Financial analysis, Starbucks VS Tim hurton

Financial analysis, Starbucks VS Tim hurton - E xecutive...

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Executive Summary: 1
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This paper provides an analysis of the keys financial ratios, estimate the capital structure, critique the dividend policy for the two companies, and working capital management, as well as the general health of the firm and their prospects for future. This analysis is designed to Tim Hortons and Starbucks as target companies for this paper. By analysis keys financial ratio, it was evident to compare and contrast liquidity ratios as quick ratio and current ratio which means looking to trends and explanations over five years of the liquidity. After a comprehensive evaluation of these ratios, it provides how quick both companies are facing their short term obligation. Moreover, an analysis profitability of both companies is intended to measure how much profits generated by using their resources. The assessment of return on asset and return on equity were the key measures. To assess efficiency of both companies, it was important to analysis the total asset turnover, receivable turnover, and inventory turnover. These ratios assess which company are using its resources efficiently. Regarding structure of capital, debts to equity and interest cover ratio were used to measure which company is healthy level borrowings. To analysis market value, there were two ratios Price earnings per share and Price book value which show how investors are willing to pay for both companies stocks. In second step, this paper analysis weight average cost of capital which gives the whole picture for each company about the cost of capital and which capital policy are adopting to finance their businesses. To accomplish this analysis, there were some assumptions being made because of lack or its unavailability the data base. For instance, some of these assumptions were the exchange rates, the inflations rates, and leveraging debts into groups, as well as the implement the same bonds yield for both companies. These assumptions were relevant for final figures calculated and their interpretation and coming up with final conclusion. In working capital management part, four ratios were designed to analysis. The First was Inventory conversion periods which provides the length of time that both companies process to transform the material to final products then sell them. Second was receivables conversion period which measures the time that company can collect cash after making sales. Third were payable deferred which 2
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which measures the length of time that company collect cash and pay out its resources. Finally, this paper analysis dividend policy for each company and how their dividend polices are much with nature of their business, and economic environment as well. After doing that, some alternatives are suggested to their current dividend policy regarding the firms and investors perspectives, and taxation impacts. After a comprehensive evaluative of these factors, a conclusion is provided to snapshot of which company is performing well. TABLE OF CONTENTS
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Financial analysis, Starbucks VS Tim hurton - E xecutive...

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