Comparison of McDonald's and Wendy's Financial StatementFinancial Statement Analysis ProjectThe two companies that I will compare in this project are McDonalds and Wendys. Both of these companies are competitors in the same industry. I am using information from their 2005 financial statement. Debt-to-Equity Ratio When comparing the debt-to-equity ratio of McDonald's and Wendy's, you need to divide the companies' total liabilities by their total assets. In essence, the debt-to-equity ratio is the main indicator of the company's debt management. When the ratio increases or decreases, it indicates that companies are changing their reliance on borrowed resources. The lower the ratio, the more efficient the company's ability to liquidate its assets should operations be interrupted and debts need to be recovered. In 2005, Wendy's had total assets of $2,076,043 and total liabilities of $846,264. When split, Wendys has the lowest ratio of its two competitors at 40%. This means they would suffer losses of 40% if the operations were closed, and the money received from valuable assets would still be enough to repay the entire debt. It also means that 40% of Wendy's assets are debt. McDonalds in 2005 had $12,545.3 (in millions) in total liabilities and $22,534.5 (in millions) in total assets. After doing the math, McDonald's ends up with a ratio of 56%, which is sixteen% higher than that of Wendys. This means there are more defaults on McDonald's liabilities, which can be a costly event from the lenders' point of view. McDonalds makes 56% of all its business through debt. In reality, it is not good to have a debt-to-equity ratio above 50%. It is also not good to have too low a debt-to-equity ratio because… in the middle of the paper… there are likely to be more investors. After comparing the two companies as an investor, I would invest in McDonalds. Based on McDonalds' debt-to-equity ratio, I believe that McDonalds is actively using all of its assets to maximize profits. As an investor, McDonald's shares are also cheaper and offer a higher return. Wendys is not far behind and seems like a company with financial success and excellent debt management, but with the money in my pocket I would use it for McDonalds. References Bourdette, D. (2003). Campsite data - Rating. Retrieved December 7, 2005, from DaleBourdette: http://www.campground-data.com/library.htmlHoevel, A. (2005, July 15). Luxury Camping: Getting It Done the Easy Way. CNN News. Retrieved December 4, 2005, from http://www.cnn.com/2003/travel/07/15/sprj.st03Mabee, Y. (2004, May). Accounting for a marina/resort. Management accounting, 11. 50-53.