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Total Liabilities. Chipotle’s total liabilities saw a large increase of 315.15% in 2019 from2018. In comparison to 2018, Chipotle only saw an increase of 20.98% in 2018 from 2017. This large increase was due to the non-current liabilities, which saw a 636.25% increase from
11Running head: INDIVIDUAL CASE STUDY PART 2: CHIPOTLE$374,189 thousand in 2018 to $2,754,985 thousand in 2019. This large increase was due to Chipotle taking on $2,678,374 thousand of long-term debt for expanding its brand locations.Shareholder Equity. Chipotle’s shareholder equity saw a 16.77% increase in 2019 from 2018 and a 5.64% increase in 2018 from 2017. This change is due to an increase in retained earnings of 13.52% from 2018 and 7.37% in 2018 from 2017. This increase of retained earnings means that either the shareholders will receive higher dividends or that the company will use the cash for further growth. Either way, an increase in shareholder equity is a good financial health indicator to shareholders.Cash Flows StatementThe historical cash flows statement for the past three years is present in Exhibit 2.4. This analysis will perform a horizontal and vertical analysis of the operating activities, investing activities, and the net cash flow.Cash Flow (CF) from Operating Activities. Chipotle’s cashflow from operating activities increased by 32.75% in 2018 from 2017. It saw an increase of 16.10% in 2019 from 2018. While it was a smaller increase from 2018 to 2019 than 2017 to 2018, the increase shows that Chipotle’s core business activities are successful and making a profit.Cash Flow (CF) from Investing Activities. Chipotle’s CF from investing activities has been negative over the past three years. Its negative amount increased from 2017 to 2018 by 347.66% but decreased from 2018 to 2019 by 24.67%. The bulk of the negative CF from investing activities is the property, plant, and equipment. This debt is a large investment item thatis for the growth and prosperity of the company.Net Cash Flow. Chipotle’s net cash flow decreased by 32.53% in 2018 from 2017; however, it increased by 246.05% in 2019 from 2018. The net cash flow was down in 2018 due
12Running head: INDIVIDUAL CASE STUDY PART 2: CHIPOTLEto a large increase in CF from investing activities, which was a negative $86,578 thousand in 2017 and rose to a negative $387,578 thousand in 2018. The increase in the operating activities as well as the decrease in the negative total for investing activities helped the net CF increase in 2019. The decrease in 2018 followed by the increase in total CF in 2019 indicates that Chipotle is growing and is in good financial standing.Ratio AnalysisThis section will analyze Chipotle through the liquidity, valuation, and capital structure ratios. The data for this ratio analysis is present in Exhibit 3.1Liquidity RatiosIn looking at Chipotle’s liquidity ratios, this analysis will focus on the current ratio and the quick ratio to analyze and measure Chipotle’s ability to pay off debt without having to raise additional external capital.