BJ Restaurant Financial Analysis
| Balance Sheet | |||||
| Liquidity Ratio | 30-Dec-19 | 30-Dec-18 | 30-Dec-19 | 30-Dec-18 | |
| Acid-Test Ratio (CA-STOCK/ C.L) | (64,605-11,102)/158,131 | (78,487-10,133)/150,425 | 0.34 | 0.45 | |
| Working capital | 64,605 – 158,431 | 78,487-150,425 | -93,826 | -71,938 | |
| Leverage Ratio | 30-Dec-19 | 30-Dec-18 | |||
| Debt Ratio (Total Liability/ Total Assets) | 30-Dec-19 | 30-Dec-18 | 0.73 | 0.56 | |
| Debt to Equity Ratios ( Total liability / mkt cap) | 781,797/633,300,000 | 385,866/309,221 | 1.23 | 1.25 | |
| Income Statement | |||||
| Profitability Ratio | 30-Dec-19 | 30-Dec-18 | |||
| Interest Coverage Ratio | 132,707/1, 161,450) | 133,706/1,116, 948 | 5% | 6% |
| Quick Ratio ( C.A/C.L) | 64,605/158431 | 78,487/150,425 | 0.41 | 0.52 |
Based on the above ratios, it is clear that the company has liquidity issues. The fact that the quick ratio for the year ended 2019 and the year ended 2018 is less than one is indicative of the fact that the company may not be able to pay off the current liabilities in the short-term. There is, therefore, a need to improve on the current assets as a way of correcting this challenge to enable it to meet the current liabilities obligations in the short-run.
The leverage is also efficient based on the leverage ratio. The leverage ratio is 1.23 for the year ended 2019 and 1.25 for the year ended 2018, which implies that it is more than one. The above therefore implies that it is efficient and in line with the company’s objectives of ensuring that the liabilities are not outweighing the assets.
Based on the net–working capital, the company is utilizing its assets efficiently. As revealed from the statements, the company has a rigid working capital. The above therefore implies that the company has sufficient capital to run its operations.
An analysis of the net income statement reveals that in 2019, the company generated revenues of $1,161. In 2018, the revenues were $ 1,117, while in 2017, the revenues were $1,032. Based on these statements, the revenues are projected to increase in 2020 (Macrotrends, 2020). The earnings per share in 2019 were $2.20, while in 2018, they were $2.35 (Macrotrends, 2020). In 2017, the earnings per share were $2.06, which was an increase from the $1.88 that was earned in 2016. Based on these statements, the earnings per share are expected to increase in 2020 or stabilize at $2.20 (Macrotrends, 2020). The gross profit margins for the year ended 2019 were 15.95%, while for the year ended 2018, was17.16%. The gross profit margins for the year ended in 2016 was 16.69% (YCharts, 2010). The above trend reveals that the gross profit margins for BJ restaurants are expected to stabilize at 16% or reduce slightly from the last income statements (YCharts, 2010). Don't use plagiarised sources.Get your custom essay just from $11/page
The P/E ratio is the price to earnings ratio, which is calculated as the ratio of the company’s share prices to the earnings of the company per share. The stock prices for BJ restaurant at the year ended 2019 was 37.96, and the TTM Net earnings per share were $2.21, which therefore implies that the price to earnings ratio was 17.18 (Macrotrends, 2020).
Based on the cash flow statement, the company is generating cash from its operations. The company is expected to invest more in property and equipment, which have taken a large chunk of their cash flows. Building improvements are expected to continue being a large part of their cash flow. In addition, the leasehold improvements will also take a large part of their investments. The company is also expected to increase their investments in equipment, fixtures, and furniture.
Sprouts Farmers Market company stock prices for the year ended 2019 were 19.35, and the earnings per share for the same year was $0.98. The price to earnings ratio for the year ended 2019 was, therefore, 19.74 (Macrotrends, 2020). The price to earnings ratio for Sprouts Farmers Market was, therefore, higher than that of BJ restaurant, which implies that it was better to invest in BJ restaurant since it would cost less for an investor to get higher earnings.
References
Macrotrends. (2020). BJ’s Restaurants EPS – Earnings per Share 2006-2019. Retrieved from https://www.macrotrends.net/stocks/charts/BJRI/bjs-restaurants/eps-earnings-per-share-diluted
Macrotrends. (2020). BJ’s Restaurants PE Ratio 2006-2019. Retrieved from https://www.macrotrends.net/stocks/charts/BJRI/bjs-restaurants/pe-ratio
Macrotrends. (2020). BJ’s Restaurants Revenue 2006-2019. Retrieved from https://www.macrotrends.net/stocks/charts/BJRI/bjs-restaurants/revenue
Macrotrends. (2020). Sprouts Farmers Market PE Ratio 2011-2019. Retrieved from https://www.macrotrends.net/stocks/charts/SFM/sprouts-farmers-market/pe-ratio
YCharts. (2010). BJ’s Restaurants Gross Profit Margin. Retrieved from https://ycharts.com/companies/BJRI/gross_profit_margin