CHIPOTLE
By Catherine Mangan, Eric Roth, Benjemin Gilsdorf,
Daniela Dedvukaj, Jesse Montie, Angelina Pechota
Executive Summary

Chipotle is a company that has made a strong,
positive impact on the fast food market. Because of
the strategic planning that Chipotle has
incorporated throughout the production process
from going healthy and organic, the company has
been and continues to be successful. The financial
and popularity increase can be seen throughout the
following data and figures from 2011-2013.
History: Timeline of Chipotle
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1993-First Chipotle opened at a former Dolly Madison ice cream location.
1995-Added second and third Chipotle locations.
1996-Opened five more Denver area restaurants.
1998-Chipotle brings on outside investors.
1999-First Chipotles opened outside of Colorado: Minneapolis, MN and Columbus, OH.
1999-Steve Ells learns about the way most pork is raised in the US. Decides to do things in a
different way.
2000-Started serving naturally raised pork. As of 2010, 100% of Chipotle is naturally
raised.
2002-Started serving naturally raised chicken. Chipotle now gets 100% of their chicken from
farms that meet their high standards.
2004-Ahead of the curve, Chipotle starts using zero trans-fat frying oil.
2006-Chipotle goes public on New York Stock Exchange.
2007-Over 60% of Chipotle’s beef is naturally raised. They now serve 100% naturally raised
beef in their restaurants.
2007-Chipotle stops using cheese or sour cream with rBGH.
2008-As of 2010, 40% of Chipotle’s black beans are certified organic and their local food
initiative takes off.
2009-Steve Ells testifies before Congress to try to eliminate the use of antibiotics in ranching.
Source: http://www.chipotle.com/en-us/chipotle_story/chipotle_story.aspx
History-Letter from the CEO

When I opened the first Chipotle in Denver, Colorado I certainly didn’t have any intention of opening more
than just one restaurant. I just wanted to build a place where you could eat delicious food made of the
finest ingredients quickly and affordably. As it turns out, it was an idea people could get behind.
As Chipotle began to grow and expand, I learned quite a bit about the way most of the food in the US is
produced and processed --- and what I learned was pretty grim. Pigs are raised in stark confinement,
produce is grown on vast factory farms with little or no regard for the environment, and dairy cows are
confined and injected with hormones that can make them ill in an effort to increase their milk production.
But I also learned that there is a better way. I met ranchers and farmers dedicated to raising livestock and
growing produce using responsible, respectful, and sustainable techniques. By partnering with these
producers we have increased the amount of naturally raised meats and responsibly grown produce we
purchase exponentially.
We are proud of our accomplishments, but there is still a long way to go.
"Food with Integrity" is our commitment to always look closer, dig deeper, and work harder to ensure that
our actions are making things better, not worse. It’s our promise to run our business in a way that doesn’t
exploit animals, people or the environment. It is the philosophy that guides every decision we make at
Chipotle.
Thanks for your support, and check back on our progress. We are excited about what the future holds.
Steve Ells
Source: http://www.chipotle.com/en-us/chipotle_story/steves_story/steves_story.aspx
Balance Sheet
in millions
Balance
Sheet
Chipotle
Date:
Assets
2013
Current Assets
Cash And Equivalents
Accounts receivable
Other Receivables
Inventory
Prepaid expenses
Short-term investments
Deferred Tax Assets, Current
Total current assets
Fixed (Long-Term) Assets
Gross Property Plant And Equipment
Accumulated Depreciation
Total fixed assets
Other Assets
Goodwill
Long-Term Investments
Other Long-Term Assets
Total Other Assets
Total Assets
12/31/2013
2012
(in millions)
2011
323.2
24.0
3.7
13.0
34.2
255.0
13.2
666.3
322.60
16.80
9.60
11.10
27.40
150.30
8.90
546.70
401.2
8.4
8.9
21.4
55.0
6.2
501.1
1,490.6
(527.4)
963.2
1,311.60
(444.90)
866.70
1,122.1
(370.2)
751.9
21.9
313.9
43.9
379.7
21.90
190.90
42.60
255.40
21.9
128.2
22.0
172.1
2,009.2
1,668.80
1,425.1
Balance Sheet Continued
Liabilities and Owner's Equity
Current Liabilities
Accounts payable
Accrued Expenses
Current taxes payable
Unearned revenue
Current portion of Long-Term Debt/Capital Lease
Current portion of Capital Lease Obligations
Total current liabilities
Long-Term Liabilities
Capital Leases
Deferred income tax
Other Non-Current Liabilities
Total long-term liabilities
Total Common Equity
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Income and Other
Total owner's equity
Total Liabilities and Owner's Equity
Common Financial Ratios
59.0
108.7
31.5
199.2
58.70
105.40
22.70
186.80
46.4
88.7
4.2
18.0
0.1
0.1
157.5
55.4
216.3
271.7
48.90
186.90
235.80
3.5
64.1
155.7
223.3
0.4
919.8
1,276.9
(660.4)
1.6
1,538.3
0.30
816.60
949.50
(521.50)
1.30
1,246.20
0.3
676.7
671.5
(304.4)
0.2
1,044.3
2,009.2
1,668.80
1,425.1
{42}
{42}
2013
2012
2011
Debt Ratio (Total Liabilities / Total Assets)
Current Ratio (Current Assets / Current Liabilities)
Working Capital (Current Assets - Current Liabilities)
Assets-to-Equity Ratio (Total Assets / Owner's Equity)
0.23
3.34
467
1.31
0.25
2.93
360
1.34
0.27
3.18
344
1.36
Acid test or Quick Ratio (Cash + Accounts Rec/Current Liabilities)
1.74
1.82
2.60
Debt-to-Equity Ratio (Total Liabilities / Owner's Equity)
0.31
0.34
0.36
Balance Sheet Continued
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
The larger the current ratio, the more liquid the firm and the current ratio should be
at least greater than one and preferably close to two. Chipotle has been higher
than two for the past three years meaning it would be easier for the firm to repay
its short-term liabilities with the cash raised from the sale of its short-term assets.
Chipotle's Quick Ratio has been considerably high compared to the industry
average which is .63. The stronger the balance sheet for Chipotle with them having
a higher number. Quick Ratio measures proportion of their cash and short-term
investments to their current liabilities. This ratio displays the ability to pay current
liabilities with their cash and short-term investments to Chipotle's current liabilities.
Working Capital has increased over the past three years giving them more longterm financing available to fund the firm's operating cycle after they have funded
their long-term strategic investment in fixed assets.
Another strong number for this company is their Debt-to-Equity Ratio. Industry
average sits at .74 with Chipotle not getting any higher than a .36 in the past three
years. This number indicates how much a company owes of total Debt for one
dollar of stockholder's equity. The lower the number, the stronger the balance sheet
for Chipotle.
Source: http://csimarket.com/stocks/CMG-Financial-Strength-Comparisons.html
Income Statement
in millions
Income Statement
Chipotle
For the Years Ending [Dec 31, 2013, Dec 31, 2012 and Dec 31, 2011]
Revenue
Sales revenue
Total Revenues
Cost of Goods Sold
Gross Profit
2013
2012
2011
3,214.6
2,731.2
2,269.5
3,214.6
2,731.2
2,269.5
2,012.4
1,704.3
1,429.1
1,202.2
1,026.9
840.4
263.6
96.1
303.0
230.3
84.1
251.6
189.8
74.9
219.3
662.7
539.5
566.0
460.9
484.0
356.4
1.8
1.8
(0.9)
-
1.8
541.3
1.8
462.7
(0.9)
355.5
Expenses
Selling General & Admin Expenses, Total
Depreciation & Amortization, Total
Other Operating Expenses
Total Expenses
Operating Income
Interest expense
Interest And Investment Income
NET INTEREST EXPENSE
EBT, EXCLUDING UNUSUAL ITEMS
Gain *Loss) On Sale of Assets
EBT, INCLUDING UNUSUAL ITEMS
Income Tax Expense
Earnings From Continuing Operations
NET INCOME TO COMMON INCLUDING EXTRA ITEMS
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS
(6.8)
(5.0)
457.7
349.7
207.0
327.4
179.7
278.0
134.8
214.9
327.4
327.4
278.0
278.0
214.9
214.9
{4 2 }
Net Income
(5.8)
534.5
[4 2 ]
327.4
278.0
[4 2 ]
214.9
Income Statement Continued


Chipotle's financials overall are growing. Revenue is increasing due
to approximately 518 additional stores being opened in the past
three years, which means additional expenses as well as increased
tax expense. Their average restaurant sales were $2.169 million as
of December 31, 2013, increasing from $2.113 million as of
December 31, 2012. Last year Sales increased at a rate of 17%
but Expenses increased by the same amount of 17% meaning a
break even occurred, no profit. The year before Sales increased by
approximately 20% with expenses only increasing 17%. There are
no significant changes in Gross Profit, Operating Profit, or Income
Tax Expense and they do not pay dividends. Retained earnings are
steady with an average increase of 40.6% over the past three
years.
Source: http://csimarket.com/stocks/CMG-Financial-StrengthComparisons.html
Managerial Balance Sheet
2011:
Investment Capital = 456.2 - 90.2 + 752.0 = 1118.00
Capital Employed = 381.1 + 1044.2 = 1425.3
WCR = 44.9 - 135.1 = -90.2
Net Fixed Assets = 752.0
2012:
Investment Capital = 472.9 - 90.3 + 866.7 = 1249.3
Capital Employed = 422.7 + 1245.9 = 1668.6
WCR = 73.8 - 164.1 = -90.3
Net Fixed Assets = 866.7
2013:
Investment Capital: 578.2 - 79.6 + 963.2 = 1461.8
Capital Employed: 471.0 + 1538.3 = 2009.3
WCR: 88.1 - 167.7 = -79.6
Net Fixed Assets: 963.2
Managerial Balance Sheet
Chipotle’s Managerial Balance Sheet for 2011-2013
December 31,
2011
Invested Capital
 Cash
 Working capital requirement (WCR)
 Net fixed assets
December 31,
2012
December 31,
2013
401.2
-79.6
963.2
322.6
-90.3
866.7
323.2
-90.2
752.0
Total invested capital
1461.8
1249.3
1118.0
Capital employed
 Short-term debt
 Long-term financing
Long-term debt
Owners’ equity
381.1
1044.2
0.1
1044.2
422.7
1245.9
-1245.9
471.0
1538.3
-1538.3
Total capital employed
1425.3
1668.6
2009.3
How has the Working Capital
Requirement changed?

Can you see the trend? Even as the cash flow
increases, the amount of money required to run the
business also increases, which means Chipotle isn't
really managing to pull ahead with their current
systems.
Liquidity

Importance
 Assessing
liquid assets are valuable for determining a
firm’s overall cash value. This monetary assessment can
be used for preventative measures during times of low
cash on hand, and for the development of future
endeavors. It is essential that a firm covers the WCR for
the benefit of its shareholders and attractiveness in
investment.
Hawawini, G., & Viallet, C. (2011). Finance for executives: managing for
value creation. (4th ed.). Mason, OH: South-Western Cengage
Learning.
Liquidity: Net Investments in the Operating
Cycle and Financing (figures in millions)
2011
2012
2013
Working Capital Requirement (WCR)
79.6
90.3
90.2
The Financing of the Operating Cycle
Net Long-term Financing = Long term financing + Owner Equity - Net Fixed Assets
[.1 + 1044.2 - 963.2]
[0 + 1245.9 - 866.7]
[0 + 1538.3 - 752.0]
81.1
379.2
786.3
Net Short-term Financing = Short term debt - Cash
[381.1 - 401.2]
[422.7 - 322.6]
[471.0 - 323.2]
-20.1
100.1
147.8
Net Long-term Financing / WCR (in percentage)
[81.1 / 79.6]
[379.2 / 90.3]
[786.3 / 90.2]
101.9%
419.9%
871.7%
Net Short-term Financing / WCR (in percentage)
[-20.1 / 79.6]
[100.1 / 90.3]
[147.8 / 90.2]
-25.2%
110.9%
163.9%
Liquidity: Ratio Conclusions



In 2011, The Liquidity of Chipotle could only cover 76.7% of the Working
Capital Requirement. The company’s Net long-term financing options were
at 101.9%, but Net short-term financing options were in negative numbers,
at -25.2%
However, the company has seen dramatic growth in liquidity in 2012 and
2013, as the distance has grown substantially between net short-term and
long-term financing. From 2012 to 2013, long-term financing increased by
$292.4M, and net fixed assets decreased, causing the WCR to decrease
by .10M
As of 2013, Chipotle’s Net Long-term financing can cover nearly nine times
the WCR, with Net-Short term financing covering 163.9%. This possibly
suggests a positive position in regard to liquidity, with the long-term
financing almost entirely made up of owner equity. A buyer may like to see
more consistent trending for a safer investment.
Liquidity Continued
2011
2012
WCR as Percentage of Sales
2013
WCR / Sales (in percentage)
[79.6 / 2269.5]
3.5%
Industry Standard = 11%
[90.3 / 2731.2]
3.3%
[90.2 / 3214.6]
2.8%
Industry Standard = 11%
Industry Standard = 11%
*Industry Standard based on 2008 projections from Haw aw ini, G., & Viallet, C. (2011). Finance for executives:managing for value
creation. (4th ed.). Mason, OH: South-Western Cengage Learning.
Cost of Good Sold / Inventories (Turnover Rate)
[1429.1 / 8.9]
[1704.3 / 11.1]
[2012.4 / 13.0]
160.6 times
153.5 times
154.8 times
Accounts Receivable / Average Daily Sales
*365 days in a year
[8.4 / (2269.5 / 365)]
[16.8 / (2731.2 / 365)]
[24 / (3214.6 / 365)]
1.3 days
2.2 days
2.7 days
Accounts Payable / Average Daily Purchases
*365 days in a year
[46.4 / (1429.1 + 1.8/365)]*
[58.7 / (1704.3 + 2.2 / 365)]
[59.0 / (2012.4 + 1.9 / 365)]
11.8 days
12.5 days
10.7 days
* The 1.8 figure comes from the 2011 inventory minus the 2010 inventory (8.9 - 7.1).
Liquidity Continued

WCR as a Percentage of Sales


Based on the figures shown, Chipotle is investing much less in its
operating cycles than the industry standard, and the WCR is continually
taking less of the percentage of sales. This is indicative of efficient use
of working capital.
Efficiency in the Management of Inventories

Chipotle has a high inventory turnover rate, which is a necessity due to
the nature of their business. Chipotle specializes in serving organic,
naturally sustainable foods, so a high turn over rate would be required
in order to keep a fresh product.
Source: https://www.chipotle.com/en-us/fwi/fwi.aspx
Liquidity Continued

Efficiency in the Management of Accounts
Receivable


By taking the figure for Accounts Receivable and dividing it by the
Average Daily Sales, we can figure out the efficiency of Accounts
receivable. Chipotle happens to be efficient as their product is relatively
inexpensive, but their rate has dropped in efficiency over the past three
years. This could be attributed to the increase in number of locations and
the prevalent use of credit cards.
Efficiency in the Management of Accounts Payable

Chipotle has seen increased efficiency in the amount of time it takes to
pay their bills from 2012 – 2013. It is suggested that the average
collection period should not exceed 15 days.
Source: http://johanhburger.com/financial-analysis/
Managerial Influence on Working Capital
Requirement (WCR)
Inventory turnover=Cost of Goods Sold
(COGS)/ending inventories
2011= $1,429.1 / 8.9 = 160.57
 2012= $ 1,704.3 / 11.1 = 153.54
 2013= $ 2,012.4 / 13.0 = 154.80
 The higher the inventory turnover, the lower the
firm’s investment in inventories and the higher
the efficiency with which the firm manages its
inventories.

Managerial Influence on Working
Capital Requirement (WCR) Cont’d
 Average
collection period = Ending Accounts receivable /
Average daily sales.



2011 = 8.4 / 6.22 = 1.35
2012 = 16.8 / 7.48 = 2.25
2013 = 24.0 / 8.81 = 2.72
 Average
Avg. Daily sales = (2,269.5 / 365) = 6.22
Avg. Daily sales = (2,731.2 / 365) = 7.48
Avg. Daily sales = (3,214.6 / 365) = 8.81
collection period is the number of days’ worth of sales
that have not yet been collected at the date of the balance
sheet.
Managerial Influence on Working
Capital Requirement (WCR) Cont’d
 Average
payment period = Ending accounts payable / average
daily purchases
2011 = 46.4 / 3.92 = 11.84 Avg. Daily purchases = (1,429.1 / 365)
 2012 = 58.7 / 4.67 = 12.57 Avg. Daily purchases = (1,704.3 / 365)
 2013 = 59 / 5.51 = 10.71
Avg. Daily purchases = (2,012.4 / 365)
 The average payment period is the number of days’ worth of purchases
that have not yet been paid at the date of the balance sheet.

Cash Flow Statements: Net Operating Cash Flow
Operations
Net Earnings
Depreciation and Ammortization
Deferred Taxes
Other Funds
Change in Working Capital Requirement (WCR)
Net Operating Cash Flow
2013
2012
2011
327.4
96.1
2.1
32.6
70.6
278.0
84.1
-18.1
-2.3
78.2
215.0
74.9
11.3
11.8
98.1
528.7
420.0
411.1
Chipotle shows that it can create a large amount of Operating Cash Flow and it
is currently trending upward. This is an indicator that the store operations are
capable of generating income.
In 2012, Chipotle incurred cost in regard to deferred taxes. This is likely to
allow for the depreciation of value in newly acquired assets, such as the
purchase of land or buildings.
Sources: http://www.marketwatch.com/investing/stock/cmg/financials/cash-flow
http://www.business.uconn.edu/users/smf/accounting%20for%20deferred%20taxes.doc
Cash Flow Statements: Investment Activities
Investing Activities
Capital Expenditures
Fixed Assets
Other Assets
Purchase/Proceeds of Investments
Purchase of Investments
Proceeds from investment securities
Net Cash Flow from Investing Activities
2013
2012
2011
-199.9
0.0
-197.0
0.0
-151.2
0.0
-387.6
159.3
-213.4
55.0
-183.8
124.8
-428.3
-355.4
-210.2
Chipotle is incurring increased expenses in Investing Activities because they
are expanding their operations. This is also reflected by the overall increases
in Operating Cash Flow, due to more restaurants being opened, and
Liquidity. By increasing the amount of investments and following the market
trend, this could be an opportunity for the consumer to invest at a lower price
and wait for Chipotle’s cost of expansion rate to plateau.
Source: http://www.marketwatch.com/investing/stock/cmg/financials/cash-flow
Cash Flow Statements: Financing Activities
Financing Activities
Cash Dividends Paid
Common/Differed
Change in Stock
Repurchase of Common Stock
Sale of Common Stock
Issuance/Reduction of Debt
Long-Term Debt
Other Funds
Uses
Sources
Net Cash Flow from Financing Activities
Exchange Rate Effect
Net Cash and Cash Equivalents
End of Year Cash and Cash Equivalencies
2013
2012
2011
0.0
0.0
0.0
-138.9
0.3
-217.1
0.5
-63.5
0.6
0.0
-0.1
-0.1
38.2
-0.1
73.2
0.0
38.7
0.0
-100.5
-143.5
-24.3
0.5
0.6
0.4
-78.7
-0.2
176.4
0.5
-157.62
353.0
Source: http://www.marketwatch.com/investing/stock/cmg/financials/cash-flow
Cash Flow Statements Continued

Financing Activities


Chipotle has not paid out any dividends from 2011-2013, indicating
that it would not be wise to invest if one was looking for a quick return.
Chipotle has continued a trend of repurchasing stock, likely because the
company feels as though the stock is undervalued. This could be an
indicator of an anticipated rise in stock value.
End of Year Cash and Cash Equivalencies

With the purchase of new investments and repurchase of common stock,
the End of the Year Cash and Cash Equivalencies are not large numbers.
The Operating Cost of Capital is currently struggling to keep up with
expenses. Chipotle may have to consider slowing down their rate of
expansion and pay dividends in order to keep investors interested.
Dann, L. Y. (1980). Common stock repurchases: An analysis of returns to bondholders and stockholders. Journal of
Financial Economics, 9, 113-138. Retrieved from http://schwert.ssb.rochester.edu/f423/jfe81_ld.pdf
Cash Flow Statements: Free Cash Flow
2011
2012
Free Cash Flow (in millions)
2013
260.0
222.9
328.9
The Free Cash Flow (FCF) does not take into account the financing activities of a
firm when measuring a firm’s cash flow. This is for the purpose of placing value
solely on the operating and investing practices of the organization. Chipotle
declined in Free Cash Flow in 2012, mainly because of the increase in
investments and drastic decrease from the proceeds of investment securities.
Sources: http://www.marketwatch.com/investing/stock/cmg/financials/cash-flow
Hawawini, G., & Viallet, C. (2011). Finance for executives: managing for value creation.
(4th ed.). Mason, OH: South-Western Cengage Learning.
Profitability, Risk and Growth
 Return
on equity = Earnings after tax (EAT) /
Owners Equity (OE)
 2011
= 214.9 / 1044.2 = 20.58%
 2012 = 278 / 1245.9 = 22.31%
 327.5 / 1538.3 = 21.29%
Profitability, Risk and Growth Cont’d
 Invested
capital = cash + WCR + net fixed assets
2011 = 456 + -96 + 752 = 1112
 2012 = 472.9 + -99 + 866.7 = 1240.6
 2013 = 578.2 + -92.8 + 963.2 = 1448.6

Profitability, Risk and Growth Cont’d
 Return
on invested capital before tax (ROICbt) =
EBIT / invested capital
2011 = 356.4 / 1112 = 32.1 %
 2012 = 460.9 / 1240.6 = 37.2 %
 2013 = 539.5 / 1448.6 = 37.2 %

Other Measures of Profitability
Share price as of March 31, 2014=495.50
Earnings per share, using the March data above
equals10.53
Chipotle’s debt to equity ratio=30%
SSGR=0.21 million for 2013
Present Value




Given current stock pricing (495.50) and expected
dividends an investment of $500,000 in this
company with a 3% cost of capital and sale of
stock at the end of 5 years would be
recommended.
Reason investment would be recommended:
In 2010=90.18 dollars per share
In 2014=495.50 dollars per share
Financial Cost Ratio
 Financial
cost ratio = Earnings before tax (EBT) /
EBIT
2011 = 355.5 / 356.4 = .997 ~1
 2012 = 462.7 / 460.9 = 1.004 ~ 1
 2013 = 541.3 / 539.5 = 1.003 ~ 1

EBIT/interest
 Times
– interest – earned ratio = EBIT / interest
expense
2011 = 356.4 / -.9 = -396
 2012 = 460.9 / 1.8 = 256.05
 2013 = 539.5 / 1.8 = 299.72

Financial Structure Ratio
 Financial
structure ratio = invested capital / owners
equity
2011 = 1112 / 1044 = 1.07
 2012 = 1240.6 / 1245.9 = .9957
 2013 = 1448.6 / 1538.3 = .9416

Financial Leverage Multiplier
 Financial
leverage multiplier = financial cost ratio x
financial structure ratio
2011 = .997 x 1.07 = 1.07
 2012 = 1.004 x .9957 = .99
 2013 = 1.003 x .9416 = .94

ROE
 How
does your firm’s ROE compare to industry
average?
2011 = 20.58%
 2012 = 22.31 %
 2013 = 21.29 %
 Industry average ~ 12% and McDonald’s ROE
for 2013 = 31.5%

Using expected dividends and current market price of common
stock to calculate payback, is this a good investment?
 Chipotle
does not pay dividends, N/A.
 Calculate
the internal rate of return for this
investment of $500,000.
 With the same 5 year investment with a 3% cost of
capital, what is the profitability index for the
$500,000 proposed project?
Firm considering raising $15,000,000 for a
project
Is this viable?
-Would take on large debt, does not generate large amount of
revenue and net income (would take 5+ years to pay back for
this investment). What would the project be for? What is the
risk involved? These questions need to be asked.
 1,000 par-value bonds, 10 year maturity, and a coupon of
$80 per yr. what would the market value of securities be?
-Market value =469.90
 If the firm could borrow at 3% above current govt. bond rates,
what would be the cost of debt?
-Cost of debt= 8%+3%=11%

Continued
At a marginal tax rate of 40%, what is after-tax cost of debt?
(=cost of debt x(1-tax rate))
-11% x (1-.40)= 6.6%
 If the cost of debt is 3% and the cost of equity is 8%; the
$15,000,000 project is funded with $10M in equity and $5M
in long-term debt, what is the WACC?
-3% x (1-.11) x 33%) + (8% x 67%) = 6.3% rounded up

Capital Structure
Using the principles outlined in Chapter 11, does the firm you
are analyzing have a suitable capital structure?
- The financial leverage multiplier is low, so that means Chipotle is
a pretty strong company and does not need to rely so much on
creditors to finance. Chipotle also has many tangible assets
which means if need be, creditors are more likely to extend
credit to the company if financial distress were to occur.
Chipotle is a stable and growing company. A lot of judgment is
needed when analyzing capital structure because there is not
one specific formula/ratio that tells everything. The goal is to
maximize value and share price.

Continued
If you were the CFO of the firm you are analyzing,
would you recommend changes to the capital
structure?
-The company does not have much debt in its current
structure. If the company can take on more debt in
the future, it could possibly grow faster and provide
more money for shareholders. That could be
something to look into as the company continues to
strengthen.

In Conclusion…

In conclusion, with the trending financial increase in
the company as seen on the balance and
managerial balance sheets, cash flow statements
and throughout the formulas that have been
displayed, we find that Chipotle is a successful
company that would be a good investment.