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Wendy’s

Steve McElroy

Ohio Dominican University

This document contains financial analysis of the Wendy’s corporation. It highlights many of the company’s financial ratios and other calculations used to measure the success of a company. The Wendy’s Company is the #2 hamburger chain in the United States following #1 McDonalds (Hoovers). The Wendy’s Company (NASDAQ:WEN) is the world’s third largest quick-service hamburger company (Wendy’s.com). The company consists of almost 6,500 restaurants in the U.S. and almost 25 in other countries (Hoovers). The first Wendy’s restaurant was opened by Dave Thomas in 1969. Mr. Thomas, the founder of Wendy’s, initiated an innovative approach to the fast-food industry: prepare fresh, made-to-order hamburgers. Mr. Thomas built a corporation which exceeded $3.58 billion in revenue in 2009 (Hoovers). Table 1 shows the financial ratios of the Wendy’s Corporation. The company’s current ratio is 2.1 with the industry average being 1.00. This ratio gives an indication of the company’s current assets and current liabilities as they relate to paying short-term obligations. Wendy’s ratio of 2.1 shows that the company is capable of paying back its obligations. The ratio is greater than the industry average; therefore Wendy’s appears to be in good financial health.

Table 1

|  |Wendys |Industry Average | |  |2011 |2010 |2009 | | |Current Ration |2.1 |1.84 |1.88 |1 | |  |  |  |  |  | |Quick Ration |1.5 |1.83 |1.87 |0.07 | |  |  |  |  |  | |Inventory Turnover |145.3 |- |- |47 | |  |  |  |  |  | |Accounts Receivable |2.84 |- |- |- | |  |  |  |  |  | |Debt to Assets |0.69 |0.54 |0.53 |0.93 | |  |  |  |  |  | |Net profit margin |-0.85% |- |- |0.1 | |  |  |  |  |  | |Return on Assets (ROA) |0.15% |-0.001 |0.001 |12.3 | |  |  |  |  |  | |Return on Common Equity (ROE) |0.33% |-0.02 |0.001 |32.9 | |  |  |  |  |  | |Historical Net Operating Working Capital |$1,996.07 |$2,163.17 |$2,306.34 |- | |(NOWC) | | | | | |  |  |  |  |  | |Historical Dividend Payout Rates (per share)|0.08 |0.07 |0.06 |- | | ...
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