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Laundry’s Restaurants Financial Analysis
Laundry’s Restaurants owns and operates full-service, casual dining restaurants. As of December 31, 2003, Laundry’s Restaurants operated 286 restaurants. In addition to these units, there were several limited menu restaurants and other properties and two restaurants that were closed temporarily for renovation. Any investor looking to invest his or her money into an organization wants to look at how the organization has performed from one year to the next. In keeping with this paper discussed Laundry’s Restaurants Financial ratio analysis of earnings per share, return on assets, current ration, times interest earned, and many other financial statements and several other ratios.
Earnings per Share
Based on analysis of 2002 to 2003 financial figures the figures appear that the basic Earnings per Share (EPS) improved with the numbers increasing from 1.60 in 2002 to 1.66 in 2003. From an investor’s perspective, this would be a good sign and show the investor that the organization is doing well. Basic earnings per share is computed by dividing net income by weighted average number of shares of common stock outstanding during the year (University of Phoenix, 2005).
Based on analysis of 2002 to 2003 financial figures the figures appear that the diluted Earnings per Share (EPS) improved with the numbers increasing from 1.54 in 2002 to 1.62 in 2003. Diluted earning per share reflects the potential dilution that can occur if contracts to issue common stock were exercised or converted into common stock (University of Phoenix, 2005). Again, with an increase, investor’s perspective would be a good sign and showing the investor the organization is doing well.
Return on Assets (ROA) and Current Ratios
The Return on Assets or Return on Investment is an indicator of how profitable a company is in relation to total assets (Investopedia, 2009). Return on Assets gives an idea of how efficiently...