Financial Practices
As of December 31, 2014, Chipotle Mexican Grill, Inc a Delaware corporation operates 1,755 Chipotle restaurants in the US, 7 in Canada, 6 in England, 3 in France and 1 in Germany. Furthermore, the company also has nine Asian kitchen restaurants serving Asian cuisine and is also an investor of a Pizzeria local restaurant. The quarterly financial statements of the company includes all the accounts of its owned subsidiaries. Chipotle’s financial statements are prepared using the US generally accepted accounting principles (GAAP). In conformity, with GAAP Chipotle’s management estimates requires the company to disclose all the amount of its assets and liabilities. The company states its revenue net sales from the food and beverages …show more content…
The company uses First-in, First-out (FIFO) inventory method to which helps them to serve high quality food under reasonable price. The company is exposed to inflationary commodity price risk, because the ingredients used for preparation, packaging and storage are subject to constant price changes Foreign exchange rate, commodity demand, seasonal changes and production are few uncontrollable factors. Chipotle still closely works with its suppliers to use a pricing protocol under which both parties agree on fixed price for a particular duration which saves the company from future customer resistance due to increase in menu price. Besides the commodity price risk, changing interest rates and changes in value of foreign currency exchange rate are important quantitative market risks that affect company’s accounting practices. As company’s restaurants receive its payment in form of cash or credit card, therefore it doesn’t require significant working capital for its daily operations. As a result, the cash received and investment balances are sufficient to meet their capital requirement for ongoing expenditures. The company mainly saves its liquidity and on hand capital for constructing new restaurant and using it for
As of December 31, 2014, Chipotle Mexican Grill, Inc a Delaware corporation operates 1,755 Chipotle restaurants in the US, 7 in Canada, 6 in England, 3 in France and 1 in Germany. Furthermore, the company also has nine Asian kitchen restaurants serving Asian cuisine and is also an investor of a Pizzeria local restaurant. The quarterly financial statements of the company includes all the accounts of its owned subsidiaries. Chipotle’s financial statements are prepared using the US generally accepted accounting principles (GAAP). In conformity, with GAAP Chipotle’s management estimates requires the company to disclose all the amount of its assets and liabilities. The company states its revenue net sales from the food and beverages …show more content…
The company uses First-in, First-out (FIFO) inventory method to which helps them to serve high quality food under reasonable price. The company is exposed to inflationary commodity price risk, because the ingredients used for preparation, packaging and storage are subject to constant price changes Foreign exchange rate, commodity demand, seasonal changes and production are few uncontrollable factors. Chipotle still closely works with its suppliers to use a pricing protocol under which both parties agree on fixed price for a particular duration which saves the company from future customer resistance due to increase in menu price. Besides the commodity price risk, changing interest rates and changes in value of foreign currency exchange rate are important quantitative market risks that affect company’s accounting practices. As company’s restaurants receive its payment in form of cash or credit card, therefore it doesn’t require significant working capital for its daily operations. As a result, the cash received and investment balances are sufficient to meet their capital requirement for ongoing expenditures. The company mainly saves its liquidity and on hand capital for constructing new restaurant and using it for