Part 1:

Calculating the Du-Pont Analysis of McDonalds and Wendy for year ending 2013

Du-Pont analysis helps in analyzing the return on equity of the company which helps in analyzing opera
McDonalds
Net Income
Sales
Profit margin

5585.9
28105.7
19.87%

Sales
Assets
Asset turnover

28105.7
36626.3
0.767

Assets
Equity
Equity Multiplies

36626.3
16009.7
2.29

ROE

34.89%

Looking at the du-pont analysis of both the companies we can say that McDonalds has better than wend
say that Wendy's profit margin is very less. The company earns about 1.83% profit whereas the profitabi
profitability of Wendy. Mcdonalds uses its assets more efficiently as compared to Wendy, the equity pro

ndy for year ending 2013

of the company which helps in analyzing operating efficiency, asset use afficiency and financial leverage of the company
Wendy
45.487
2487.41
1.83%
2487.41
4363.04
0.570
4363.04
1929.486
2.26
2.36%

e can say that McDonalds has better than wendy's. Looking at the different aspects of the Du-Pont analysis we can
earns about 1.83% profit whereas the profitability of McDonalds is 19.87% which is much higher than the
efficiently as compared to Wendy, the equity proprtion is almost same for both the companies

of the company

Common size statement

Mcdonalds

In millions, except per share data

Years ended December 31,

2013

REVENUES
Sales by Company-operated restaurants
Revenues from franchised restaurants
Total revenues

18,874.20
9,231.50
28,105.70

OPERATING COSTS AND EXPENSES

Company-operated restaurant expenses
6,361.30

Food & paper

Payroll & employee benefits
Occupancy & other operating expenses
Franchised restaurants-occupancy expenses
Selling, general & administrative expenses
Other operating (income) expense, net
Total operating costs and expenses
Operating income
Interest expense-net of capitalized interest of $15.5, $15.9 and $14.0
Nonoperating (income) expense, net
Income before provision for income taxes
Provision for income taxes
Net income

4,824.10
4,393.20
1,624.40
2,385.60
-247.2
19,341.40
8,764.30
521.9
37.9
8,204.50
2,618.60
5,585.90

In millions, except per share data

December 31, 201

ASSETS
Current assets
2,798.70

Cash and equivalents

Accounts and notes receivable
Inventories, at cost, not in excess of market
Prepaid expenses and other current assets
Total current assets

1,319.80
123.7
807.9
5,050.10

Other assets
Investments in and advances to affiliates

1,209.10
2,872.70

Goodwill

1,747.10

Miscellaneous
Total other assets

5,828.90

Property and equipment

Property and equipment, at cost
Accumulated depreciation and amortization
Net property and equipment
Total assets

40,355.60
-14608.3
25,747.30
36,626.30

LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities
Accounts payable
Income taxes
Other taxes
Accrued interest
Accrued payroll and other liabilities

1,086.00
215.5
383.1
221.6
1,263.80

3,170.00

Total current liabilities

14,129.80

Long-term debt

1,669.10

Other long-term liabilities

1,647.70

Deferred income taxes

Shareholders equity
Preferred stock, no par value; authorized 165.0 million shares; issued
none
Common stock, $.01 par value; authorized 3.5 billion shares; issued
1,660.6 million shares

16.6
5,994.10

Additional paid-in capital

41,751.20

Retained earnings

427.6

Accumulated other comprehensive income

Common stock in treasury, at cost; 670.2 and 657.9 million shares

-32178
16,009.70

Total shareholders equity

36,626.30

Total liabilities and shareholders equity

Wendy

December 29,
2013
ASSETS
Current assets:
Cash and cash equivalents
Accounts and notes receivable
Inventories
Prepaid expenses and other current assets
Deferred income tax benefit
Advertising funds restricted assets
Total current assets

580,152
62,885
10,226
81,759
120,206
67,183
922,411

Total current assets

1,165,487

Properties

842,544

Goodwill
Other intangible assets

1,305,780
83,197

Investments
Deferred costs and other assets
Total assets

43,621
4,363,040

LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expenses and other current liabilities
Advertising funds restricted liabilities
Total current liabilities
Long-term debt
Deferred income taxes
Other liabilities

38,543
83,700
160,100
67,183
349,526
1,425,285
482,499
176,244

Commitments and contingencies

Stockholders equity:
Common stock, $0.10 par value; 1,500,000
shares authorized; 470,424 shares issued
Additional paid-in capital
Accumulated deficit
Common stock held in treasury, at cost
Accumulated other comprehensive (loss) income

47,042
2,794,445
-49215
-409445
-10337

Total stockholders equity

Total liabilities and stockholders
equity

1,929,486
4,363,040

Year Ended
December 29,
2013
Revenues:
2,165,829

Sales
Franchise revenues

321,581
2,487,410

Costs and expenses:

1,839,740

Cost of sales
General and administrative
Depreciation and amortization
Facilities action charges, net
Impairment of long-lived assets
Impairment of goodwill
Other operating expense, net

293,792
182,359
10,856
15,879
9,397
245
2,352,268

Operating profit
Interest expense
Loss on early extinguishment of debt
Investment income, net
Other (expense) income, net
Income (loss) from continuing operations before
income taxes and noncontrolling interests

135,142
-69012
-28563
23,565
-2080
59,052

(Provision for) benefit from income taxes

Income from continuing operations
Discontinued operations:
(Loss) income from discontinued operations, net
of income taxes

-14514
44,898

-266

Loss on disposal of discontinued operations, net

of income taxes
Net (loss) income from discontinued
operations
Net income
Net loss (income) attributable to noncontrolling
interests
Net income attributable to The Wendys Company

266
44,632
855
45,487

Looking at the common size statement we can see that Wendy has high operating expenses as compa
Wendy's cost of sales is about 74% of that of sales, whereas McDonalds cost of sales is about 23% w
of McDonalds is about 13.5% whereas Wendy's current assets are about 21% in proportion to total a

%
67.15%
32.85%
100.00%

22.63%
17.16%
15.63%
5.78%
8.49%
-0.88%
68.82%
31.18%
1.86%
0.13%
29.19%
9.32%
19.87%

December 31, 2013

7.64%
3.60%
0.34%
2.21%
13.79%

3.30%
7.84%
4.77%
15.91%

110.18%
-39.88%
70.30%
100.00%

2.97%
0.59%
1.05%
0.61%
3.45%

8.65%
38.58%
4.56%
4.50%

0.05%
16.37%
113.99%
1.17%
-87.85%
43.71%
100.00%

ember 29,
2013

13.30%
1.44%
0.23%
1.87%
2.76%
1.54%
21.14%

26.71%
19.31%
29.93%
1.91%
1.00%
100.00%

0.88%
1.92%
3.67%
1.54%
8.01%
32.67%
11.06%
4.04%

1.08%
64.05%
-1.13%
-9.38%
-0.24%

44.22%
100.00%

ar Ended
ember 29,
2013
87.07%
12.93%
100.00%

73.96%
11.81%
7.33%
0.44%
0.64%
0.38%
0.01%
94.57%
5.43%
-2.77%
-1.15%
0.95%
-0.08%
2.37%

-0.58%
1.81%

-0.01%

0.01%
1.79%
0.03%
1.83%

ating expenses as compared to Mcdonalds. Wendy has about 1.83% profit as compared to 19% profit of McDonalds.
of sales is about 23% which is te major reason for the difference in the net income of the company. The current assets
in proportion to total assets of the company. Equity and liabilities held by the both the companies are almost same.

profit of McDonalds.
any. The current assets
ies are almost same.