A Financial Analysis of Wendy's International

Paper Summary:

This paper evaluates the financial position of Wendy's International Corporation, a fast food restaurant, by comparing it to the financial position of McDonald's Corporation. This author reports that Wendy's income performance, while strong, is substantially inferior to that of McDonald's; and, in this area more than any other, Wendy's needs to improve if the corporation is to narrow the gap. This paper states that McDonald's has a substantially higher inventory turnover and holds less than half as many days in sales than does Wendy's.

Table of Contents
Executive Summary
Financial Position
Income Performance
Short-Term Liquidity
Long-Term Solvency
Asset Management
Profitability
Market Value

List of Appendices
Common-Size Balance Sheets McDonald's Corporation
Common-Size Balance Sheets Wendy's International
Combined Common-Size & Base-Year Balance Sheets McDonald's Corporation
Combined Common-Size & Base-Year Balance Sheets Wendy's International
Common-Size Balance Sheet Wendy's International With Baseline Comparison
Common-Size Income Statements McDonald's
Common-Size Income Statements Wendy's
Combined Common-Size & Base-Year Income Statements McDonald's
Combined Common-Size & Base-Year Income Statements Wendy's
Common-Size Income Statement Wendy's With Baseline Comparison
Short-Term Liquidity Ratios Wendy's With Baseline Comparison
Long-Term Solvency Ratios Wendy's With Baseline Comparison
Asset Management Ratios Wendy's With Baseline Comparison
Profitability Ratios Wendy's With Baseline Comparison
Market Value Ratios Wendy's With Baseline Comparison
Du Point Analysis Wendy's 1998

From the Paper:

"With respect to short-term liquidity, Wendy's compares well in relation to McDonald's (refer to Appendix B-1). The reason for the Wendy's advantage lies in the corporation's decision to keep such a high proportion of assets in a current status. This strategy is not conducive to the most productive use of the corporation's assets.

"In relation to debt ratios, Wendy's is superior to McDonald's (refer to Appendix B-2). In this area, Wendy's also is superior to McDonald's in relation to interest coverage, as the corporation uses borrowing very little in comparison to McDonald's."

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