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Profitability Ratios Essay

McDonalds and Dominos both have seen a shortfall in profit this year . Burger King on the other hand has seen a tremendous improvement in its profit which has doubled this year to 13% however Dominos Inc. has made an adysmal 2. 6% profit margin. Earning per share have also decreased for both McDonalds and Domino’s although McDonalds has suffered considerably less than Domino’s whose EPS has more than halfed this year probably because of a poor profit. Burger King has improved it EPS from a very low 0. 24 in 2006 to a much respectable 1.

08 in 2007. Domino’s Inc. has the highest Return on Capital Employed although it has dropped considerably from 95% in 2006 to 65% in 2007which shows that Domino’s has given a very good return on the resources invested and the poor net profit is probably due to the increase in interest payments. ROCE has also increased for Burger King from 8 % in 2006 to 14 % in 2007. McDonalds’ ROCE has slightely dropped from 17 % in 2006 to 15. 6% in 2007. Cash and equivalents at the end of the year 1,981 2,127 (94) 11.

12 38. 33 Cashflows from Operating activities have

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increased for McDonalds from last year. Burger King has also experienced a similar increase in operating cashflows however Domino’s has seen slide in its operating cashflows. Cashflows in investing activities has reduced for McDonalds from last year. Burger King has invested more this year similarly Domino’s. McDonalds has spent lesser cash on its financing activities so has Burger King as compared to last year .

However Domino’s has almost spent nothing on its financing activities this is because Domino’s Inc. is already highly geared moreover doesnt have much assets to provide in security the ones already in existence would be securing amounts already borrowed, however it has spent a lot this year on its investing activities. At the year end cashflow position has deteriorated for McDonalds but only slightly as for Domino’s its cashflow position has deteriorated considerably.

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