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The purpose of this assignment is to analyze the financial performance of a company to make recommendations to potential investors about the purchase of stock. Studying all aspects of a company's...

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The purpose of this assignment is to analyze the financial performance of a company to make recommendations to potential investors about the purchase of stock.

Studying all aspects of a company's financial statements is necessary in order to understand the financial performance and health of a company. This is particularly important for investors trying to determine whether or not to buy stock in the company.

An investor has approached you about whether or not purchasing stock in the company would be a wise investment. Using your financial analysis of the company, you will send a letter to the investor summarizing your findings and explaining whether you recommend a stock purchase at this time.

You will use information in the Form 10-K for the company you selected in the Topic 1 to complete this assignment. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel:

  1. Three liquidity ratios for the past 3 years
  2. Three solvency ratios for the past 3 years
  3. Three profitability ratios for the past 3 years

Conduct research about a competitor company within the same sector using IBIS World and other topic resources. Complete a competitor analysis that includes a minimum of three ratios and compares your company to a competitor company using these ratios to determine financial performance as well as how the company rates compared to overall industry averages. Be prepared to justify your analysis by explaining your findings.

Using your research findings and analysis of company performance in relation to industry competitors, construct a XXXXXXXXXXword letter making stock purchase recommendations for a potential investor. In the letter, address the following, referencing specific ratios and comparative numbers as appropriate.

  1. Discuss the overall financial performance of your company in relation to industry averages and a specific competitor. Explain whether the company performed better or worse than the competition using specific numbers and providing an explanation of what the numbers illustrate.
  2. Recommend whether the potential investor should purchase stock in your company and justify your recommendation based upon your research and analysis of the company ratios and industry competition.

Submit the Excel file that contains your ratios and the Word file letter



Please be sure to follow the instructions and calculate the below ratios using one Excel tab for each ratio.

1. Three liquidity ratios for the past 3 years

2. Three solvency ratios for the past 3 years

3. Three profitability ratios for the past 3 years

Answered Same Day Feb 19, 2021

Solution

Shakeel answered on Feb 20 2021
158 Votes
Data
    Sta
ucks                        MCDonalds
    Income Statement                        Income Statement
    All numbers are in thousands    2019    2018    2017    2016        All numbers are in thousands    2019    2018    2017    2016
    Total Revenue    26,508,600    24,719,500    22,386,800    21,315,900        Total Revenue    21,076,500    21,025,200    22,820,400    24,621,900
    Cost of Revenue    19,020,500    17,367,700    15,531,500    14,575,400        Cost of Revenue    9,961,200    10,239,200    12,199,600    14,417,200
    Gross Profit    7,488,100    7,351,800    6,855,300    6,740,500        Gross Profit    11,115,300    10,786,000    10,620,800    10,204,700
    Operating Expenses                        Operating Expenses
    Research Development    -    -    -    -        Research Development    -    -    -    -
    Selling General and Administrative    1,824,100    1,759,000    1,393,300    1,360,600        Selling General and Administrative    2,229,400    2,200,200    2,231,300    2,384,500
    Total Operating Expenses    3,572,400    3,545,300    2,958,500    2,886,800        Total Operating Expenses    2,045,500    2,200,200    2,231,300    2,384,500
    Operating Income or Loss    3,915,700    3,806,500    3,896,800    3,853,700        Operating Income or Loss    9,069,800    8,585,800    8,389,500    7,820,200
    Interest Expense    331,000    170,300    92,500    81,300        Interest Expense    1,121,900    981,200    921,300    884,800
    Total Other Income/Expenses Net    785,000    1,952,400    237,900    318,200        Total Other Income/Expenses Net    70,200    206,800    1,098,200    -73,700
    Income Before Tax    4,466,200    5,780,000    4,317,500    4,198,600        Income Before Tax    8,018,100    7,816,100    8,573,500    6,866,000
    Income Tax Expense    871,600    1,262,000    1,432,600    1,379,700        Income Tax Expense    1,992,700    1,891,800    3,381,200    2,179,500
    Income from Continuing Operations    3,594,600    4,518,000    2,884,900    2,818,900        Income from Continuing Operations    6,025,400    5,924,300    5,192,300    4,686,500
    Net Income    3,599,200    4,518,300    2,884,700    2,817,700        Net Income    6,025,400    5,924,300    5,192,300    4,686,500
    Net Income available to common shareholders    3,599,200    4,518,300    2,884,700    2,817,700        Net Income available to common shareholders    6,025,400    5,924,300    5,192,300    4,686,500
    Reported EPS                        Reported EPS
    Basic    3.04    3.45    2    1.92        Basic    8    7.72    6.54    5.72
    Diluted    2.92    3.24    1.97    1.9        Diluted    7.88    7.54    6.37    5.44
    Balance Sheet                        Balance Sheet
    All numbers are in thousands    2019    2018    2017    2016        All numbers are in thousands    2019    2018    2017    2016
    Assets                        Assets
    Cu
ent Assets                        Cu
ent Assets
    Cash And Cash Equivalents    2,686,600    8,756,300    2,462,300    2,128,800        Cash And Cash Equivalents    898,500    866,000    2,463,800    1,223,400
    Short Term Investments    70,500    181,500    228,600    134,400        Short Term Investments    -    -    -    -
    Total Cash    2,757,100    8,937,800    2,690,900    2,263,200        Total Cash    898,500    866,000    2,463,800    1,223,400
    Net Receivables    879,200    693,100    870,400    768,800        Net Receivables    2,224,200    2,441,500    1,976,200    1,474,100
    Inventory    1,529,400    1,400,500    1,364,000    1,378,500        Inventory    -    51,100    58,800    58,900
    Other Cu
ent Assets    -    -    358,100    350,000        Other Cu
ent Assets    435,200    745,700    0    1,527,000
    Total Cu
ent Assets    5,653,900    12,494,200    5,283,400    4,760,500        Total Cu
ent Assets    3,557,900    4,053,200    5,327,200    4,848,600
    Non-cu
ent assets                        Non-cu
ent assets
    Property, plant and equipment                        Property, plant and equipment
    Gross property, plant and equipment    14,273,500    13,197,100    11,584,000    10,573,300        Gross property, plant and equipment    37,421,200    37,193,600    36,626,400    34,443,400
    Accumulated Depreciation    -7,841,800    -7,268,000    -6,664,500    -6,039,500        Accumulated Depreciation    -    -14,350,900    -14,178,100    -13,185,800
    Net property, plant and equipment    6,431,700    5,929,100    4,919,500    4,533,800        Net property, plant and...
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