Tim Hortons Executive Summary
Tim Hortons is one of North America’s largest developers and franchisors of quick service restaurants with 4,485 system-wide restaurants as of year-end 2013 (Annual Report 2013). Tim Hortons is among the largest publicly-traded restaurant chains in North America based on market capitalization, and the largest in Canada by a wide measure. In Canada, they command an approximate 42% share of the quick service restaurant traffic. Tim Hortons Inc. has iconic brand status in Canada and strong consumer awareness in the U.S. market (Annual Report 2013).
According to Ready Ratios (2014), the most important financial ratios to assess a company’s financial picture are:
1. Debt to Equity Ratio = Total Liabilities / Shareholders Equity
2. Dividend Payout …show more content…
This ratio indicates the proportion of equity and debt used by the company to finance its assets. It is really important to know about what the debt-to-income ratio number indicates. This number needs to be as low as possible. The less debt relative to the income indicates that a company is financially better off because there is extra money to apply towards future goals. Referring to Appendix B, Tim Hortons debt to equity ratio is at 0.34 and has been steady for the past six years. This shows that the corporation has available money on hand to apply toward their financial …show more content…
The profit margin ratio shows what percentage of sales are left over after all expenses are paid by the business. A higher net profit margin shows more efficiency of the company at converting its revenue into actual profit. This ratio is a good way of making comparisons between companies in the same industry, because similar companies are often subject to similar business conditions. Tim Hortons net profit margin for year 2013 was at 13.04% and for the previous 5 years has been stable (Appendix B). A comparison between Tim Hortons and Dunkin Donuts (Appendix D), shows that Tim Hortons net profit margin for 2013 was approximately 7% lower than Dunkin Donuts. While Tim Hortons has had a steady profit margin, Dunkin Donuts has increased their profit margin by 14% over the last five
According to Ready Ratios (2014), the most important financial ratios to assess a company’s financial picture are:
1. Debt to Equity Ratio = Total Liabilities / Shareholders Equity
2. Dividend Payout …show more content…
This ratio indicates the proportion of equity and debt used by the company to finance its assets. It is really important to know about what the debt-to-income ratio number indicates. This number needs to be as low as possible. The less debt relative to the income indicates that a company is financially better off because there is extra money to apply towards future goals. Referring to Appendix B, Tim Hortons debt to equity ratio is at 0.34 and has been steady for the past six years. This shows that the corporation has available money on hand to apply toward their financial …show more content…
The profit margin ratio shows what percentage of sales are left over after all expenses are paid by the business. A higher net profit margin shows more efficiency of the company at converting its revenue into actual profit. This ratio is a good way of making comparisons between companies in the same industry, because similar companies are often subject to similar business conditions. Tim Hortons net profit margin for year 2013 was at 13.04% and for the previous 5 years has been stable (Appendix B). A comparison between Tim Hortons and Dunkin Donuts (Appendix D), shows that Tim Hortons net profit margin for 2013 was approximately 7% lower than Dunkin Donuts. While Tim Hortons has had a steady profit margin, Dunkin Donuts has increased their profit margin by 14% over the last five