Read about Yum! Company.
Yum! Brands is the owner of five different fast food chains across the world. These include Pizza Hut, Taco Bell, Kentucky Fried Chicken, Long John Silver’s and A & W Restaurants. As the owner of five such restaurant chains, there are a variety of potential projects or events that require an investment. These can include such things as an expansion, buying new equipment, mergers, recalls, and so on.
Within Yum! There are two projects that I would recommend to the corporation to be done. The first would be a corporate office for the international offices and the second would be a updating the current computer systems within the restaurant locations. One of these will be funded by current source of funds and the other sourced by non-current funds. “Current sourcing of funds are traditional ways, which can be circulated and repaid within the accounting period or operating cycle of the business. These types of funds are easily converted into cash or equivalent”. Alternatively, “non-current sources of funds are for a longer period of time, typically at least over one year. Normally long term sources are used for capital expenditure such as land, buildings, and machineries for the enterprises”.
Creating an international corporate office for Yum! Brands would be considered a non-current project. "Yum currently has a corporate office for their China division, but everything else is run from their regular corporate office located in Louisville, Kentucky". This expansion would be considered a non-current project because it would be a long-term event that would take over one year to complete. I think that the best way to raise the capital for this project would be to use a non-current debt instrument. I would recommend that Yum should use mortgages and even notes payable to fund the additional corporate office for their international business. This would allow Yum to borrow the money today and make payments on it later when the profits are increased.
The second project I suggest is to update the current computer systems in the restaurants. This is essential because in today’s world technology is the key to success and profitability. Companies want to make sure they are up to date on the latest technology. This is a project that will occur immediately and would therefore be a current project. I feel that the best way to fund this project would be to issue common or preferred stock in the company. Because Yum owns such popular food chains it would be easy to sell enough stock to raise the capital needed to get an adequate amount of money to update the computers.
Choose true or false:
1. Current sourcing of funds are non- traditional ways.
2. Yum currently has a corporate office for their Japan division.
3. The writer doesn’t like the idea of preferred stock in the company.