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A Study of Operating Cycle According to the Leverage Effect of Chicken Franchise Companies Using Time Series Data

Tae-Ho Kim 1,  Hak-Seon Kim 1

1경성대학교

Excellent Accredited

ABSTRACT

This study used time series data to evaluate risk management behavior and business performance according to the leverage effect on the operating cycle. This was done analyzing chicken franchise companies from 2013 to 2015. The result was that DFL decreased to 0.96 from a 2.59 level and this showed that the fixed income ratio is increasing. DCL was 1.08 ~ 9.3, and this is an important indicator within the special nature and context of the chicken franchise industry. This special nature was due to the IMF, global financial crisis, and an economic recession. There was also a tendency for new investment plans to be made to enter into new businesses or overseas markets. Also, the financial condition of some companies became significantly lower than in the past due to the launch of new brand. The business cycle also ranged from 8.60 to 22.33 days, and inventory management was better than in the past. The implication of this study is that it is necessary to adjust debt reliance to an appropriate level and to increase the operating profit to a higher level in order to improve the management performance.

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