Financial_Analysis

Financial Analysis Anthony Osu Jr. Financial Statement Analysis Project The two companies that I will be comparing in this project are McDonalds and Wendy¡¦s. Both of these companies are competitors in the same industry. I¡¦m using the information from their 2001 Financial Statements. Debt-to-Assets Ratio When comparing the debt-to-assets ratio of McDonalds and Wendy¡¦s, you have to divide the firm¡¦s total liabilities by their total assets. Essentially, the debt-to-assets ratio is the primary indicator of the firm¡¦s debt management. As the ratio increases or decreases, it indicates the firm¡¦s changing reliance on borrowed resources. The lower the ratio the more efficient the firm will be able to liquidate its assets if operations were discontinued, and debts needed to be collected. In 2001 Wendy¡¦s had $2,076,043 worth in total assets and $846,264 in total liabilities. When divided, Wendy¡¦s has the lower ratio of the two competitors at 40%. This means that they would take losses of 40% if operations were shut down, and the cash received from valuable assets would still be sufficient to pay off the entire debt. It also means that 40% of Wendy¡¦s assets are made through debt. McDonalds in 2001 had $12,545.3 (in ratio, mcdonalds, wendy¡¦s, current, assets, financial, earnings, 2001, ratios, per, share, quick, liabilities, industry, debt-to-assets, stock, firm¡¦s, firm, comparing, average, total, price, p/e, investor, higher, future, firms, common, both, two, means, mean, lower, eps, better