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Wendy Accounting Essay

2551 words - 11 pages

DHT-FT-2012-04-1
Ms.Zwen Chua

Accounting in H&T
Continuous Assessment 3
(Group Work)

Team members:
Vu Que Linh (1206009805)
Andrian Hendro (1207009990)
Giovanni Budianto (1110009123)
Vania (1206009788)
Pham Thuy Van (1204009616)
Pham Thi Hoan Hao (1207009935)
Maria Astrid K (1206009804)
Huynh Ngoc Thanh Truc

Table of Contents

Introduction…………………………………………………………….1
Presentation of financial statement of the past three years……........1
Identification of major ratios……………………………………..…..2
Sales trend justification……………………….………………………4
Buying or leasing………………………………………………………5
Accepting a special order……………………………………………..9
Appendix……………………………………………………………….10

1. ...view middle of the document...

Through many problems and changes of ownerships, now the company still grows prosperly

2. Representation of Financial Statement of the past 3 years (In thousand)

*=in This Year, Arby’s were sold. Before this year, they had been consolidated.

3. Identification of major ratios

Ratios | 2009 | 2010 | 2011 |
Efficiency | Inventory Turnover | 118.50 | 115.04 | 140.75 |
| | 3.08 days | 3.17 days | 2.59 days |
| Receivable Turnover | 36.34 | 36.14 | 31.11 |
| | 10.04 days | 10.10 days | 11.73 days |
| Payables Turnover | 26.34 | 32.09 | 22.34 |
| | 13.84 days | 11.37 days | 16.34 days |
Profitability | ROTA | 2.25 | 2.80 | 3.19 |
| ROCE | 2.49 | 3.07 | 3.49 |
| Net Profit Margin | 3.50 | 4.35 | 6.45 |
| Net Asset Turnover | 0.71 | 0.71 | 0.54 |
Short Term Liquidity | Current Ratio | 1.85 | 1.79 | 2.03 |
| Acid Test Ratio | 1.80 | 1.74 | 1.99 |
Long Term Liquidity | Gearing Ratio | 39.11% | 41.8% | 40.35% |
| Interest Cover | 0.88x | 0.96x | 1.20x |

Short Term Liquidity Ratios measure the ability of a business to meet its short-term financial obligations.The liquidity ratios can be shown as follows.

| 2009 | 2010 | 2011 |
Current ratio | 1.85 | 1.79 | 2.03 |
Acid Test Ratio | 1.80 | 1.74 | 1.99 |
This Company’s capability to fulfill its short term obligation in recent three years shows a healthy growth, eventually hit ratio 2 in last year. Its organization’s tendency is to keep a little proportion of stock compare than all it’s current assets.

Long Term Liquidity Ratios measure the extent to which the capital employed in business has been financed either by shareholders through share capital and retained earnings,or through long term lending finance.

| 2009 | 2010 | 2011 |
Gearing ratio | 39.11% | 41.8% | 40.35% |
Interest cover | 0.88x | 0.96x | 1.20x |


In the last three years, Wendy’s dependence on long term obligation was a bit fluctuated. The long term liabilities that make up the portion of the whole company size in recent years was always under half portion, it means the company didn’t face too high level of financial risk.
While in the same period, its productivity of long term debt’s trend was improved. Although in 2009 and 2010 it’s productivity of long term liabilities was negative. But eventually last year, due to the split between Wendy’s and Arby’s, it had attained to positive level (1.2x).

Efficiency Ratios figure how well a business manages its various resources efficiently. These are the summary of the ratio.

| 2009 | 2010 | 2011 |
Inventory Turnover | 118.503.08 days | 115.043.17 days | 140.752.59 days |
Receivable Turnover | 36.3410.04 days | 36.1410.10 days | 31.1111.73 days |
Payable Turnover | 26.3713.84 days | 32.0911.37 days | 22.3416.34 days |

Every business prefer a short inventories turnover period. Wendy’s inventory turnover period trend show the good progress, even it ever felt in 2010. However, because...

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