McDonald's & Wendy's Financial Statement Comparison Essay

What do you typically order when dining at McDonald’s or Wendy’s? When I am having a meal from either place, my favorite choice is a fried chicken sandwich with lettuce, tomato, bacon and extra mayo. Sometimes, I may make it a combo and enjoy the greasy, salty french fries and an ice cold soft drink. Most of their customers often purchase the unhealthiest options because they feel as if that is what fast food is all about, right? Fortunately, it does not have to be that way. Fast food can be convenient and nutritious. Wendy’s and McDonald’s are both fast food restaurants, so they are alike in many

Liquidity is important for any firm as it is an assessment of the ability to pay its' liabilities in the short term. There are two main liquidity ratios: the current and the quick ratio. The current ratios divides the current assets by the current liabilities to assess how many times the current assets can pay the current liabilities (Elliott and Elliott, 2011). Traditional ratios are usually in the region of 1.5, but this may vary depending on the industry and nature of the business (Elliott and Elliott, 2011). The current ratio is shown in table 1.

The current ratio shows the short-term debt-paying ability of the company also known as liquidity ratio. Components of the current ratio are current assets and current liabilities. To find the current ratio, divide current assets by current liabilities. For example if a current ratio was 2:1, then that company would be able to pay off its short term debt easily. But you should also look at the types of debt the company has because some assets might be larger. For the current ratio a rule of thumb is the ratio should be around 2:1. The company wants to at least make sure that the value of the current assets covers at least the amount of the short-term obligations. In 2013 the current ratio is 1.75 and in 2014 the current ratio is 1.8. This is showing a favorable

This ratio indicates a company’s liquidity. It depicts how many dollars of current assets exist for every dollar in current liabilities. The ratio is the higher, the better. Home Depot and Lowe’s has increasing current ratio while Home Depot has a slightly higher one.

Their food seems to be the same, but it isn’t. On one hand, McDonald’s hamburger weighs less and has only 9g of total fat, while Burger King’s hamburger has 12g and they have a saltier taste. On the other hand, Burger King’s beef are 100% pure and they flame-boils their burgers, while McDonald’s fries their beef. That’s why they taste different. Concern at cost, McDonald’s simple burger is lower at $0.89 while Burger King’s has their simple burger at $0.99.

Liquidity ratios measure how well a company is able to meet its short term obligations without relying on selling inventory (David, Fred). Starbucks three main components in these current categories are cash, inventory and accrued liabilities. The current ratio indicates that if Starbucks needed to liquidate they would be able to cover their current liabilities. They would be unable to meet their outside obligations without selling off inventory to

Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.

McDonalds (McD’s) and Burger King (BK) are key players in the fast food industry and have been competing for many years. They both provide similar food that is prepared quickly for a low price. So what sets them apart? The difference between McD’s and BK is their corporate culture – operational management. The manufacturing method at McD’s follows the “Doing It All For You” versus “Having It Your Way” at BK.

The current ratio lets one know what is exactly happening in the business at the present time. The current ratio is defined as current assets such as accounts receivables, inventories any type of work in progress or cash that are divided by the business current liabilities. Business liabilities can consist of many things such as insurance on building, employee insurance these liabilities way heavy on any type of business especially one that is large as Landry’s Restaurant.

Competitor's Ratios and Analysis. Using relative comparative analysis (Table 6), competing firms Google and Amazon have unique performance over fiscal years (FY) 2014-2016. Measuring profit performance using profitability ratios, Google has a greater gross profit margin than Apple and retains an average of 61 cents for every dollar spent on direct sales. However, Apple outperforms Google on both return on assets and return on equity ratios. Meaning, Apple retains 14 cents for every dollar in assets in comparison to Google’s 11 cent retained average. In addition, Apple retains a net average of 35 cents for every dollar invested by common shareholders.

Because the current ratio measures a company’s ability to pay back short term loans I would be less uncomfortable with the slight drop in liquidity from Coca-Cola rather than the substantially larger drop from PepsiCo. Both current ratios are quite healthy though when compared to others in the industry.

The restaurant industry “operates restaurants and other eating places, including full-service restaurants, quick-service restaurants, cafeterias, buffets, and snack bars” (Restaurants). The fast food sector has a number of popular companies like McDonald’s and Wendy’s. Fast food chains earn the majority of their success by offering quick, inexpensive meals made uniformly around the world (Nath). This project will be focused on comparing the financial ratios and statements from McDonald’s (MCD) and Wendy’s (WEN). The analysis will take an unbiased approach when comparing the companies. The comprehensive analysis will include: the company’s financial statements, including the balance sheets, income statements, and statement of cash flows, calculating the financial ratios, deciding which external factors could influence the company’s profits, and finally making a recommendation on which stock will have a positive effect on a potential investor’s portfolio.

Debt ratio helps in comparing total assets and total liabilities. If you have more liabilities it means you have lesser equity and therefore an increased leverage position.

The liquidity ratios are a group of ratios that show the relationship of a firm’s cash and other current assets to its current liabilities. This basically means that the ratios measure how well the company is able to pay its short-term obligations and how well they can confront unexpected needs for cash.

Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.