Assignment: Ratio Analysis and Final Project: Income Statement and Balance Sheet Analysis, Performance Comparison
Part One: Ratio Analysis
Find the latest financial statements for Coca Cola. Identify and/or calculate the following measures over the last three years:
1. Total revenues
2. Gross profit
3. Operating income
4. net income
5. Dividend payout
6. Dividends received per shareholder
Required:
1. For the measures listed above, perform a trend analysis, including graphs, for the last 3 years.
2. What conclusions are evident from your trend analysis? Justify your answers and explain how these findings might be relevant to the investor and the management of the company.
3. Cite sources of your research in APA format.
Part Two: Income Statement and Balance Sheet Analysis, Performance Comparison
Required:
Using the financial information gathered in Week 1, address the following questions or issues:
1. Select three items from the income statements that you feel would be important to an investor. Analyze and compare your two companies in terms of these items and how they are performing relative to each other and in general.
2. Select three items from the balance sheet that you feel would be important to an investor. Analyze and compare your two companies in terms of these items. How they are performing relative to each other and in general? Provide a rationale for your conclusions.
Part 2: Final project
For this part, I choose the hotel industry by choosing McDonalds and Wendy's Restaurants. Mc Donald is the world's leading global foodservice restaurant with more than 36,000 fast-food restaurants located across the world, some being fully owned and others existing as franchises. The McDonalds restaurant annually employs over one million in America and serves over 69million customers in their different locations around the world (McDonalds, 2015). Having more than 28,000 restaurants in the US and all over the world, Mc Donald's has displayed substantive growth over the years characterized by extensive growth and expansion into new markets and increased sales. This tremendous growth has largely been attributed by McDonalds' corporate governance principles that is wholly based on trust, dependable and ethical programs while offering its services. These principles are emphasized by the board of directors of the company who are committed to ensuring solid corporate governance to standing out in the market.
On the other hand, Wendy's is a multinational fast food chain restaurant based in the US. Since its foundation in 1969, Wendy's has grown and expanded into the international sphere having more than 6500 branches and franchises located in the US and other 29 countries across the globe (Market Watch, 2016). The continued expansion of the new markets and extensive growth of the existing markets has continued to be a source of the increased productivity. Better financial performance has been reported with the expansion into the international market being the core source of increased returns at Wendy's. Rising to be the third largest player in the sector, their boards of directors are committed to compliance with the state and ensure quality leadership to meet the stakeholder's interests (Market Watch, 2016).
Both companies operate in the hotel industry thus comparing their strengths shall be undertaken against each other being great competitors. Listed in the security markets i.e. NYSE, Wendy's is today selling at $10.87 a great depiction of good and stable performance from its value at the beginning of the year. Valued at $ 10.61 at the start of the year WEN has undergone numerous fluctuations with the prices rising and falling radically (Market Watch, 2016). On the other hand, MCD tremendously lost its value in the month of February from $124.61 on 1st February to its lowest of $116.73 8th February 2016 before starting to gain its value to $123.81 on the 20th of March. This performance is a portrayal of instability in the prices of MCD, a great threat to the profitability of investments.
From the financial statements, Wendy's has reported an inconsistent report in their total revenue/ sales that is reported as; $2.43bn (2012), $2.5bn (2012), $2.48bn (2013), 2.06bn (2014) and $1.87bn in 2015. From the record of $27bn in 2011, McDonalds has increased its total sales/revenue to $25.4bn in 2015 where it gets valued at $117 in the security market. The decrease in the total revenue is also reflected in the total income/profits reported by the firm. As at 2011, McDonalds reported net income of $ 5.5 bn a figure that has continuously decreased to $4.53bn in 2015 a clear depiction of unfavorable financial performance that could be experienced in the future (McDonalds, 2015). From the comparisons, it is clear that financial and annual reports that Wendy's stands out stronger and profitable than McDonalds despite its strong brand image.