Boston Chicken Vs. McDonalds
February 10, 2011
Boston Chicken vs. McDonalds
|Conduct a ratio analysis to evaluate the financial performance of BOST for 1996. | |
| |Profit Margin |Asset Turnover |Leverage | |
| |Net Profit/Sales |Sales/Asset |Asset/Equity |ROE |
|McDonalds |1,572.600 |10,686.500 |17,386.000 | |
| |10,686.500 |17,386.000 |8,718.200 | |
| |0.147 |0.615 |1.994 |0.180 |
| | | | | |
| Boston Chicken |66.958 |264.508 |1,543.616 | |
| |264.508 |1,543.616 |935.840 | |
| |0.253 |0.171 |1.649 |0.072 |
From the Dupont analysis above, we can see that Boston Chicken has a very small return on equity compared to that of McDonalds. This means that Boston Chicken’s investment is not generating as much profits as McDonalds’. Let’s take a close look at each element of ROE and compare them between these two companies.
Profit margin
Boston Chicken’s profit margin is 72% higher than that of McDonalds, which means Boston...