a. Does each company have the ability to pay current liabilities? Your answer should explain what the results of your calculations for working capital, current ratio and acid test ratio mean for each company b. Does each company have the ability to pay long term debt? Your answer should explain what the results of your calculations for debt ratio and times interest earned mean for each company. . c. What is your opinion of each company's profitability? Your answer should explain what the results of your calculations for profit margin, return on assets and return on equity mean for each company. d. What is your opinion of the overall financial health of each company? Which company's stock would you prefer to buy? Support your answer with details from your responses to questions a - d and by explaining what the results of the Price-Earnings ratio means for each company. Evaluating the ability to pay current liabilities 1/3/2021 Wendys 1. Working Capital 12/31/2020 Mcdonalds Current Assets - Current Liabilities 687,623 413,308 6,243 6,181 274,315 62 687,623 413,308 6,243 6,181 Result = 0 1 2. Current Ratio 2 3 Current Assets 4 Current Liabilities 15 16 Result = 17 18 3. Acid Test Ratio 79 Cash(+) 20 Notes receivable (+) 21 Investment(+) 22 Total: 1.663706 1.01004659 306,989 109,891 44,574 461,454 5559.4 Total= 461,454 5559.4 Current Liabilities (/) =) 413,308 461,454 6,181 5559.4 Result 1 1 4. Total Asset Turnover Net sales Total average assets 722,764 220,518 19,208 50,069 3 0 Evaluating the ability to pay long term debt 3 results = 4 5. 6 7 8 5. Debt ratio 9 0 Total debts 1 Total assets 2 3 Result = 4,490,410 5,040,006 35,197 52,627 0.8909533 0.66879993 6. Times Interest earned Net income EBITDA interest expense 269,308 117,737 7324 1,218 Result 2.28736931 6.01264264 Evaluating profitability (show as a percentage) 7. Profit margin Percentage Net income 3 Total revenue 117,832 1,733,825 4,731 19,208 6.79607227 0.24628016 Result = 1 2 8. Return on assets 3 54 Net income 55 Average total assets 56 117,832 1,733,825 4,731 52,627 100 4,731 52,627 8.98876618 2 8. Return on assets 3 4 Net income 117,832 55 Average total assets 1,733,825 56 100 67 68 Result = 7 69 70 9. Return on equity 71 72 Net income 117,832 73 Average stockholders equity 532,978 74 100 75 Result 22.1082503 76 77 Evaluating stock as an investment 78 79 10. Price-Earnings Ratio 80 81 Market price 82 Earnings per share 4,731 - 7,825 -60.454447 Result = - 22.1082503 -60.454447 Evaluating stock as an investment B 21.92 214.58 0.52 6.31 10. Price-Earnings Ratio 0 1 Market price -2 Earnings per share 33 34 Result = 85 86 87 42.1538462 34.0063391