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Financial Analysis Paper

1364 Words6 Pages

With my financial statement that I have researched about McDonald (MCD) and Burger King (BKW), I will be explaining the financial statements from both of the industry. Each of the industry, I’ll be analyzing and computing the profitability and risks of both of the firms. With my financial research, I will evaluate the financial statements of the two firms’ by the financial ratios: currents and past performances to evaluate with a comprehensive analysis. McDonald (MCD) annual report ended on fourth quarter of December 31,2014. Whereas, Burger King (BKW) is fiscal year ended on September 30,2014. Each of the annual reports consists of the income statements, balance sheets, and cash flows for Burger King (BKW) and McDonald.

From both of …show more content…

When the risk is taking into consideration by looking at the balance sheet. In the beginning, the balance sheet will show the available amount of money from current assets and current liabilities. When calculating the current ratio by dividing current assets of the company dividing by current liabilities. Example, the current assets of Burger King is 1,363 millions divided by current liabilities is 605 with the current ratio will be 2.25 for the year of 2014. In 2013, the current assets is 891 divided by 398 will be 2.24 in current ratio. In 2014, the current assets is 1074 divided by 346 will be 3.10 in current ratio. From the current ratios these past few years, Burger King has increases in current liabilities and assets. (gurufocus.com)

As for McDonald (MCD), their current ratio begins from 1.45 in 2011 to increase of 1.59 in 2012, and a decrease of 1.52 in 2013. In 2012, McDonald (MCD) had a slightly increase with its current ratio that they had some short term; however, the current ratio in 2013 has decreases which means that McDonald (MCD) had the ability to pay short-term debt. …show more content…

In 2012 to 2013, the quick ratio improved from 2012 and 2013. In 2013 and 2014, the quick ratio for those years has slightly deteriorated. Between the quick ratio and current ratio, the ratios are slightly same because the quick ratio shows that the company risk slightly went downward. (stock-analysis.com) Burger King (BKW) quick ratio in 2013 was 3.10 and 2.25 in 2014. The quick ratio is slightly different than the current ratio for Burger King (BKW). The quick ratio decline a little in 2014. With this analysis comparison, Burger King (BKW) and McDonald (MCD) seems to be able to meet the short term obligation and be able reduce the debts, but I believe that McDonald (MCD) will be able to reduce the debt quicker than Burger King (BKW). (guru.com)

Long-Term Solvency Risk

Long-term solvency risk is being used to the shareholder equity under a debt ratio. By finding the long-term solvency of the debt ratio is using the total liabilities divided by the total shareholders’. Shareholders’ equity will help paying off the long-term debt. In 2012, McDonald risk was at 1.17, in 2013 was 0.88, and in 2014 0.89. McDonald ratio risk has shown some improvements over the last three years, which leads into a better outcome in the near future. (gurufocus.com)

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