Management Efficiency Ratios: Burger King vs. McDonalds

RUNNING HEAD : Burger King vs . McDonalds

Management Efficiency Ratios : Burger King vs . McDonalds

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17 April 2009 1 . Introduction

This seeks to compare Burger King (BK ) with its competitor McDonald (MCD ) in the restaurant industry , using their financial statements as basis in terms of profitability and management efficiency ratios for the latest fiscal year . This will also discuss the concept of operating cost , evaluate the annual and year-end results of the two companies , and interpret BK as takeover target

compared with its competitors

2 . Analysis and Discussion

The following summary of financial ratios is extracted from the financial statements of BK and McDonalds to facilitate the comparison of profitability and management efficiency of the company

Source : MSN (2009a 2009b

Burger King 's profitability is obviously lower than MCD . Based on net profit margin for year 2008 , BK had 7 .3 as compared with MCD 's 18 .3 for the same year . The same behavior may be observed in terms of pre-tax margin , where BK had 11 as against that of MCD at 26 .2 for the same year . It is only in terms of gross margins that BK has exceeded that of MCD but the net margin and pre-tax margin are better ways to measure profitability as expenses need to be deducted further

For purposes of comparing the net profit margin and pre-tax margin of the two companies against the industry average , BK is worse but MCD is definitely better...