Homework Answers
Part 1
Wendy's and McDonald's results show higher rate of returns as compared to the industry average which moves them into leading category. Moreover the combination of higher return on stockholders' equity and a lower debt equity ratio implies the overall financial stability. Lower expenditure on debt also contributes to higher net profits. Overall, all the ratios are favorable and better than industry average. Hence, these companies can certainly be industry leaders
Part 2
Once the individual company's performance is consistently better than the normal industry average, it is significant that the results gets compared to the upper quartile as well. This would help Wendy's and McDonald's to understand the business potential as well as the expectation of stakeholders. If the results are compared with top 25% average, then it is clear that both Wendy's and McDonald's have scope to improve upon the performance in order to climb up the ladder.
Part 3
Basis the data given in this part, it can be said that Wendy's and McDonald's performance is close to the upper quartile values. In this scenario as well, it is suggested that the results are compared with total industry along with the top players.
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3 parts to the question total.
Problem 12-20 (Essay) Wendy's International, Inc, and McDonald's Corporation, two...
Fill in the remaining boxes and write short response to question. Company Name McDonald's Wendy's YUM!...
Fill in the remaining boxes and write short response to question. Company Name McDonald's Wendy's YUM! Industry Average Market Price of Common Stock (Stock Price) $35.0 $31.0 $45.0 $37.0 Revenue (Sales) $22,151.0 $3,550.0 $8,380.0 $11,360.3 Cost of Goods Sold $7,384.1 $2,299.6 $3,940.0 $4,541.2 Gross Profit $14,766.9 $1,250.4 $4,440.0 $6,819.1 SG&A Expense $5,776.0 $261.1 $3,005.0 $3,014.0 Depreciation + amortization $1,148.2 $167.8 $401.0 $572.3 Operating Income (EBIT) Earnings before interest and taxes $7,842.7 $821.5 $1,034.0 $3,232.7 Interest Expense $467.1 $48.5 $164.5 $226.7...
Application Problem 12-1A a-b (Common-size analysis and differences in profitability) Comparative financial statement data for First...
Application Problem 12-1A a-b (Common-size analysis and differences in profitability) Comparative financial statement data for First Ltd. and Supreme Ltd., two competitors, follow: Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Capital assets (net) Current liabilities Long-term liabilities Share capital Retained earnings First Ltd. 2020 2019 $333,400 203,374 62,990 3,440 17,330 175,950 $153,650 420,700 332,180 48,820 40,560 72,040 101,660 313,000 249,000 162,790 94,610 Supreme Ltd. 2020 2019 $2,121,600 1,230,528 473,250 34,100 65,940 1,069,600...
Company Name McDonald's Wendy's YUM! Industry Average Market Price of Common Stock (Stock Price) $35.0 $31.0...
Company Name McDonald's Wendy's YUM! Industry Average Market Price of Common Stock (Stock Price) $35.0 $31.0 $45.0 $37.0 Revenue (Sales) $22,151.0 $3,550.0 $8,380.0 $11,360.3 Cost of Goods Sold $7,384.1 $2,299.6 $3,940.0 $4,541.2 Gross Profit $14,766.9 $1,250.4 $4,440.0 $6,819.1 SG&A Expense $5,776.0 $261.1 $3,005.0 $3,014.0 Depreciation + amortization $1,148.2 $167.8 $401.0 $572.3 Operating Income (EBIT) Earnings before interest and taxes $7,842.7 $821.5 $1,034.0 $3,232.7 Interest Expense $467.1 $48.5 $164.5 $226.7 Net Profits After Tax $1,675.0 $236.0 $617.0 $842.7 3-5 Year Growth...
Two of the largest chains of clothing stores in the United States are The Gap, Inc....
Two of the largest chains of clothing stores in the United
States are The Gap, Inc. and Abercrombie & Fitch Co. In fiscal
2011, Gap had net income of $833 million and Abercrombie &
Fitch had net income of $128 million. It is difficult to judge from
these figures alone which company is more profitable because they
do not take into account the relative sales, sizes, and investments
of the companies. Data (in millions) needed for a complete
financial analysis...
Comparison with Industry Averages Heartland Inc. is a medium-size company that has been in business for...
Comparison with Industry Averages Heartland Inc. is a medium-size company that has been in business for 20 years. The industry has become very competitive in the last few years, and Heartland has decided that it must grow if it is going to survive. It has approached the bank for a sizable five-year loan, and the bank has requested Heartland's most recent financial statements as part of the loan package. The industry in which Heartland operates consists of approximately 20 companies...
Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and...
Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): Operating profit before other expenses and interest Other revenue Interest expense Income before Income tax expense Income tax expense Net Income Marriott $ 2,366 319 (340) $ 2,345 438 $1,907 Hyatt $332 695 (76) $951 182 $769 Balance sheet information is...
Problem 12-16 (Part Level Submission) The following information (in $ millions) was taken from the recent...
Problem 12-16 (Part Level Submission) The following information (in $ millions) was taken from the recent annual reports of two companies. Cost of goods sold Average inventory Company A $27,303.1 $2,758.1 Company B $26,558.0 $4,949.5 (1) Calculate each company's inventory turnover. (Round answers to 1 decimal place, e.g. 2.5.) Company A Company B Inventory turnover times times Click if you would like to Show Work for this question: Open Show Work Problem 12-17 (Part Level Submission) Poston, Inc., and Victor...
Exercise 15-20 Presented below is information from the annual report of Blue Plastics, Inc. Operating income...
Exercise 15-20
Presented below is information from the annual report of Blue
Plastics, Inc.
Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
The third picture is the question the 2 first are the informations
the third picture is the question the 2 first are the
informations
We were unable to transcribe this imageEAST COAST YACHTS 2010 Balance Sheet Current liabilities S 24,546,000 Current assets 11,232,000 Accounts payable Cash and equivalents Accounts receivable Inventories Other 0,208,000 Notes payable 22,656,000 Accrued expenses 6,185,000 S 49,456,000 184,000 Total current liabilities 55,280,000 $146,560,000 $146,560,000 Total current assets Long-term debt Fixed assets Total long-term liabilities $462,030,000 (114,996,000) Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and fi he company's income statement and balance sheet as well as the industry average data for retailers. Click the icon to view the income statement 囲(Click the icon to view the balance sheet. Read the requirements. Ambrose Department Stores, Inc Common-Size Income Statement Year Ended December 31, 2018 Ambrose Industry Average 100.01% 100.0 % 65.8 34.2 % 19.7 14.5 % 0.4...
Application Problem 12-1A a-b (Common-size analysis and differences in profitability) Comparative financial statement data for First Ltd. and Supreme Ltd., two competitors, follow: Net sales Cost of goods sold Operating expenses Interest expense Income tax expense Current assets Capital assets (net) Current liabilities Long-term liabilities Share capital Retained earnings First Ltd. 2020 2019 $333,400 203,374 62,990 3,440 17,330 175,950 $153,650 420,700 332,180 48,820 40,560 72,040 101,660 313,000 249,000 162,790 94,610 Supreme Ltd. 2020 2019 $2,121,600 1,230,528 473,250 34,100 65,940 1,069,600...
Two of the largest chains of clothing stores in the United
States are The Gap, Inc. and Abercrombie & Fitch Co. In fiscal
2011, Gap had net income of $833 million and Abercrombie &
Fitch had net income of $128 million. It is difficult to judge from
these figures alone which company is more profitable because they
do not take into account the relative sales, sizes, and investments
of the companies. Data (in millions) needed for a complete
financial analysis...
Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): Operating profit before other expenses and interest Other revenue Interest expense Income before Income tax expense Income tax expense Net Income Marriott $ 2,366 319 (340) $ 2,345 438 $1,907 Hyatt $332 695 (76) $951 182 $769 Balance sheet information is...
Problem 12-16 (Part Level Submission) The following information (in $ millions) was taken from the recent annual reports of two companies. Cost of goods sold Average inventory Company A $27,303.1 $2,758.1 Company B $26,558.0 $4,949.5 (1) Calculate each company's inventory turnover. (Round answers to 1 decimal place, e.g. 2.5.) Company A Company B Inventory turnover times times Click if you would like to Show Work for this question: Open Show Work Problem 12-17 (Part Level Submission) Poston, Inc., and Victor...
Exercise 15-20
Presented below is information from the annual report of Blue
Plastics, Inc.
Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
the third picture is the question the 2 first are the
informations
We were unable to transcribe this imageEAST COAST YACHTS 2010 Balance Sheet Current liabilities S 24,546,000 Current assets 11,232,000 Accounts payable Cash and equivalents Accounts receivable Inventories Other 0,208,000 Notes payable 22,656,000 Accrued expenses 6,185,000 S 49,456,000 184,000 Total current liabilities 55,280,000 $146,560,000 $146,560,000 Total current assets Long-term debt Fixed assets Total long-term liabilities $462,030,000 (114,996,000) Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and fi he company's income statement and balance sheet as well as the industry average data for retailers. Click the icon to view the income statement 囲(Click the icon to view the balance sheet. Read the requirements. Ambrose Department Stores, Inc Common-Size Income Statement Year Ended December 31, 2018 Ambrose Industry Average 100.01% 100.0 % 65.8 34.2 % 19.7 14.5 % 0.4...
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