Dunkin Donuts vs. Starbucks
Analyze and report on these two companies. Recommend which company’s stock you would buy and fully explain why.
Financial ratios and interpretation/explanation 2015-2017, thereof for each of the following:
1. Current Ratio
2. Debt to Equity Ratio
3. Earning Per Share
4. Gross Profit Margin
5. Dividend Paid Per Share
(You can use Nasdaq.com or Finance.yahoo.com to obtain this information).
Summary comparing & contrasting both companies, leading to a recommendation of which company’s stock to buy.
Present in two forms:
A. Hard-copy formal written report including any relevant charts and graphs.
B. PowerPoint: relevant data, charts and graph, including speaker notes.
To analyze and compare Dunkin Donuts and Starbucks, we will look at five financial ratios from 2015 to 2017: Current Ratio, Debt to Equity Ratio, Earnings Per Share, Gross Profit Margin, and Dividend Paid Per Share.
1. Current Ratio:
The current ratio measures a company's ability to cover short-term obligations with its short-term assets. It is calculated by dividing current assets by current liabilities.
To obtain the financial ratios for Dunkin Donuts and Starbucks, you can visit the financial websites Nasdaq.com or Finance.yahoo.com. Search for each company's stock symbol (Dunkin Donuts: DNKN, Starbucks: SBUX). Access the respective historical financials under the "Financials" or "Financial Statements" section.
Calculate the current ratio for each company by dividing their current assets by current liabilities for each year (2015-2017). Compare the ratios to determine which company has a higher current ratio.
2. Debt to Equity Ratio:
The debt to equity ratio measures the proportion of a company's financing that comes from debt compared to equity. It is calculated by dividing total debt by total equity.
To analyze this ratio, gather the total debt and total equity values for each company from the financial statements. Calculate the ratio for each year (2015-2017) and compare the results.
3. Earnings Per Share (EPS):
Earnings per share represents the portion of a company's profit allocated to each outstanding share of common stock. It is calculated by dividing the net income (or profit) by the average number of shares outstanding.
To find the EPS for Dunkin Donuts and Starbucks, navigate to the financial statements and locate the net income and average number of shares for each company for each year (2015-2017). Calculate the EPS for each year and compare.
4. Gross Profit Margin:
The gross profit margin measures the profitability of a company's core operations. It is calculated by dividing gross profit by revenue and multiplying by 100 to express it as a percentage.
Find the gross profit and revenue figures for each company for each year (2015-2017) from the financial statements. Calculate the gross profit margin for each year and compare the results.
5. Dividend Paid Per Share:
The dividend paid per share indicates the amount of money a company pays in dividends to its shareholders per share of common stock. It is often expressed on an annual basis.
Review the financial statements to find the dividend paid per share for Dunkin Donuts and Starbucks for each year (2015-2017). Compare the amounts to assess which company pays a higher dividend per share.
Once you have gathered and analyzed these financial ratios for both companies, you can compare and contrast them in a written report or a PowerPoint presentation. Use relevant charts and graphs to visually represent the information. Additionally, consider other factors such as market trends, brand strength, competitive advantages, and potential growth opportunities when making a recommendation on which company's stock to buy.
Remember, this analysis should be based on historical data, and it is crucial to conduct further research and consider the current economic and market conditions before making any investment decisions.