BA 142: BUSINESS FINANCE 2
Investment Analysis
Brief Company Background
Jollibee Foods Corporation (JFC) is the Philippines’ largest Food Service business and is continuously expanding its presence in foreign countries. It has a System Wide Sales of P117.9 billion and a Net Income of P5.4 billion in 2014.
JFC has a total store network of 2,951 stores worldwide as of
March 31, 2015. In the Philippines, JFC’s store network totals to 2,335: Jollibee brand 869, Greenwich 216, Chowking 419, Red Ribbon 334, Mang Inasal 452, and Burger King 45. Abroad, it operates 616 stores: Yonghe King 313, Hong Zhuang Yuan 43, and San Pin Wang, 53, all in China, Jollibee 123 (USA 32, Vietnam 60, Brunei 12, Saudi Arabia 10, Qatar 3, Kuwait 3, Singapore 2 and…show more content… Long Term Financing Policy of Jollibee
Based on the statement of Cash Flows of Jollibee, it is financed both by debt and equity. Because of the nature of the business, the company is constantly cash rich, and for this reason, the company doesn’t require short term loans that are traditionally used as a revolver for the company’s daily operations. The company will only take on long term debts in the event it plans to make acquisitions. And also with the help of the capital structure, it is easier to identify the sources of financing.
Equity financing often means issuing additional shares of common stock to an investor. With more shares of common stock issued and outstanding, the previous stockholders' percentage of ownership decreases.
Debt financing means borrowing money and not giving up ownership. Debt financing often comes with strict conditions or covenants in addition to having to pay interest and principal at specified dates. Failure to meet the debt requirements will result in severe consequences. Adding too much debt will increase the company's future cost of borrowing money and it adds risk for the company. III. Long Term Sources of Financing
Following are the various sources of long term finance are as follows