Ratio Analysis of Starbucks vs Mcdonald's

Better Essays
Running Head: RATIO ANALYSIS

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).
Starbucks Corporation
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
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
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.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    McDonald's vs. Starbucks

    • 302 Words
    • 2 Pages

    Homework: Analysis of McDonald’s and Starbucks McDonald’s and Starbucks have completely different values when it comes to their businesses. Typically, McDonald’s can be seen as focused on their speed of service, low cost/prices, and generally happy attitude. On the other hand, Starbucks can be seen as a laid-back, relaxed, good experience for the customer system. On one side of the spectrum, McDonald’s is more cost-oriented. They strive on having low costs monetarily, and passing that onto the…

    • 302 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Starbucks Ratios

    • 1270 Words
    • 6 Pages

    Starbucks Ratio Analysis 2. Market Capitalization = closing price * shares outstanding = 37.29 * 742.6 = 27691.55 3. A. P/E = Price per share / Earnings per share = 37.29 / 1.66 = 22.46 times B. Market-to-Book = Market price per share / Book value per share = Price per share / (Total shareholders’ equity / Shares outstanding) = 37.29 / (4384.9 / 742.6) = 6.32 times C. Enterprise value-to-EBITDA=…

    • 1270 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    McDonald's Targets Starbucks Topic: The fast-food company expects to add $1 billion in sales by offering specialty coffee drinks in all its U.S. restaurants. Transcript of radio broadcast. Source: VOA 1. Listen to the audio and complete ------------------------------------------------- Principio del formulario This is the VOA Special English Economics Report. McDonald's, the fast-food company, is heating up competition with the Starbucks Coffee Company. McDonald's plans to put bars in…

    • 550 Words
    • 3 Pages
    Good Essays
  • Good Essays

    The Coffee Wars: Starbucks (SBUX) vs. McDonald's (MCD) Posted Feb 12th 2008 2:15PM by Steven HalpernSteven Halpern RSS Feed Filed under: Starbucks (SBUX), Newsletters, McDonald's (MCD), Stocks to Buy EmailMore "I am quite confident that business students in the future will be reading case studies on the battle between Starbucks (NASDAQ: SBUX) and McDonald's (NYSE: MCD)," says value investor Charles Mizrahi. In his Hidden Values Alert, the advisor explains, "This is a classic case of a…

    • 914 Words
    • 4 Pages
    Good Essays
  • Best Essays

    A Look at the Global Marketing Strategies of McDonald’s and Starbucks Abstract This paper explores the global strategies of McDonald’s Corporation and Starbucks Corporation. An overview of the company histories is included along with the basic business philosophies. The focus of the paper is on the marketing strategies, both domestic and international, examining the marketing mix for each company. The four P’s of marketing are detailed with examples of how each company uses them to their advantage…

    • 4004 Words
    • 17 Pages
    Best Essays
  • Better Essays

    Mcdonald's vs. Subway

    • 1127 Words
    • 5 Pages

    1 McDonald’s vs. Subway Convenience or Health Darlene Freeman University Composition and Communication 1 August, 23, 2012 Karen Robinson…

    • 1127 Words
    • 5 Pages
    Better Essays
  • Powerful Essays

    Starbucks vs Mccafe

    • 8020 Words
    • 33 Pages

    Table of Content 1. Executive Summary……………………………………………………................ 3 2. Introduction………………………………………………………………………. 4 3. General company information…....…………………………...…………................ 3.1 Starbucks……………….………………………………...…………………...... 3.2 MaCafe…………………………………………………………..…………...... 4 4 5 4. Theoretical discussion……………………………………………………………..... 4.1 Consumer perception…………………………………...……………………… 4.1.1 The perception of quality………………………...…………………...... 4.1.2 The relationship between the perception…

    • 8020 Words
    • 33 Pages
    Powerful Essays
  • Good Essays

    of 200 "McCafés" McDonald's is opening in Europe this year. By yearend, McDonald's (MCD) hopes to have some 1,100 of the cafés across Europe. The cafés are located inside existing restaurants but with a separate counter, comfy furnishings, and nary a Big Mac in sight. Next year, the company plans 200 more, with an eye toward becoming "the No. 1 coffee seller in Europe," says Jerome Tafani, the company's chief financial officer for the region. That's a grande order. Starbucks (SBUX) is currently…

    • 586 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    starbuck vs mcdonald

    • 2678 Words
    • 11 Pages

    Starbucks is named after the first mate in Herman Melville’s Moby Dick. Our logo is also inspired by the sea – featuring a twin‐tailed siren from Greek mythology. The company was a single store in Seattle’s historic Pike Place Market. From just a narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean coffees. The name, inspired by Moby Dick, evoked the romance of the high seas and the seafaring tradition of the early coffee traders. Starbucks Opens first store…

    • 2678 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    Mcdonald's Analysis

    • 450 Words
    • 2 Pages

    McDonald’s internal analysis consists of resources and capabilities. Some of the resources consist of extensive financial and physical capital: The large extensive financial and physical capital McDonalds possess allows their firm’s to expand nationally and globally. There are currently 31,000 restaurants over 119 countries. The management at McDonalds provides a culture of corporate governance. This motivates management teams to continuously deliver a quality standard of service and financial…

    • 450 Words
    • 2 Pages
    Good Essays