Finance 300
Finance 300
Finance 300: Finance 300
Assignment 2
Due Monday, Sep 19 Midnight, 5 minute grace period (12:05AM of Tuesday)
Submit via Canvas Assignments Dropbox
Assignment grades will be based on 50% completion and 50% accuracy. Please show all work, including cell references if you are using Excel.
Using the Excel File “MCD vs. WEN Annotated_v2” uploaded on Canvas, find the following variables in 2017 to 2021 for Wendy’s. All questions are worth 5 points each.
1. Find the Current Ratio
2. Find the Quick Ratio
3. Find the Cash Ratio
4. Describe the trend of the above ratios from 2017 ~ 2021
5. In 2021, which firm, in general, has more safety in terms of meeting obligations over the next 12 months?
6. Find the Total Debt ratio (use textbook definition debt = liabilities)
7. Find the Debt to Equity ratio (use textbook definition debt = liabilities)
8. Find the Equity Multiplier (use textbook definition debt = liabilities)
9. How is the debt situation looking like for Wendy’s in years 2017 ~ 2021?
10. In 2021, which firm is using more debt proportionally?
11. Find the Asset Turnover ratio
12. In 2021, which firm is using its assets more efficiently?
13. Find the Net Profit Margin
14. Find the ROA
15. Find the ROE
16. Describe the trend of the above ratios from 2017 ~ 2021
17. Which firm is more profitable?
18. Is the ROE meaningful in this case? If yes, describe what it measures. If no, describe why it’s not meaningful
19. What is the difference between market capitalization and enterprise value? What do each of these variables measure?
20. Go to Key Stats spreadsheet for each firm and scroll down to the current capitalization section. Which firm is larger? McDonald’s or Wendy’s? Why?
21. Bonus: Stay on the Key Stats spreadsheet and scroll all the way down to Valuation Multiples based on Current Capitalization. You should be able to find the P/E ratio for each firm in row 79. Which firm has a larger P/E ratio in 2021 (1 pt)? Explain one potential reason why this company would have a larger P/E ratio (4 pts).
