Starbucks Corporation & McDonalds Corporation McDonald’s Corporation McDonald’s Corporation operates in the food service industry. The company has its restaurants in more than 100 countries of the world. McDonald’s, the world’s largest food chain is headquartered in U.S. having an employee population of 390000 (About McDonald's..., 2008).
Seattle based, Starbucks Corporation is the leading coffeehouse chain in the world. The company has its operations in more than 44 countries. The main products offered by Starbucks various kinds of drinks, snacks, coffee beans. The company also operates in the field of marketing of music, books (The Company, 2008).
Ratio Analysis (2007) Ratios Starbucks McDonalds
Current Ratio 0.79 0.80
Quick Ratio 0.30 0.67
Debt Equity Ratio 1.34 0.92
Proprietary Ratio 0.43 0.52
Solvency Ratio 0.57 0.48
Inventory Turnover Ratio 12.13 118.77
Gross Profit Ratio (%) 23.34 34.69
Net Profit Ratio (%) 7.15 15.67
Return on Proprietors' Funds (%) 29.45 15.67
Earning Per Share 0.91 2.06
Current Ratio may be defined as the relationship between current assets and current liabilities. It is also known as working capital ratio or 2: 1 ratio. It is calculated by dividing the current assets by current liabilities. The main components of this ratio are current assets and current liabilities. Current assets of a firm represent those assets which can be, in the ordinary course of business, converted into cash within a period not exceeding one year. Current liabilities mean those obligations which are to be paid within a period of one year of current assets or by creation of current liabilities (Van Horne, Wachowicz & Bhaduri, 2005).
Current ratio of the Starbucks Corporation and McDonalds Corporation is .79 and .80 respectively in the year 2007. There is little difference in the current ratio of both the companies. The ratio reflects weak liquidity
References: About McDonald 's...(2008). Retrieved November 19, 2008, from http://www.mcdonalds.com/corp/about.html McDonald 's Corp: Financial Statement. (2008). MSN Money. Retrieved November 19, 2008, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=US:MCD&lstStatement=Balance&stmtView=Ann Starbucks Corp: Financial Statement. (2008). MSN Money. Retrieved November 19, 2008, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=SBUX&lstStatement=Balance&stmtView=Ann The Company. (2008). Retrieved November 19, 2008, from http://www.starbucks.com/aboutus/overview.asp Van Horne, J.C. Wachowicz, J.M. & Bhaduri, S. N. (2005). Fundamentals of Financial Management (12th Ed.). (pp. 130-133). United Kingdom: Pearson Education.