Liquidity Analyses for McDonald’s and Wendy’s The following information was summarized from the balance sheets of McDonald’s Corporation andWendy’s International Inc. at December 31, 2006.

Required 1. Using the information provided, compute the following for each company at year end:

a. Working capital

b. Current ratio

c. Quick ratio 2. Comment briefly on the liquidity of each of these two companies. Which appears to be more liquid?
3. McDonald’s reported cash flows from operations of $4,341.5 million during 2006. Wendy’s reported cash flows from operations of $271,379 thousand. Current liabilities reported by McDonald’s at December 31, 2005, and Wendy’s at January 1, 2006, were $4,107.7 million and $583,352 thousand, respectively. Calculate the cash flow from operations to current liabilities ratio for each company. Does the information provided by this ratio change your opinion as to the relative liquidity of each of these two companies?

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Current Assets: Cash and cash equivalents Accounts receivable, net* Deferred income taxes Inventories** McDonald's (in millions) $ 2,136.4 904.2 Wendy's (in thousands) $ 457,614 84,841 0 29,651 149.0 30,252 Other current assets 435.7 54,374 Total current assets $ 3,625.3 $ 656,732 Current liabilities $ 3,008.1 $ 394,666 Noncurrent liabilities $10,557.4 $ 654,004 Shareholders' equity $15,458.3 $1,011,677 *McDonald's combines accounts and notes receivable. **Inventories and other for Wendy's.