panera bread
Penn State Erie - The Behrend College
Case 2: Panera Bread Company
KAILEY JOYCE
2/27/2012
1. An analysis of Panera Bread Company’s financial situation shows some financial pros and cons for potential inventors. The company has reported increasing sales as well as net income since 2002. Panera Bread Company has also reported increasing earnings per share every year which is an attractive statistic for investors. The company has consistently proven that they can make money. Figure 1 shown below demonstrates the increases in sales and net income over the last four years
Axis Title
Panera Bread Co. Net Income
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
2002
Net Income
Expenses
Revenue
2003
2004
2005
2006
Figure 1
While this figure indicates an increase in sales revenue and net income it is important to note that the company’s expenses have been increasing as well. In fact, last year, expenses increased by 32% while sales increased at 29%. This statistic shows poor expense management on the part of Panera’s management team. In calculating the company’s net profit margins it becomes clearer that expenses are too high. Figure 2 indicates that margins have been consistently low ranging between 7% and 8.5% since 2002. It also shows that the margin decreased last year which is a negative trend that must be considered when analyzing financial health and future growth potential.
Net profit margin
9.00%
8.50%
8.00%
7.50%
Net profit margin
7.00%
6.50%
6.00%
2002 2003 2004 2005 2006
Figure 2
Conducting further analysis I analyzed the company’s balance sheet to evaluate its financial position. My analysis shows that Panera is a low risk investment. In calculating its debt to
equity ratio, which is shown in figure 3, I found that while it has been increasing the company’s ratio has never been higher than .5. This means the company has stable liabilities and their
Case 2: Panera Bread Company
KAILEY JOYCE
2/27/2012
1. An analysis of Panera Bread Company’s financial situation shows some financial pros and cons for potential inventors. The company has reported increasing sales as well as net income since 2002. Panera Bread Company has also reported increasing earnings per share every year which is an attractive statistic for investors. The company has consistently proven that they can make money. Figure 1 shown below demonstrates the increases in sales and net income over the last four years
Axis Title
Panera Bread Co. Net Income
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
2002
Net Income
Expenses
Revenue
2003
2004
2005
2006
Figure 1
While this figure indicates an increase in sales revenue and net income it is important to note that the company’s expenses have been increasing as well. In fact, last year, expenses increased by 32% while sales increased at 29%. This statistic shows poor expense management on the part of Panera’s management team. In calculating the company’s net profit margins it becomes clearer that expenses are too high. Figure 2 indicates that margins have been consistently low ranging between 7% and 8.5% since 2002. It also shows that the margin decreased last year which is a negative trend that must be considered when analyzing financial health and future growth potential.
Net profit margin
9.00%
8.50%
8.00%
7.50%
Net profit margin
7.00%
6.50%
6.00%
2002 2003 2004 2005 2006
Figure 2
Conducting further analysis I analyzed the company’s balance sheet to evaluate its financial position. My analysis shows that Panera is a low risk investment. In calculating its debt to
equity ratio, which is shown in figure 3, I found that while it has been increasing the company’s ratio has never been higher than .5. This means the company has stable liabilities and their