4333297 4316659 4146296 4051528
Common stock 374 373 373 373 371 370 369
Additional paid-in capital 1849683 1807938 1782303 1753328 1690806 1654195 1606501
Treasury stock, at cost 4480833 4076555 3969221 3702023 3170798 3067458 2908111
Accumulated other comprehensive income (loss) -7431 -8896 -6639 -5159 -5143 -4187 -4492
Retained earnings (accumulated deficit) 5119892 4604521 4347383 4087441 3795672 3591238 3403264
Total shareholders' equity 2481685 2327381 2154199 2133960 2310908 2174158 2097531
Untitled Spreadsheet
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Chipotle Mexican Grill Inc (NYS: CMG)
Exchange rate used is that of the Year End reported date
As Reported Quarterly Cash Flow
Report Date 03/31/2023 09/30/2022 06/30/2022 03/31/2022 09/30/2021 06/30/2021 03/31/2021
1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarte
Cu
ency USD USD USD USD USD USD USD
Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Consolidated Yes Yes Yes Yes Yes Yes Yes
Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands
Net income (loss) 291644 675374 418236 158294 519509 315075 127101
Depreciation & amortization 76585 212814 141398 71665 188395 125204 63122
Amortization of operating lease assets - - - - - 105485 49269
Defe
ed income tax provision (benefit) -486 -8567 -15537 -14024 -1024 -15884 -13482
Impairment, closure costs, & asset disposals 8152 15127 8851 4265 12483 8235 4937
Provision for credit losses 500 -969 -876 -918 733 -220 -275
Stock-based compensation expense 20084 77371 52221 23590 138741 102680 55390
Other adjustments -2810 -13045 -11909 -998 2534 2467 2180
Accounts receivable 39659 22891 12353 10394 21882 37286 32175
Inventory 1086 -1056 3320 2970 -1996 1309 2148
Prepaid expenses & other cu
ent assets -14569 -3169 948 5920 -19343 -18186 -8756
Operating lease assets 59135 171464 112505 55125 151628 - -
Other assets 3277 -1537 -3014 -1132 1901 117 -186
Accounts payable -2732 10774 -2972 15702 28712 12525 19446
Accrued payroll & benefits -53428 -32861 -583 10438 -13193 21068 18188
Accrued liabilities 17009 -16562 -22293 -31151 -7407 -20102 -17869
Unearned revenue -22653 -18141 -20062 -21604 -2978 -11487 -15606
Income tax payable or receivable 85400 -18070 -3832 43367 -35850 -1851 38640
Operating lease liabilities -51584 -153200 -100024 -49596 -141540 -101818 -50902
Other long-term liabilities 767 2968 958 595 474 955 453
Net cash flows from operating activities 455036 921606 569688 282902 843661 562858 305973
Purchases of leasehold improvements, property & equipment -120369 -335518 -196495 -96162 -320569 -212123 -86619
Purchases of investments -214819 -513813 -195242 -118827 -288899 -190920 -90477
Maturities of investments 99639 202997 142540 81923 243441 162045 60593
Proceeds from sale of equipment - - - - 2885 2885 -
Net cash flows from investing activities -235549 -646334 -249197 -133066 -363142 -238113 -116503
Acquisition of treasury stock -126709 -629775 -521910 -263308 -300733 -203151 -57229
Tax withholding on stock-based compensation awards -67185 -92374 -91905 -85811 -63492 -58860 -44810
Other financing activities 11 -586 -588 -359 -2342 -2208 -221
Net cash flows from financing activities -193883 -722735 -614403 -349478 -366567 -264219 -102260
Effect of exchange rate changes on cash, cash equivalents & restricted cash 290 -1170 -490 147 -788 -216 -407
Net change in cash, cash equivalents, & restricted cash 25894 -448633 -294402 -199495 113164 60310 86803
Cash, cash equivalents, & restricted cash at beginning of period 408966 846230 846230 846230 635836 635836 635836
Cash, cash equivalents, & restricted cash at end of period 434860 397597 551828 646735 749000 696146 722639
Income taxes paid -245 227452 139177 2291 163069 108247 6909
RATIOS Most Recent Fiscal Qt
ACCOUNTING & FINANCIAL RATIOS
CURRENT RATIO (Cu
ent Assets / Cu
ent Liabilities) TOTAL ASSET TURNOVER RATIO (Total Revenue / Total Assets)
Cu
ent Assets Total Revenue
Cu
ent Liabilities ERROR:#DIV/0! Total Assets ERROR:#DIV/0!
WORKING CAPITAL (Cu
ent Assets - Cu
ent Liabilities)
: *Note to students: Be mindful of the scale being used in Mergent Online when filling this out. If a number is written as 12.53, that does not mean the total for that item is $12.53. There could be numerous zeros written after it, depending on the scale labeled above. In this example, 12.53 is actually $12,530,000. (To delete this comment, right-click on the "WORKING CAPITAL" box, then select Delete Comment from the drop-down menu.) FINANCIAL LEVERAGE (Total Assets / Shareholder's Equity)
Cu
ent Assets Total Assets
Cu
ent Liabilities 0 Shareholder's Equity ERROR:#DIV/0!
DEBT RATIO (Total Liabilities / Total Assets) NET PROFIT MARGIN (Net Income / Total Revenue)
Total Liabilities Net Income
Total Assets ERROR:#DIV/0! Total Revenue ERROR:#DIV/0!
EARNINGS PER SHARE (Net Income / Weighted Average Common Shares Outstanding) RETURN ON ASSETS (Net Income / Total Assets)
Net Income Net Income
Shares Outstanding ERROR:#DIV/0! Total Assets ERROR:#DIV/0!
PRICE EARNINGS RATIO (Share Price (end of quarter / EPS) RETURN ON EQUITY (Net Income - Prefe
ed Dividends / Shareholder's Equity)
Stock Price NI - Pref. Div.
EPS ERROR:#DIV/0! Shareholder's Equity ERROR:#DIV/0!
RATIOS Same Fiscal Qtr 1 Yr Ago
ACCOUNTING & FINANCIAL RATIOS
CURRENT RATIO (Cu
ent Assets / Cu
ent Liabilities) TOTAL ASSET TURNOVER RATIO (Total Revenue / Total Assets)
Cu
ent Assets Total Revenue
Cu
ent Liabilities ERROR:#DIV/0! Total Assets ERROR:#DIV/0!
WORKING CAPITAL (Cu
ent Assets - Cu
ent Liabilities)
: *Note to students: Be mindful of the scale being used in Mergent Online when filling this out. If a number is written as 12.53, that does not mean the total for that item is $12.53. There could be numerous zeros written after it, depending on the scale labeled above. In this example, 12.53 is actually $12,530,000. (To delete this comment, right-click on the "WORKING CAPITAL" box, then select Delete Comment from the drop-down menu.) FINANCIAL LEVERAGE (Total Assets / Shareholder's Equity)
Cu
ent Assets Total Assets
Cu
ent Liabilities 0 Shareholder's Equity ERROR:#DIV/0!
DEBT RATIO (Total Liabilities / Total Assets) NET PROFIT MARGIN (Net Income / Total Revenue)
Total Liabilities Net Income
Total Assets ERROR:#DIV/0! Total Revenue ERROR:#DIV/0!
EARNINGS PER SHARE (Net Income / Weighted Average Common Shares Outstanding) RETURN ON ASSETS (Net Income / Total Assets)
Net Income Net Income
Shares Outstanding ERROR:#DIV/0! Total Assets ERROR:#DIV/0!
PRICE EARNINGS RATIO (Share Price (end of quarter / EPS) RETURN ON EQUITY (Net Income - Prefe
ed Dividends / Shareholder's Equity)
Stock Price NI - Pref. Div.
EPS ERROR:#DIV/0! Shareholder's Equity ERROR:#DIV/0!
NPV
Net Present Value (NPV) Calculato
Building
Initial Investment Year 1 2 3 4 5 6 7 8 9 10
Annual Cash Inflows Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Discount Rate NPV = $0 Year 11 12 13 14 15 16 17 18 19 20
Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Salvage Value
Equipment
Initial Investment Year 1 2 3 4 5 6 7 8 9 10
Annual Cash Inflows Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Discount Rate NPV = $0 Year 11 12 13 14 15 16 17 18 19 20
Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Salvage Value
Bonds
Initial Investment
Annual Cash Inflows
Discount Rate NPV = $0 Year 1 2 3 4 5 6 7 8 9 10
Number of Years Cash Flows $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Returned
Optional Worksheets-
Monthly
Time Value of Money - Monthly Compounding
Rate of Return Year 1
Initial Investment Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 2
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 3
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 4
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 5
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 6
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 7
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 8
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 9
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Year 10
Month 1 2 3 4 5 6 7 8 9 10 11 12
Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Annual
Time Value of Money - Annual Compounding
Rate of Return Year 1 2 3 4 5 6 7 8 9 10
Initial Investment Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Investment Value $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
PV
Time Value of Money - Present Value Annuity
Number of Years
Rate of Return $0.00
Payment
FV
Time Value of Money - Future Value Annuity
Number of Years
Rate of Return $0.00
Payment
PV - Lump Sum
Time Value of Money - Present Value of Lump Sum
Rate
Years $0.00
Initial Investment
FV - Lump Sum
Time Value of Money - Future Value of Lump Sum
Rate
Years $0.00
Initial Investment
Untitled Spreadsheet
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Chipotle Mexican Grill Inc (NYS: CMG)
Exchange rate used is that of the Year End reported date
As Reported Quarterly Income Statement
Report Date 03/31/2023 09/30/2022 06/30/2022 03/31/2022 09/30/2021 06/30/2021 03/31/2021
1st Quarter 3rd Quarter 2nd Quarter 1st Quarter 3rd Quarter 2nd Quarter 1st Quarte
Cu
ency USD USD USD USD USD USD USD
Audit Status Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Consolidated Yes Yes Yes Yes Yes Yes Yes
Scale Thousands Thousands Thousands Thousands Thousands Thousands Thousands
Food & beverage revenue 2351009 2202336 2192802 1998956 1932409 1869365 1715990
Delivery service revenue 17571 17839 20537 21583 19906 23173 25585
Total revenue 2368580 2220175 2213339 2020539 1952315 1892538 1741575
Restaurant operating costs - food, beverage & packaging 692559 662540 673928 626926 591332 574478 522671
Restaurant operating costs - labor 583794 557178 549926 531940 502757 464506 433669
Restaurant operating costs - occupancy 121931 115826 113919 112032 104223 103430 101769
Restaurant operating costs - other operating costs 363206 322085 317481 330695 294650 287242 294710
General & administrative expenses 148340 140896 140820 147402 145930 146044 155103
Depreciation & amortization expenses 76585 71416 69733 71665 63191 62082 63122
Pre-opening costs 6198 7618 5253 5348 5894 4965 3421
Impairment, closure costs, & asset disposals 8361 6363 4681 4310 4658 4266 5668
Total operating expenses 2000974 1883922 1875741 1830318 1712635 1647013 1580133
Income (loss) from operations 367606 336253 337598 190221 239680 245525 161442
Interest & other income (expense), net 8949 3712 10572 -213 -126 851 -2168
Income (loss) before income taxes 376555 339965 348170 190008 239554 246376 159274
Provision (benefit) for income taxes 84911 82827 88228 31714 35120 58402 32173
Net income (loss) 291644 257138 259942 158294 204434 187974 127101
Weighted average shares outstanding - basic 27624 27773 27905 28043 28150 28134 28125
Weighted average shares outstanding - diluted 27788 27956 28092 28301 28475 28501 28582
Year end shares outstanding 27601 27751 27804 27984 28155 28098 28159
Net earnings (loss) per share - basic 10.56 9.26 9.32 5.64 7.26 6.68 4.52
Net earnings (loss) per share - diluted 10.5 9.2 9.25 5.59 7.18 6.6 4.45