Recommendations

Jollibee Foods Corporation is an excellent company if one only looks at its financial

statements. Important values for profitability such as Revenues and Income are all increasing.

Glancing at the assets should give one a sense of security because of its’ climbing route. Good

things at hand and one should be able to assume that everything will be alright. However, by

learning the financial ratios, financial managers could safely indicate different possibilities that

may occur in the future, may it be a problem or something to investigate more on. Given the

audited financial statements of the Jollibee Foods Corporation, the team listed a few

recommendations to prevent losses for the company.

1. Lower down borrowing funds to avoid future problems

The average debt ratio of the quick service restaurant industry is playing at 50%, a

maintained ratio of 53% in the last two years have proven a point that the company is able to

borrow funds and pay at its due. However, one can’t evaluate properly by using just one ratio.

The goal of the company is to borrow funds and make sure to make use of it for profit. This

wasn’t the case for Jollibee. The profitability ratios show a slight decline and not the expected

increase. This could add doubts to lenders or creditors to take risk in a company with fluctuating

profit ratio.

2. Cut Cost of Sales

As indicated in the financial statement analysis, the cost of sales had increased

dramatically, compared to the previous years. One of the greatest factors that added into the
increase was the Contracted Services. Aside from inflation, which can’t be managed by the

corporation, the company has incurred this cost because they needed more employees to

operate new sites as well as its compliance to new labor regulations. The JFC follows a stricter

procedure before opening new sites, however, in the past year alone. The company had opened

more stores in hopes to gain more profit. In the future, JFC could ensure profitability by making

sure to strictly follow labor regulations and be open to changes in the macroenvironment

aspect.

3. Expansion does not always lead to more profits

Great conquerors such as Napoleon, Alexander the Great and Julius Caesar are known

because of their great feats in their field. However, even though they have conquered a lot of

lands, nothing could be more profound than to learn why they stopped. Most of them, stopped

because the conqueror died, hence the conquest died, some because the soldiers just simply

wanted to go home, some acquired so much that the conqueror had to fight battles again and

again to reclaim lands. A lot can be aligned to what is happening to the stores owned by JFC.

People are flocking to quick service restaurants and more restaurants are opening aside from

the ones owned by JFC. This could lead to the possibility of a number of JFC stores available for

one customer. Instead of gaining more because of the new stores, JFC stores will be sharing

what could have been earned by only one store. In the financial statements reported by JFC,

more stores were opened that have brought more costs.