Review of Financial Statements Essay

fiscal recitals are essential accounting tools which include relief sheets, specie flow teachings, and income statements that append information on a scatternerships past and present monetary history. Information on pecuniary statements croupe be used by any number of usual and private entities to determine if an organizations financial status is healthy. Burger superpower and McDonalds are two organizations that use financial statements in conducting contrast.Further, this subject will discuss the financial statements of apiece company, the firms which size up each companies financial statements, and define accounting concepts, terminologies, and transactions used in the financial statements. additional information will provided regarding when McDonalds and Burger magnate were established and what product and service they provide to the public.Overview of OrganizationsMcDonalds first subject its doors in 1940 introducing the concept of the speedee service organ ization offering french fries, hamburgers, and shakes to satisfy the hungry client quickly at a low price. Over the next 65 sum total old age the McDonalds identity card has changed from just french fries and hamburgers to salads, wraps, chicken nuggets and many more items which cater to the ever changing tastes of consumers. McDonalds has been criticized over the age as world a major contri scarceor high obesity posts, in part due to the speedee service concept. These criticism have caused McDonalds to rethink menu items and helped the company to enact numerous changes to the menu which now offers nutritional guides for each menu item and healthier natural selections such as salads, fruit, and milk.McDonalds has changed the oil color used to tiddler sustenances to make the fries healthier and includes a choice of meal sizes and most recently started a new line of burnt umber drinks, which offers the desired Starbucks taste for a fraction of the cost. The profligate foo d twine currently has 31,000 restaurants worldwide and operates in 119 countries and serves approximately 47 one thousand thousand customers daily. McDonalds is similarly highly associated with the Ronald McDonald House Charities (RMHC) that has donated bills and services to families and communities for over 35 historic period to approximately 37 cardinal children and families. (McDonalds, 2009). The McDonald kitty pays for most ofRMHCs planetary administration cost so that solely donations go directly to the union and families. The charity is in such high demand that RMHC plans to expand their programs by 37% by 2010 to better help those in need.Burger top executive started in 1953 first known as Insta Burger great power offering hamburgers to consumers that was cooked on a small cooker called an Insta-Broiler oven the concept proved to be successful. In 1954 the name changed to Burger exponent, the broiler oven first used was replaced with the flame broiler and soon be came popular for offering their flame oven broil hamburgers and what is now known as the Whopper burger. (Burger King, 2009). The next 60 plus years for Burger King began suffering the homogeneous criticisms as McDonalds.It seemed all fast food chains were being blamed for the change magnitude obesity rate in the U.S. Burger King followed suit and began making changes to their menus adding chicken, salads, fruit, food nutritional guides, littler sizes, choice of drinks such as tea, milk, and changing the oil used to fry French fries as well as additional changes. Burger King Corporation is associated with a few charity organizations such as induct It Your Way which works to alleviate hunger, disease, and promotes community education through lore programs the McLamore Foundation provides scholarships and is associated with several charities forWhen Organizations Were EstablishedBurger King was founded in 1954 in Miami, Florida by James McLamore and David Edgerton. McLamore and E dgerton, both of whom had extensive experience in the restaurant business before starting their joint venture, believed in the simple concept of providing the customer with reasonably priced quality food, served quickly in attractive, clean surroundings. ( crude York demarcation Source, 2009), thus, the construct of the Whopper which was an instant success. Today Burger is found in all 50 states and 74 countries and territories throughout the world with more than 11,700 restaurants. In 1967 the Pillsbury alliance establish in Minneapolis, Minnesota purchased the company and its employees and the company went public in whitethorn 2006 at $17 a share. Today the company remains majority-owned by an equity group comprised of Texas Pacific Group, Bain Capital Partners and the Goldman Sachs Funds. (New York Job Source, 2009).McDonalds was founded by two brothers, Dick and Mac McDonald of SanBernardino, California. Ray Kroc, a milkshake work distributor happened on the brothers restaur ant as he was curious to incur why such a small establishment would need 10 milkshake machines. Kroc was impressed by the speed with which these two brothers were able to provide service in their busy hamburger stand and he asked the brothers for a briefing on their McDonalds Speedee System and after the briefing he requested and secured the rights to duplicate the system throughout the United States. Ray Kroc opened his first outlet in Chicago in 1955, 50 years later the number of McDonalds locations had expanded to over 31,500. (Albrecht, Stice, Stice, & Swain, 2008, pg. 76). Today McDonalds averages over 100 million dollars a day and is locate in 121 countries around the world. Both companies had meager beginnings and have grown into fast food superstars. news report Organizations Providing AuditsBoth McDonalds and Burger King offer burgers, fries, and creamy shakes. However, the differences betwixt McDonalds and Burger King are far more than thriving arches and golden crowns . McDonalds has both and internal and external take stock committees. The internal study committee is composed of five Directors, each of whom meets the independence and other requirements of the New York Stock Exchange (Santona, 2009). The committee abides by a charter which states all its responsibilities and is reviewed annually. Ernst & Young LLP (Ernst & Young), the Companys freelance auditors, is responsible for performing an audit of the Companys annual consolidated financial statements in abidance with generally accepted accounting principles (GAAP) and for issuing a report on those statements (Santona, 2009).The Burger King Corporation as well as has both internal and external audit committees. The internal committees perform quarterly internal audits that are published for investors, but these audits are indicated as unaudited by an external entity. KPMG LLP is the external organization the Burger King Corporation uses for its external audits.Financial Statements Used and TerminologyAs a publicly traded company within the United States Burger King Corporation (BKC) has interpreted all the necessary steps required to abide by the regulations eagerness forth the Sarbanes-Oxley Actof 2002. The annual report for FY2008 includes information such as business information, risk factors, physical assets, legal proceedings, stockholder matters, and finally a comprehensive financial statement. (Burger King Corp, 2009). This section of the annual report begins with charge reports on internal controls which are in place regarding financial reporting which explains in detail the understanding of both the CEO and CFO and their pledge to take full responsibility for the content of the annual report. The report of the item-by-item registered public accounting firm (KPMG) is and additional statement of responsibility from the independent accounting firm which states the firm has reviewed the information. Paged within the reportcontain the balance sheet, stat ement of income, statement of stockholders equity, and statement of cash flows for FY2008 compared to 2007, 2006, and 2005.While BKCs annual report was presented in a standard no-frills format, McDonalds Corporations 2008 annual report include graphics and photos as the driver of the information. Along with the financial statements, McDonalds annual report focused on highlights from the menu to the money along with letters of welcome from the Chairman, Andy McKenna and CEO, Jim Skinner. (McDonalds Corporation, 2009). The financial reporting still included the managements report on internal controls, the report of independent registered public accounting firm (Ernst & Young, LLP), the balance sheet, statement of income, statement of stockholders equity, and the statement of cash flows. In both instances a dedicated effort was make to satisfy the requirements regulated by the United States Securities and Exchange Commission.Basic Accounting ConceptsIn 2008, McDonalds financial report shows annual total tax income at 23,522.4 million dollars compared to Burger Kings 2,455.0 million dollars a difference of 21,067.4 million dollars McDonalds clearly having earned more revenue (MSN Money, 2009). However, prior to 2003, the difference amongst McDonalds meshs and Burger Kings were even greater. From 2001 through 2003 Burger King was losing money, but has made a steady annual gross arrive at since. (CNN Money, 2006).TransactionsIn 2008, Burger Kings annual profit was 1,452.0 million dollars and in 2007 the profit was 1,317.0 million dollars, a growth of 135 million dollars. McDonalds has also encountered gross profit over the past two years, however, at a much greater scale. In 2008 the gross profit recorded was 8,639.2 million dollars and in 2007 a gross profit was recorded of 7,905.2, an increase in profit of 734 million dollars.Accounts Affected by TransactionsWhile the two fast food restaurant chains are no where mount comparable in revenue, both chains are in creasing revenue year after year. Since 2006, when Burger King became a publicly traded company same McDonalds, they both worked to maintain a profitable growth for share holders which has increased the amount of profit each year (MSN Money, 2009). Both companies have cash assets as well as land and property, rental fees, food, supplies, salary responsibilities, and advertising. Financial Statements Affected by TransactionsEach of the transactions listed for Burger King and McDonalds are provided in detail on a number of the financial statements. Specifically, the profit can be followed on the balance sheet, the statement of income, and the statement of cash flows located in each annual report. In addition these figures are compared to the forward years numbers on each of these statements.ConclusionMcDonalds and Burger King have been in business for decades and each company has established its respective(prenominal) company in the hearts of the American people and consumers across the globe when they expanded into global market. Both companies use reputable accounting firms and the same types of financial statements in order to assess the health of their financial status. This report has shown how important understanding the concepts, terms, and transactions listed on financial statements are in order to better gauge how a company is faring financially on a year to year basis.ReferencesAlbrecht, W.S., Stice, E.K., Stice, J.D. & Swain, M.R. (2008). Accounting Concepts and applications, (10 ed). Cengage Learning Center, Mason, Ohio.Burger King Corp. (2009). Company Info. Retrieved June 20, 2009 http//www.bk.com/Companyinfo/corporation/fact.aspxCNN Money. (2006). The King Meets his Public. Retrieved June 18, 2009, from http//money.cnn.com/magazines/fortune/fortune_archive/2006/03/06/8370602/index.htmMcDonalds. (2009). Our company. Retrieved June 18, 2009 from http//www.aboutmcdonalds.Com/mcd/our_company.htmlMcDonalds Corporation (2009). 2008 annual report. Re trieved June 18, 2009, from http//www1.mcdonalds.com/annualreport/index.htmlMSN Money. (2009). McDonalds Corporation Financial Statement. Retrieved June 18, 2009,from http//moneycentral.msn.com/investor/invsub/results/statement.aspx?Symbol=MCD&1stStatement=Income&stmntView=AnnMSN Money. (2009). Burger King Holdings Inc. Financial Statement Retrieved June 18, 2009, from http//moneycentral.msn.com/investor/invsub/results/statement.aspx?Symbol =BKC&1stStatement=Income&stmntView=AnnNew York Job Source. (2009). Burger King Worlds second largest food chain. Retrieved June 19, 2009 from http//www.nyjobsource.com/burgerking.htmlSantona, G. (2009). McDonalds 2009 annual Shareholders Meeting and Proxy Statement. Retrieved June 20, 2009, from http//www.aboutmcdonalds.com/etc/medialib/aboutMcDonaldsinvestor_relations.Par.58.686.File.tmp/2009%20Annual%Shareholders%20Meeting%20Proxy%20Statement.pdf