working capital management-dominos

8/3/2019 Working Capital Management-Dominos

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FM PresentationFM PresentationOn Working Capital

Management and CapitalBudgeting of Domino¶s

ByBy--Group 4Group 4



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Introduction

Type- Public

Industry-Restaurants. Founded-Michigan, USA in 1960.

Products-Pizza, Sandwiches, Pasta, Chicken wings,Desserts.

Revenue-$1.425 billion.



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Introduction

Second largest Pizza chain in US

9000 corporate and franchised stores across 60nations

Dominos outlet in India opened in 1996

Jubilant Food Works Limited, a Jubilant BhartiaGroup company holds the Master Franchise rights

for India, Nepal, Sri Lanka and Bangladesh Revenue

± 70 % from home deliveries

± 30 % from OTC sales



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Working Capital

Working capital is the cash needed to pay for theday to day operation of the business.

Calculation of Working Capital

Working Capital=Current Assets-Current Liability.



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Working Capital Management

Working Capital Management is concern with theproblem that arise in managing the Current Assets,Current Liabilities and the interrelationship betweenthem. Its operational goal is to manage the CA andCL in such a way that a acceptable level of NetWorking Capital (NWC) is maintained.



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Working Capital as per 2010Current Assets Amount in

($000)Current Liabilities Amount in

($000)

Cash and cashequivalents

16241 Trade and other payables

25,282

Trade & Other Rec. 21724 Borrowings 40

Financial Assets 2168 Borrowings 604

Inventories 3537 Other financialliabilities

3004

Others 4446 Provisions 2171

Assets classified asheld for sale 843

Total CA 48959 Total CL 31101

Working Capital=48959-31101=17858($000)



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Capital Budgeting

Capital Budgeting is the process of evaluating

and selecting long term investments that areconsistent with the goal of shareholders

(owners) wealth maximization.



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Components of Budget

Sales Budget Production Budget

Material Budget

Cash Budget

Factory OverheadBudget

Labour Budget

Budgeted IncomeStatement

Budgeted BalanceSheet

Advertising Budget



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Ratio Analysis

DOMINO¶S PIZZAHUT

Liquidity 2005 2006 2007 2008 2009 Avg 2009

Current

Ratio 1.02 1.07 1.29 1.7 1.27 1.315 0.98

Quick

Ratio 0.65 0.67 0.45 0.77 0.54 0.593 0.57



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Ratio Analysis

After comparing Dominos with Pizza Hut, we

can see that Dominos average current ratiois better than its competitor which is

evidence of its strong liquid position.



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Assets Management

Assets Mgt 2005 2006 2007 2008 2009 Avg Pizza

HutTotal AssetTurn Over

3.28 3.78 3.09 3.07 3.09 3.26 2.79

Fixed AssetTurn Over

11.50 12.27 11.90 13.14 13.66 12.50 5.69

InventoryTurnover 46.48 46.17 43.48 43.62 39.28 43.81 28.07



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Assets Management

Dominos has a significantly higher asset turn

over for both fixed and total compared tolisted competitor in 2009.

Dominos has a consistent asset turn over that

is one of its strength.



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Fundamental Rankings

Company Liquidity AssetMgmt

DebtMngt

Profitability ROE

Domino¶s 2nd 1st 4th 3rd 4th

Papa John¶s 3rd 2nd 1st 4th 3rd

Pizza Hut 4th 3rd 3rd 2nd 1st

MC Donalds 1st 4th 2nd 1st 2nd



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Performance Report



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THANK YOU

working capital management-dominos

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