Comparison of Wendy's International, Inc. and Starbucks Corporation Based on Finances

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Comparison of Wendy's International, Inc. and Starbucks Corporation Based on Finances

Wendy's International, Inc., incorporated in 1969, is primarily engaged in the business of operating, developing and franchising a system of quick-service and fast-casual restaurants. As of December 28, 2003, there were 6,481 Wendy's restaurants (Wendy's) in operation in the United States and in 21 other countries and territories. Of these restaurants, 1,465 were operated by the Company and 5,016 by its franchisees. As of December 28, 2003, the Company and its franchisees operated 2,527 Tim Hortons (Hortons) restaurants with 2,343 restaurants in Canada and 184 restaurants in the United States¡]Smart money, 2004.

Starbucks Corporation purchases and roasts whole bean coffees and sells them. As of September 28, 2003 (fiscal year-end 2003), Starbucks operated a total of 4,546 retail stores. Starbucks sells coffee and tea products through other channels, and, through certain of its equity investees. The Company has two operating segments, United States and International, each of which include Company-operated retail stores and Specialty Operations. Starbucks opened 602 new Company-operated stores during fiscal 2003. As of fiscal year-end, Starbucks had 3,779 Company-operated stores in the United States, 373 in the United Kingdom, 316 in Canada, 40 in Australia and 38 in Thailand. ¡]Smart money, 2004¡^

In this financial analysis report, I will compare and contrast these two companies¡¦ finance based on their annual report and related websites. There are four parts in this report. It includes Financial Ratios, WACC, Working Capital and Dividend policy.

Part ¢¹Compare and Contrast of the Financial Ratios

Profitability Ratios

The Retails-Eating Places industry is a very competitive area for companies to survive. Both Starbucks and Wendy¡¦s are excellent companies to earn a lot of profit in this industry.

Return on sales (ROS): Harrington (2004) said that ¡§this ratio indicates that what percentage of each dollar of revenue is available for the owners after all the expenses are paid to other suppliers. This ratio is related to net income and net sales which I found from the income statements of both Starbucks and Wendy¡¦s in their annual reports.

The return on sales is the key profitability ratio. This ratio tells the analyst what proportion of the revenues ...

... middle of paper ...

...urchasing the company's own shares, acquiring new companies and profitable assets, and reinvesting in financial assets (McClure, 2004)

.

Bibliography

Harrington, D. (2004) Corporate Financial Analysis. 7th ed. Ohio, South-Western.

Hoover¡¦s Company Records (2004) database [Internet] Available from: < http://ezproxy.mala.bc.ca:2051/pqdweb?RQT=573&TS=1098648711&clientId=7024&LASTSRCHMODE=2> [Accessed 18 Oct 2004]

Mergent Online (2004) database [Internet] Available from: < http://ezproxy.mala.bc.ca:2129/compsearch.asp> [Accessed 12 Oct 2004]

Reuters website (2004) Investing [Internet] Available from: [Accessed 15 Oct 2004]

Ross, S.A., Westerfield, R.W., Jaffe, J.F., & Roberts, G.S (2001) Corporate Finance. 3 th ed.Toronto, McGraw-Hill Ryerson.

Seiler. M, (1996) Adverse selection in capital budgeting decision making. Management Research News, 19(8), pp.61-67

Smart Money website (2004) [Internet] Available from: <

http://smartmoney.com/> [Accessed 15 Oct 2004]

Wendy¡¦s International, Inc. website (2004) [Internet] Available from: [Accessed 13 Oct 2004]

Yahoo Finance website (2004) [Internet] Available from:

[Accessed 12 Oct 2004]

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