Financial Statement Analysis
Autor: Tim • May 14, 2018 • 508 Words (3 Pages) • 898 Views
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RATIO ANALYSIS
Chipotle
Starbucks
USPS
Home Depot
MILLIONS
MILLIONS
MILLIONS
MILLIONS
Profitability
Net Profit Margin
Net Income
476
2,757
-5,060
7,009
Net Sales
4,501
19,163
68,928
88,519
Net Profit Margin %
11%
14%
-7%
8%
Liquidity
Working Capital Ratio
Current Assets
815
4,353
7,915
16,993
Current Liabilities
280
3,654
48,911
12,526
Working Capital Ratio %
2.91
1.19
0.16
1.36
Solvency
Debt to Equity Ratio
Total Liabilities
597
6,626
74,405
36,233
Total Equity
2,128
5,820
-50,391
6,316
Debt to Equity Ratio %
28%
114%
-148%
574%
Companies Evaluation
Learning team B analyzed four different companies to make a comparison of different ratios. The result of this analysis are based on applying Profitability, liquidity and solvency ratios to financial statements. As a result, we evaluate the overall financial stability of each organization.
According to the information showed in the ratios analysis, Learning team B decides to lend money to Chipotle Mexican Grill. In both short term or long term loan situations, Chipotle has the best rated ratios. For short term, they the highest Working Capital ratio of 2.91 which represents their ability to pay its short term obligations they are due. For long term, Chipotle has the lowest Debt to Equity ratio with 28%. Lower Debt to Equity ratio means the company is very financially stable.
Even tough Chipotle Mexican grill has a better Solvency ratio, Learning team B would invest in Starbucks. Starbucks has a higher profitability rate so that would give us the ability to recover our investment sooner. Dividends are paid based on Net Income. Starbucks has the highest Net Profit margin ratio with 14%.
Finally, Learning team B members agree that Chipotle Mexican Grill would be the best company to work for. Even though Starbucks has a better profitability ratio with 14%, Chipotle has a better financially stable company. Chipotle's financial statements show the stability of its operations as well as the success of its employees in both personally and professionally.
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