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Prepare a 3,000-word business report on any two companies ( related to hospitality )listed on any stock exchange for the same year from any years after 2012. Compare and analyse companies’...

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Prepare a 3,000-word business report on any two companies ( related to hospitality )listed on any stock exchange for the same year from any years after 2012. Compare and analyse companies’ profitability, liquidity, solvency and market performance. You must calculate the following ratios but your comparison and analysis must not be limited to these ratios:

1. Return on Assets

2. Return on Ordinary Equity

3. Profit Margin

4. Current Ratio

5. Inventory Turnover

6. Debt Ratio

7. Equity Ratio

You must also discuss debt and equity financing structure of the same chosen companies. Attach financial statements of chosen companies in appendix.

Answered Same Day May 18, 2020 BUS201

Solution

Abr Writing answered on May 20 2020
127 Votes
Introduction
In this report, we are discussing about one of the two leading hospitality companies who is operating in the International Arena.  The first company we are discussing is Chipotle Mexican grill and the second company we have discussed is McDonald's.
Chipotle Mexican Grill is a major chain of restaurants which provides grilled Mexican food. The company has derived its name from the Chipotle which means dried and smoked food in the local language. Chipotle Mexican grill owns a restaurant in around 1600 locations in the entire world and all of those restaurants are owned by the Chipotle group and company has not adopted a franchise model. Mission and vision of Chipotle Mexican grill include providing high quality cook the food which is prepared by using innovative ingredients and techniques in order to make delicious food in the audible range of prices.
McDonald's is one of the oldest company in food and Restaurant sector the company was started in 1940 by its founder Richard MacDonald in the state of California in the United States. The McDonalds Head around 36900 outlets in the entire world and company serves around 70 million people in over 100 countries. Burger along with other range of fast food is the major product supplied by the company. The company operates on the franchise model and derive its major revenue from the royalties and fees paid by those franchises.
Vertical and Horizontal analysis
Initially we have analyzed the financial statements of Chipotle Mexican grill and McDonalds through vertical and horizontal analysis. In income statement, vertical analysis expresses all the line item in the income statement as a percentage of revenue. This helps in analyzing cost and operational mattresses as the percentage of the revenue.  In balance sheet all the line items of the balance sheet are expressed as a percentage of total assets this helps in identifying the share of asset or liability on the balance sheet of the company.
Here we can observe that in case of Chipotle Mexican Grill, the majority of the cost is incu
ed as cost of sales. The cost of sales is almost 72% of the net revenue of the company this implies that company is heavily dependent on raw materials which are used to make the final sales product.  In case of the balance sheet, the fixed assets forms around 65% of the total assets and the company have a smaller amount of liabilities due to the absence of debt in its capital structure.
In case of McDonald's, we can observe that although the highest cost is incu
ed in the cost of sale the percentage of the cost of sales as the percentage of revenue is lower for McDonald's than the Chipotle Mexican grill.  Similarly, in case of the balance sheet, we can observe that the fixed asset forms around 66.4% of the total Assets and liabilities order McDonald's company are higher than its shareholder equity.
Horizontal and Vertical analysis of Income statement of McDonalds
    MCD
     
     
     
     
     
     
    Vertical Analysis
     
    Horizontal Analysis
    Fiscal year ends in June. AUD in millions except per share data.
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
     
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
     
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
    Revenue
    28106
    27441
    25413
    24622
    22820
     
    100.0%
    100.0%
    100.0%
    100.0%
    100.0%
     
    100.0%
    97.6%
    90.4%
    87.6%
    81.2%
    Cost of revenue
    17203
    16986
    15624
    14417
    12200
     
    61.2%
    61.9%
    61.5%
    58.6%
    53.5%
     
    100.0%
    98.7%
    90.8%
    83.8%
    70.9%
    Gross profit
    10903
    10456
    9789
    10205
    10621
     
    38.8%
    38.1%
    38.5%
    41.4%
    46.5%
     
    100.0%
    95.9%
    89.8%
    93.6%
    97.4%
    Operating expenses
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Sales, General and administrative
    2386
    2488
    2434
    2384
    2231
     
    8.5%
    9.1%
    9.6%
    9.7%
    9.8%
     
    100.0%
    104.3%
    102.0%
    99.9%
    93.5%
    Total operating expenses
    2386
    2488
    2434
    2384
    2231
     
    8.5%
    9.1%
    9.6%
    9.7%
    9.8%
     
    100.0%
    104.3%
    102.0%
    99.9%
    93.5%
    Operating income
    8517
    7968
    7355
    7820
    8390
     
    30.3%
    29.0%
    28.9%
    31.8%
    36.8%
     
    100.0%
    93.6%
    86.4%
    91.8%
    98.5%
    Interest Expense
    522
    570
    638
    885
    921
     
    1.9%
    2.1%
    2.5%
    3.6%
    4.0%
     
    100.0%
    109.2%
    122.2%
    169.5%
    176.4%
    Other income (expense)
    209
    -25
    -161
    -69
    1105
     
    0.7%
    -0.1%
    -0.6%
    -0.3%
    4.8%
     
    100.0%
    -12.0%
    -77.0%
    -33.0%
    528.7%
    Income before taxes
    8204
    7372
    6556
    6866
    8574
     
    29.2%
    26.9%
    25.8%
    27.9%
    37.6%
     
    100.0%
    89.9%
    79.9%
    83.7%
    104.5%
    Provision for income taxes
    2619
    2614
    2026
    2180
    3381
     
    9.3%
    9.5%
    8.0%
    8.9%
    14.8%
     
    100.0%
    99.8%
    77.4%
    83.2%
    129.1%
    Net income from continuing operations
    5586
    4758
    4529
    4686
    5192
     
    19.9%
    17.3%
    17.8%
    19.0%
    22.8%
     
    100.0%
    85.2%
    81.1%
    83.9%
    92.9%
    Net income
    5586
    4758
    4529
    4686
    5192
     
    19.9%
    17.3%
    17.8%
    19.0%
    22.8%
     
    100.0%
    85.2%
    81.1%
    83.9%
    92.9%
    Net income available to common shareholders
    5586
    4758
    4529
    4686
    5192
     
    19.9%
    17.3%
    17.8%
    19.0%
    22.8%
     
     
     
     
     
     
    Earnings per share
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
    #DIV/0!
    #DIV/0!
    #DIV/0!
    #DIV/0!
    #DIV/0!
    Basic
    5.59
    4.85
    4.82
    5.49
    6.43
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
    100.0%
    86.8%
    86.2%
    98.2%
    115.0%
    Diluted
    5.55
    4.82
    4.8
    5.44
    6.37
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Weighted average shares outstanding
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
    #DIV/0!
    #DIV/0!
    #DIV/0!
    #DIV/0!
    #DIV/0!
    Basic
    998
    980
    939
    854
    807
     
    3.6%
    3.6%
    3.7%
    3.5%
    3.5%
     
    100.0%
    98.2%
    94.1%
    85.6%
    80.9%
    Diluted
    1006
    986
    945
    861
    816
     
    3.6%
    3.6%
    3.7%
    3.5%
    3.6%
     
     
     
     
     
     
    EBITDA
    10312
    9587
    8750
    9267
    10858
     
    36.7%
    34.9%
    34.4%
    37.6%
    47.6%
     
    100.0%
    93.0%
    84.9%
    89.9%
    105.3%
Horizontal and Vertical analysis of Balance sheet of McDonalds
    Fiscal year ends in June. AUD in millions except per share data.
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
     
    Vertical Analysis
     
    Horizontal Analysis
    Assets
     
     
     
     
     
     
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
     
    2013-06
    2014-06
    2015-06
    2016-06
    2017-06
    Cu
ent assets
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Cash
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Cash and cash equivalents
    2799
    2078
    7686
    1223
    2464
     
    7.6%
    6.1%
    20.3%
    3.9%
    7.3%
     
    100.0%
    74.2%
    274.6%
    43.7%
    88.0%
    Total cash
    2799
    2078
    7686
    1223
    2464
     
    7.6%
    6.1%
    20.3%
    3.9%
    7.3%
     
    100.0%
    74.2%
    274.6%
    43.7%
    88.0%
    Receivables
    1320
    1214
    1299
    1474
    1976
     
    3.6%
    3.5%
    3.4%
    4.8%
    5.8%
     
    100.0%
    92.0%
    98.4%
    111.7%
    149.7%
    Inventories
    124
    110
    100
    59
    59
     
    0.3%
    0.3%
    0.3%
    0.2%
    0.2%
     
    100.0%
    88.7%
    80.6%
    47.6%
    47.6%
    Prepaid expenses
    808
    783
    559
    565
    828
     
    2.2%
    2.3%
    1.5%
    1.8%
    2.4%
     
    100.0%
    96.9%
    69.2%
    69.9%
    102.5%
    Other cu
ent assets
     
     
     
    1527
     
     
    0.0%
    0.0%
    0.0%
    4.9%
    0.0%
     
     
     
     
     
     
    Total cu
ent assets
    5050
    4186
    9643
    4849
    5327
     
    13.8%
    12.2%
    25.4%
    15.6%
    15.8%
     
    100.0%
    82.9%
    191.0%
    96.0%
    105.5%
    Non-cu
ent assets
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Property, plant and equipment
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Gross property, plant and equipment
    40356
    39126
    37692
    34443
    36626
     
    110.2%
    114.1%
    99.3%
    111.0%
    108.3%
     
     
     
     
     
     
    Accumulated Depreciation
    -14608
    -14569
    -14575
    -13186
    -14178
     
    -39.9%
    -42.5%
    -38.4%
    -42.5%
    -41.9%
     
    100.0%
    99.7%
    99.8%
    90.3%
    97.1%
    Net property, plant and equipment
    25747
    24558
    23118
    21258
    22448
     
    70.3%
    71.6%
    60.9%
    68.5%
    66.4%
     
    100.0%
    95.4%
    89.8%
    82.6%
    87.2%
    Equity and other investments
    1209
    1004
    793
    726
    1086
     
    3.3%
    2.9%
    2.1%
    2.3%
    3.2%
     
    100.0%
    83.0%
    65.6%
    60.0%
    89.8%
    Goodwill
    2873
    2735
    2516
    2336
    2380
     
    7.8%
    8.0%
    6.6%
    7.5%
    7.0%
     
    100.0%
    95.2%
    87.6%
    81.3%
    82.8%
    Other long-term assets
    1747
    1799
    1869
    1855
    2563
     
    4.8%
    5.2%
    4.9%
    6.0%
    7.6%
     
    100.0%
    103.0%
    107.0%
    106.2%
    146.7%
    Total non-cu
ent assets
    31576
    30096
    28296
    26175
    28476
     
    86.2%
    87.8%
    74.6%
    84.4%
    84.2%
     
    100.0%
    95.3%
    89.6%
    82.9%
    90.2%
    Total assets
    36626
    34281
    37939
    31024
    33804
     
    100.0%
    100.0%
    100.0%
    100.0%
    100.0%
     
    100.0%
    93.6%
    103.6%
    84.7%
    92.3%
    Liabilities and stockholders' equity
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Liabilities
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Cu
ent liabilities
     
     
     
     
     
     
    0.0%
    0.0%
    0.0%
    0.0%
    0.0%
     
     
     
     
     
     
    Short-term...
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