Question

Company analysis.  Given the financial data in the popup​ window for Disney​ (DIS) and​ McDonald's (MCD), compare these two companies using the following financial​ ratios: debt​ ratio, current​ ratio, total asset​turnover, financial​ leverage, profit​ margin, and return on equity. Which company would you invest​ in, either as a bondholder or as a​ stockholder?

	Disney		​McDonald's
Sales	​$48 comma 76548,765		​$28 comma 14228,142
EBIT	​ $12 comma 29712,297		​$8 comma 1038,103
Net Income	​ $7 comma 5737,573		​$5 comma 5455,545
Current Assets	​$15 comma 13415,134		​$5 comma 0975,097
Total Assets	​$84 comma 05384,053		​$36 comma 51636,516
Current Liabilities	​$13 comma 18413,184		​$3 comma 1683,168
Total Liabilities	​$39 comma 14939,149		​$20 comma 54620,546
Equity	​$44 comma 83944,839		​$16 comma 03116,031
Values are expressed in millions of dollars.

1) The debt to ratio for Disney and McDonald's is? 4 decimals

2) The current ratio for both? 4 dec.

3) The total asset turnover ratio for both? 4

4) The financial leverage ratio for both? 4 dec.

5) The profit margin ratio is? 4 dec.

6) The return on equity is? 4 dec.

7) Which is the best company to invest in?

Answer 1

		Disney	​McDonald's
1	debt ratio =Total liabilities / total assets	39,149 / 84,053 =0.4658	20,546 / 36,516 =0.5627
2	current ratio = Current Assets / Current Liabilities	15,134 / 13,184 =1.1479	5,097 / 3,168 =1.6089
3	total asset turnover ratio = sale / total assets	48,765 / 84,053 =0.5802	28,142 / 36,516 =0.7707
4	financial leverage ratio = Total debt / Total equity	39,149 / 44,839 =0.8731	20,546 / 16,031 =1.2816
5	profit margin ratio = net income / sale	7,573 / 48,765 =15.5296%	5,545 / 28,142 =19.7036%
6	return on equity = net income / total equity	7,573 / 44,839 =16.8893%	5,545 / 16,031 =34.5892%