Question

Select a company from a nonregulated industry for which you can obtain complete financial statements for at least the most recent six years. Companies to choose from: Walmart, JC Penney, Target, Dicks, TJ Maxx, Mc Donald’s, Burger King, or Wendy’s. CASE CC–1 Comprehensive Financial Analysis Required: Based on these financial statements, the company’s background, industry statistics, and other market and company information, prepare a financial statement analysis report covering the following points: a. Executive summary of the company and its industry. b. Detailed evaluation of: (1) Short-term liquidity (current debt-paying ability).(2) Cash forecasting and pro forma analysis. (3) Capital structure and solvency. (4) Return on invested capital. (5) Asset turnover (utilization). (6) Profitability and equity analysis. Note: You are expected to use a variety of financial analysis tools in answering (b). Your analysis should yield inferences for each of these six areas. c. Comment on the usefulness of the financial statements of this company for your analysis. d. How did accounting principles used in the financial statements affect your analytical measures? e. Prepare a forecast of the income statement, balance sheet, and statement of cash flows for a five-year horizon and a terminal year in Year 6. f. Estimate the value of your company’s common stock per share using the valuation analysis and procedures described in the Comprehensive Case. I need a clear explanation of the calculations, reference APA for any sources used, also the financial statements to be within the years of 2014-2020 because they must be statements of the most recent 6 years please. Thank you.

Answer 1

“BURGER KING”. It’s the world’s second largest fast food. It owns more than 12000 restaurants in 80 countries.

Company restaurant at Retail sales for  Franchise revenues Property income from properties Short term liquidity ratios can comprise of Current ratio, Quick ratio, Cash ratio etc.

Current ratio: Current Assets/Current Liabilities. This ratio measures the degree to which current assets cover the current liabilities.

CR = $1074.4/$346 = 3.11

Quick ratio: (Cash + Marketable Securities + Accounts receivable)/Current liabilities This ratio examines the liquidity from a more immediate aspect than does the current ratio by eliminating inventory from current assets

QR = ($786.9 + $179.7)/$346 = 2.79

Cash ratio: (Cash + Marketable securities)/Current liabilities This ratio compares only cash and marketable securities which is cash equivalents to the current liabilities and is an evidence of most liquidity position of a concern

CR: $786.9/$346 = 2.27

Cash flow Ratio: Operating cash flow/Current liabilities This ratio measures a firm’s ability to meet its debt obligations with the cash generated in the normal course of business.

CFR: $325.2/$346 = 0.94

Long term debt: Total liabilities & shareholder’s equity – Current liabilities – Shareholder’s equity

LTD: $5828.5 - $346 - $1516.2 = $3966.3

LTD to equity ratio: $3966.3/$1516.2 = 2.62

Debt/Equity Ratio: $3966.3+$346/$1516.2 = 2.84

Return on Capital: Net income/Shareholder’s Equity

ROC: $233.7/$1516.2 = 15.41%

Asset Turnover: turnover/Assets

Asset Turnover: $1146.3/$5828.5 = 0.20

Financial statements are an integral part of the decision making process for users both internal to the organization and external to it.

Industry specific regulations allow a choice between two or more accounting methods, the method selected should be disclosed. FASB ASC topic 235, notes top financial statements states that a description of all significant accounting policies of the reporting entity should be included as an integral part of the financial statements.