Question

Calculate the following ratios based on Wendy's 2017 and 2018 financial statements and comment on the differences between FY 2017 and FY 2018.

		Wendy's
		FY 2017	FY 2018
Liquidity	Current Ratio:
	Quick Ratio:
Comments on the companies' liquidity - what do the numbers say?
Asset Management	Total Asset Turnover:
	Avg Collection Period:
Comments on the companies' asset management - what do the numbers say?
Debt Management	Total Debt to Total Assets:
	Times Interest Earned:
Comments on the companies' debt management - what do the numbers say?
Profitability	Net Profit Margin:
	Return on Assets:
	Return on Equity:
	Modified Du Point Equation, FY 2012:
Comments on the companies' profitability - what do the numbers say?
Market Value Ratios	PE Ratio:
	Market to Book Ratio:
Comments on the companies' market values ratios - what do the numbers say?

Wendys Annual Data 2018-12-31 2017-12-31 1.78 0.8262 4.8053 56.3302 17.5541 EE EE Current Ratio Long-term Debt / Capital Debt/Equity Ratio Gross Margin Operating Margin EBIT Margin EBITDA Margin Pre-Tax Profit Margin Net Profit Margin Asset Turnover Inventory Turnover Ratio Receiveable Turnover Days Sales In Receivables ROE - Return On Equity Return On Tangible Equity ROA - Return On Assets ROI - Return On Investment Book Value Per Share Operating Cash Flow Per Share Free Cash Flow Per Share 2.3426 0.8093 4.294 63.9111 15.7171 15.7171 23.823 36.1597 28.9392 0.3704 155.6254 14.4796 25.2078 70.9562 -33.0166 10.7202 13.5279 2.8043 0.9154 0.6302 EE E E E 17.5541 27.8276 8.2572 15.8597 0.2986 169.2839 10.6951 34.1279 33.85 -13.0071 4.736 5.8842 2.3833 0.9465 0.6226

Answer 1

Wendy's
	Ratio	FY 2018	FY 2017
	Liquidity
A	Current Ratio	$665.718/ $284.185	$404.353/ $227.162
	Current Assets/Current Liabilities	2.34 times	1.78 times
	Comments	It means that for every dollar that the firm owes its creditors, it is owed $2.34 by its debtors.	It means that for every dollar that the firm owes its creditors, it is owed $1.78 by its debtors.
		Current Ratio measures the entity's ability to pay short term obligations. Ideal ratio is 2:1. As of the FY 2018, The company’s liquidity is good.
B	Quick Ratio
	Cash, Marketable securities & receivables/ Current Liabilities	$461.265/ $284.185	$204.08/ 227.162
		1.62:1	0.89:1
	Comments	Quick ratio of 1.62 times implies the company's liquidity is good and ability to meet current obligations using liquid assets.	Quick ratio of less than 1 means the firm can't fully pay back its current liabilities.
		Quick ratio, also known as the acid-test measures the ability of a firm to use its near cash or quick assets to extinguish or retire its current liabilities immediately. Normal ratio is 1:1. As of the FY 2018, The company liquidity is good.