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.

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,

This project has helped me understand essentially why financial statements are analyzed. These ratios give us investors a process to assess the potential risks and returns from investing in a firm. With these simple and appropriate ratios, it¡¦s easy for a potential investor to develop a general framework that can be used to conduct a comprehensive financial analysis. When comparing the two firms, we¡¦ll start with McDonalds and Wendy¡¦s debt-to-assets ratio. Although Wendy¡¦s might have a lower debt-to-assets ratio, doesn¡¦t necessary mean they¡¦re in better financial condition. Wendy¡¦s debt-to-assets ratio being at 40% may mean they have extra assets that could be used to produce more profit. McDonald¡¦s debt-to-asset ratio at 56% shows that they are utilizing all of their assets to make future profit, while staying around the 50% mark. Both of the firms¡¦ current ratios are better than the industry average of .60; Wendy¡¦s being at .90 and McDonalds being at .81. When comparing the two ratios they show that Wendy¡¦s would be able to pay off there debt¡¦s quicker than McDonalds. There are two strengths that McDonalds had in 2001 with both their quick and P/E ratios better than Wendy¡¦s. Under a worse case scenario McDonalds would be able to liquidate its assets quicker and pay off debts better. As an investor, the company with the higher earnings on a per share basis will be more likely to have more investors. After comparing the two firms as an investor I would invest in McDonalds. Based on McDonald¡¦s debt-to-assets ratio, I believe that McDonalds is actively using all its assets to maximize profits. As an investor McDonald¡¦s stock is also cheaper and gives a greater return. Wendy¡¦s isn¡¦t far behind and seems like a firm with economic success and great debt management, but with the money in my pocket I would use it on McDonalds. Now food¡K¡K¡K¡K¡K. sometimes might be a different story! ƒº

To find the quick ratio, which is often called the acid test; only cash & cash equivalents as well as accounts receivable are added and then divided by current liabilities. The purpose of the quick ratio is to indicate the resources that may be available in the short term. Essentially quick ratio is sort of a ¡§worse case scenario¡¨ that might apply if no other resources are available. In 2001 Wendy¡¦s had a quick rat

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