In 2010, McDonald’s and Dunkin’ Brand group had a total system wide sales of 33 and 6 trillion dollars respectively while Starbucks and Tim Hortons total sales were 7.5 and 8.3 trillion dollars. This competition in the QSR industry has brought about the need to improve services and quality of products to stay ahead of the other companies. Analysis and Comparison Using Annual Report and 10-K It is a companies’ requirement to fill both the annual and 10-k reports to the SEC (Securities and Exchange Commission). The 10-k document is mandatory for all public companies and is the best for investment analysis since it gives detailed information on the company (Rodgers, 2008).
The 10-k in both companies includes; the business description, risk factors, legal proceedings, selected financial data and management discussion and analysis of the current or future financial condition. The functional currency in the financial statements of Tim Hortons Inc. is Canadian dollars while that of Starbucks is the United States dollars. However, both companies prepare their financial statements with the generally accepted accounting principles (GAAPs) The amount of sales and net operating income is higher in Tim Hortons Company’s Annual report compared to that of Starbucks.
This amount also will determine the amount of earnings after interest and tax deductions which are relatively higher in Tim Hortons. In the 10-k annual filing, Starbuck is diversified in computations given the large number of companies that are subsidiaries and will be consolidated in the annual reports (Rodgers, 2008). Tim Hortons however has a simplified and less structured given that revenue and expenses is accounted separately in the franchises then later included in the financial statements.
Calculations Working Capital- is the amount of money that remains after all debts have been settled. These amounts will be used to settle other future expenses and also invested in available opportunities (Rodgers, 2008). Creditors will prefer a higher amount because they will be sure of timely payments while investors prefer a smaller amount to avoid opportunity cost of having idle cash. Year 2009 2010 2011 2012 2013 Starbucks 230.8m 132.4m (248.1m) (404m) 476.7m Tim Hortons (27.77m) 98.43m (132.07m) 514m 27.65m Liquidity ratios Current ratio The ratio measures if the company to settle short-term debts and obligations.
Work citedRodgers, Paul, Financial analysis, Oxford: CIMA 2008, print (Rodgers, 2008)