While both companies maintain similar menus and overall strategies, there are key differences in their business models related to scale, store ownership and branding. Despite being founded 20 years after Dunkin' Donuts, Starbucks grew aggressively and is a substantially larger company.
A ratio analysis looks at various numbers in the financial statements such as net profit or total expenses to arrive at a relationship between each number. To ensure accuracy, it is usually best if both statements have been audited by a certified public accountant, or CPA. Ensure that both financial statements have been audited or at the very least prepared by a neutral, third-party accounting firm, to help ensure the integrity and accuracy of the reported numbers.
Also, verify that the numbers reported are from the same accounting period such as January through December.
Compare the statements such as the profit and loss to see if the results are reported in a similar fashion. For example, net sales are usually reported as gross sales, less customer discounts, whereas some companies report net sales as gross sales, less discounts, and cost of goods sold.
Perform a ratio analysis on some of the key components of the statements. There are many types of ratios, but some of the most important include the net profit ratio and the return on assets ratio.
The net profit ratio is arrived at by taking the net, pre-tax profit shown near the bottom of the profit and loss and dividing it by the nets sales. The same ratio should be performed both statements.
The other important ratio is the return on assets ratio. This is determined by dividing the net, pre-tax profit by the total assets shown on the balance sheet.
Compare the various ratios of each company to see which is more or less profitable or efficient in its operation. You should consult with a CPA or financial analyst to help you with the comparison. If the businesses are dependent on large machinery in their operations, look closely at ratios that focus on assets.
If the business relates more on commission- sales based on service, look closer at payroll to sales-related ratios.
Warning Comparing two company's financial results isn't the only measure of evaluating their profitability. For example, one business might be successful based on a key individual who may be leaving or retiring. In that case, the future results may not be as valid, because the prior results were based on the dependence of the key person.Comparing of Financial Statement for Similar Companies Words | 20 Pages.
smaller variety/dollar stores and a shopper-friendly format which is more convenient than larger sized dis count merchandise stores. The company’s sales of p harmaceuticals have a percentage of % in , % in , and % in , comparing to the total. Comparative analysis of Financial Statement of two Companies Subject: Finance Topic: Assignment This is an assignment of Comparative analysis of Financial Statement of two Companies.
Balance Sheet versus Income Statement comparison chart; Balance Sheet Income Statement; Introduction (from Wikipedia) In financial accounting, a balance sheet is a summary of the financial balances of a company at a GIVEN point in time.
Financial ratios, averaged by industry, serve as a benchmark for comparison against individual companies and help users make informed investing and credit decisions.
Financial Ratios Financial ratios provide information on a company's financial strength, efficiency, profitability and other business measurement metrics. The common-size analysis is also useful for comparing the diversification of items on the financial statement—the diversification of incomes on the income statement, cash flows on the cash flow statement, and assets and liabilities on the balance sheet.
Income Statement Often referred to as a Statement of Profit and Loss, or P&L, this financial report shows the revenues and expense generated and incurred by a company over a specified period of time.