Compare and contrast the two companies. Which company is the better investment
Write your analysis and interpretations of the ratios you calculated. Very brief, summarize most important ratios.
--Write your analysis/interpretations of the horizontal analyses
--Write your analysis/interpretations of the vertical analyses
Briefly, analyze the companies, given the limited data you have created. You do NOT need to research these companies beyond the spreadsheet analyses that you have done and the additional information you have gathered. You need to make conclusions about the companies: Are these companies healthy? Are the trends favorable? Based on your very limited research, do you recommend this company for investment? Finally, which company is the better investment? Make a conclusion and give evidence from your data to support your conclusion. Quote numbers.
2017 18.1 times 20.2 days 4.4 times 83.0 days 2.7 to 1 2.4 to 1 STARBUCKS (SBUX) Ending September 30 Risk Ratios Liquidity 2018 Receivables Turnover Ratio 31.6 times Average Collection Period 11.6 days Inventory Turnover Ratio 5.7 times Average Days in Inventory 64.0 days Current Ratio 2.2 to 1 Acid-Test Ratio 1.7 to 1 2017 27.3 times 13.4 days 5.2 times 70.2 days 1.3 to 1 0.8 to 1 DUNKIN BRANDS (DNKN) Ending December 31 Risk Ratios Liquidity 2018 Receivables Turnover Ratio 26.6 times Average Collection Period 13.7 days Inventory Turnover Ratio* 2.8 times Average Days in Inventory* 130.4 days Current Ratio 1.5 to 1 Acid-Test Ratio 1.2 to 1 Solvency Debt to Equity Ratio -584.7% Times Interest Earned Ratio 3.24 to 1 Profitability Gross Profit Ratio 89.7% Return on Assets 6.2% Profit Margin 17.4% Asset Turnover 0.4 times Return on Equity -47.5% Price-Earning Ratio 27.2 Solvency -1644% 3.72 to 1 -1964.2% (33.0) to 1 163% (45.43) to 1 89.2% 7.6% 21.2% 0.4 times 350.1% 18.1 Debt to Equity Ratio Times Interest Earned Ratio Profitability Gross Profit Ratio Return on Assets Profit Margin Asset Turnover Return on Equity Price-Earning Ratio 67.9% 23.5% 18.3% 1.3 times 136.5% 17.5 68.4% 20.1% 12.9% 1.6 times 50.9% 27.3 Increase (Decrease) Amount % 2017 Dunkin' Brands Balance Sheet December 31 ($ in millions) Year 2018 Assets Total Current Assets $813 Property, Plant, and Equipment $209 Long-term Investments $146 Goodwill and Intanglible Assets $2,223 Other Long-Term Assets $64 Total Assets $3,457 Liabilities and Share Holders Equity Current Liabilities $540 Long-Term Liabilities $3,630 Common Stock $0 Retained Earnings ($1,339) Total Liabilities and Share Holders Equity $3,457 $1,304 $182 $141 $2,245 $65 $3,937 ($491) $28 $6 ($22) (37.6) 15.2 4.1 (1.0) (1.5) (12.2) (81) ($481) $485 $3,706 SO ($968) $3,937 $54 ($77) (SO) ($371) ($481) 11.1 (2.1) (8.9) 38.3 (12.2) Increase (Decrease) Amount 2017 % Starbucks (SBUX) Balance Sheet September 30 ($ in millions) Year 2018 Assets Total Current Assets $12,494 Property, Plant, and Equipment $5,929 Long-term Investments $602 Goodwill and Intanglible Assets $4,584 Other Long-Term Assets $412 Total Assets $24,156 Liabilities and Share Holders Equity Current Liabilities $5,684 Long-Term Liabilities $17,296 Common Stock $1 Retained Earnings $1,457 Total Liabilities and Share Holders Equity $24,156 $5,283 $4,920 $1,024 $1,981 $363 $14,366 $7,211 $1,010 ($422) $2,603 $49 $9,791 136.5 20.5 (41.2) 131.4 13.6 68.2 $4,221 $4,688 $1 $5,563 $14,366 $1,464 $12,609 (SO) ($4,106) $9,791 34.7 269.0 (7.1) (73.8) 68.2 % Dunkin' Brand Income Statement December 31 ($ in millions) Year 2018 2017 $1,322 $1,276 $136 $137 $1,186 $1,138 $910 $885 $412 $391 $123 $108 $289 $283 $59 $12 $230 $271 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses Income Before Tax Income Tax Expense Net Income Increase (Decrease) Amount $46 3.6 ($2) (1.3) $48 4.2 2.9 $21 5.3 $15 13.8 $6 2.1 $47 389.3 ($41) (15.2) $25 % Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses Income Before Tax Income Tax Expense Net Income Starbucks (SBUX) Income Statement September 30 ($ in millions) Year 2018 2017 $24,720 $22,387 $7,931 $7,066 $16,789 $15,321 $20,836 $18,252 $3,883 $4,135 $1,897 $183 $5,780 $4,318 $1,262 $1,433 $4,518 $2,885 Increase (Decrease) Amount $2,333 10.4 $865 12.2 $1,468 9.6 $2,584 14.2 ($251) (6.1) $1,714 937.6 $1,463 33.9 ($171) (11.9) $1,634 56.6 2017 Amount % DUNKIN' BRANDS (DNKN) Common-Size Balance Sheets December 31 ($ in millions) 2018 Amount % Assets Total Current Assets 813 23.5 Property, Plant, and Equipment 209 6.1 Long-term Investments 146 4.2 Goodwill and Intanglible Assets 64.3 Other Long-Term Assets 1.9 Total Assets 3,457 100.0 Liabilities and Share Holders Equity Current Liabilities 15.6 Long-Term Liabilities 3,630 105.0 Common Stock 0.0 Retained Earnings ($1,339) (38.7) Total Liabilities and Share Holders Equity $3,457 100.0 1,304 182 141 2,245 33.1 4.6 3.6 57.0 2,223 64 65 1.7 3,937 100.0 540 485 3,706 SO $0 12.3 94.1 0.0 (24.6) 100.0 ($968) $3,937 2017 Amount % STARBUCKS (SBUX) Common-Size Balance Sheets September 30 ($ in millions) 2018 Amount % Assets Total Current Assets 12,494 51.7 Property, Plant, and Equipment 5,929 24.5 Long-term Investments 602 2.5 Goodwill and Intanglible Assets 4,584 19.0 Other Long-Term Assets 412 1.7 Total Assets 24,156 100.0 Liabilities and Share Holders Equity Current Liabilities 5,684 23.5 Long-Term Liabilities 17,296 71.6 Common Stock $1 0.0 Retained Earnings $1,457 6.0 Total Liabilities and Share Holders Equity $24,156 100.0 5,283 4,920 1,024 1,981 36.8 34.2 7.1 13.8 2.5 100.0 363 14,366 4,221 4,688 $1 $5,563 $14,366 29.4 32.6 0.0 38.7 100.0 DUNKIN' BRANDS (DNKN) Common-Size Income Statements December 31 ($ in millions) 2018 Amount 1,322 136 % 100.0 10.3 89.7 68.8 Net Sales Cost of Goods Sold Gross Profit Operating Exepnses Operating Income Other Income (Expense) Income before tax Income Tax Expense Net Income 1,186 910 412 123 2017 Amount 1.276 137 1,138 885 391 108 283 % 100.0 10.8 89.2 69.3 30.7 8.4 22.2 1.0 21.3 31.2 289 9.3 21.9 4.5 17.4 59 230 271 STARBUCKS (SBUX) Common-Size Income Statements September 30 ($ in millions) 2018 Amount Net Sales 22,387 100.0 Cost of Goods Sold 7,066 31.6 Gross Profit 15,321 68.4 Operating Exepnses 18,252 81.5 Operating Income 4,135 18.5 Other Income (Expense) 183 0.8 Income before tax 4,318 19.3 Income Tax Expense 1,433 6.4 Net Income 2,885 12.9 2017 Amount 22,387 7,066 15,321 18,252 4,135 183 4,318 1,433 2,885 % 100.0 31.6 68.4 81.5 18.5 0.8 19.3 6.4 12.9 2017 18.1 times 20.2 days 4.4 times 83.0 days 2.7 to 1 2.4 to 1 STARBUCKS (SBUX) Ending September 30 Risk Ratios Liquidity 2018 Receivables Turnover Ratio 31.6 times Average Collection Period 11.6 days Inventory Turnover Ratio 5.7 times Average Days in Inventory 64.0 days Current Ratio 2.2 to 1 Acid-Test Ratio 1.7 to 1 2017 27.3 times 13.4 days 5.2 times 70.2 days 1.3 to 1 0.8 to 1 DUNKIN BRANDS (DNKN) Ending December 31 Risk Ratios Liquidity 2018 Receivables Turnover Ratio 26.6 times Average Collection Period 13.7 days Inventory Turnover Ratio* 2.8 times Average Days in Inventory* 130.4 days Current Ratio 1.5 to 1 Acid-Test Ratio 1.2 to 1 Solvency Debt to Equity Ratio -584.7% Times Interest Earned Ratio 3.24 to 1 Profitability Gross Profit Ratio 89.7% Return on Assets 6.2% Profit Margin 17.4% Asset Turnover 0.4 times Return on Equity -47.5% Price-Earning Ratio 27.2 Solvency -1644% 3.72 to 1 -1964.2% (33.0) to 1 163% (45.43) to 1 89.2% 7.6% 21.2% 0.4 times 350.1% 18.1 Debt to Equity Ratio Times Interest Earned Ratio Profitability Gross Profit Ratio Return on Assets Profit Margin Asset Turnover Return on Equity Price-Earning Ratio 67.9% 23.5% 18.3% 1.3 times 136.5% 17.5 68.4% 20.1% 12.9% 1.6 times 50.9% 27.3 Increase (Decrease) Amount % 2017 Dunkin' Brands Balance Sheet December 31 ($ in millions) Year 2018 Assets Total Current Assets $813 Property, Plant, and Equipment $209 Long-term Investments $146 Goodwill and Intanglible Assets $2,223 Other Long-Term Assets $64 Total Assets $3,457 Liabilities and Share Holders Equity Current Liabilities $540 Long-Term Liabilities $3,630 Common Stock $0 Retained Earnings ($1,339) Total Liabilities and Share Holders Equity $3,457 $1,304 $182 $141 $2,245 $65 $3,937 ($491) $28 $6 ($22) (37.6) 15.2 4.1 (1.0) (1.5) (12.2) (81) ($481) $485 $3,706 SO ($968) $3,937 $54 ($77) (SO) ($371) ($481) 11.1 (2.1) (8.9) 38.3 (12.2) Increase (Decrease) Amount 2017 % Starbucks (SBUX) Balance Sheet September 30 ($ in millions) Year 2018 Assets Total Current Assets $12,494 Property, Plant, and Equipment $5,929 Long-term Investments $602 Goodwill and Intanglible Assets $4,584 Other Long-Term Assets $412 Total Assets $24,156 Liabilities and Share Holders Equity Current Liabilities $5,684 Long-Term Liabilities $17,296 Common Stock $1 Retained Earnings $1,457 Total Liabilities and Share Holders Equity $24,156 $5,283 $4,920 $1,024 $1,981 $363 $14,366 $7,211 $1,010 ($422) $2,603 $49 $9,791 136.5 20.5 (41.2) 131.4 13.6 68.2 $4,221 $4,688 $1 $5,563 $14,366 $1,464 $12,609 (SO) ($4,106) $9,791 34.7 269.0 (7.1) (73.8) 68.2 % Dunkin' Brand Income Statement December 31 ($ in millions) Year 2018 2017 $1,322 $1,276 $136 $137 $1,186 $1,138 $910 $885 $412 $391 $123 $108 $289 $283 $59 $12 $230 $271 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses Income Before Tax Income Tax Expense Net Income Increase (Decrease) Amount $46 3.6 ($2) (1.3) $48 4.2 2.9 $21 5.3 $15 13.8 $6 2.1 $47 389.3 ($41) (15.2) $25 % Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income Other Expenses Income Before Tax Income Tax Expense Net Income Starbucks (SBUX) Income Statement September 30 ($ in millions) Year 2018 2017 $24,720 $22,387 $7,931 $7,066 $16,789 $15,321 $20,836 $18,252 $3,883 $4,135 $1,897 $183 $5,780 $4,318 $1,262 $1,433 $4,518 $2,885 Increase (Decrease) Amount $2,333 10.4 $865 12.2 $1,468 9.6 $2,584 14.2 ($251) (6.1) $1,714 937.6 $1,463 33.9 ($171) (11.9) $1,634 56.6 2017 Amount % DUNKIN' BRANDS (DNKN) Common-Size Balance Sheets December 31 ($ in millions) 2018 Amount % Assets Total Current Assets 813 23.5 Property, Plant, and Equipment 209 6.1 Long-term Investments 146 4.2 Goodwill and Intanglible Assets 64.3 Other Long-Term Assets 1.9 Total Assets 3,457 100.0 Liabilities and Share Holders Equity Current Liabilities 15.6 Long-Term Liabilities 3,630 105.0 Common Stock 0.0 Retained Earnings ($1,339) (38.7) Total Liabilities and Share Holders Equity $3,457 100.0 1,304 182 141 2,245 33.1 4.6 3.6 57.0 2,223 64 65 1.7 3,937 100.0 540 485 3,706 SO $0 12.3 94.1 0.0 (24.6) 100.0 ($968) $3,937 2017 Amount % STARBUCKS (SBUX) Common-Size Balance Sheets September 30 ($ in millions) 2018 Amount % Assets Total Current Assets 12,494 51.7 Property, Plant, and Equipment 5,929 24.5 Long-term Investments 602 2.5 Goodwill and Intanglible Assets 4,584 19.0 Other Long-Term Assets 412 1.7 Total Assets 24,156 100.0 Liabilities and Share Holders Equity Current Liabilities 5,684 23.5 Long-Term Liabilities 17,296 71.6 Common Stock $1 0.0 Retained Earnings $1,457 6.0 Total Liabilities and Share Holders Equity $24,156 100.0 5,283 4,920 1,024 1,981 36.8 34.2 7.1 13.8 2.5 100.0 363 14,366 4,221 4,688 $1 $5,563 $14,366 29.4 32.6 0.0 38.7 100.0 DUNKIN' BRANDS (DNKN) Common-Size Income Statements December 31 ($ in millions) 2018 Amount 1,322 136 % 100.0 10.3 89.7 68.8 Net Sales Cost of Goods Sold Gross Profit Operating Exepnses Operating Income Other Income (Expense) Income before tax Income Tax Expense Net Income 1,186 910 412 123 2017 Amount 1.276 137 1,138 885 391 108 283 % 100.0 10.8 89.2 69.3 30.7 8.4 22.2 1.0 21.3 31.2 289 9.3 21.9 4.5 17.4 59 230 271 STARBUCKS (SBUX) Common-Size Income Statements September 30 ($ in millions) 2018 Amount Net Sales 22,387 100.0 Cost of Goods Sold 7,066 31.6 Gross Profit 15,321 68.4 Operating Exepnses 18,252 81.5 Operating Income 4,135 18.5 Other Income (Expense) 183 0.8 Income before tax 4,318 19.3 Income Tax Expense 1,433 6.4 Net Income 2,885 12.9 2017 Amount 22,387 7,066 15,321 18,252 4,135 183 4,318 1,433 2,885 % 100.0 31.6 68.4 81.5 18.5 0.8 19.3 6.4 12.9
