Answer:
1. Debt ratio=Total liabilities/Total assets
Disney = 39,228/84,121 =0.466328
McDonald's=20583/36669 =0.561319
Based on this ratio, Disney is a better investment option because Disney is less leveraged than McDonald's which means it is has taken lesser risk than McDonald's.
2. Current ratio = Current assets/Current liabilities
Disney = 15078/13295 = 1.1341
McDonald's=5019/3066 =1.6369
Based on this ratio, McDonald's is a better investment option because of higher ratio, its ability to pay its current liabilities with its current assets is better than Disney.
3. Total asset turnover=Sales/total assets
Disney = 48719/84121 = 0.5791
McDonald's = 28049/36669 = 0.7649
Based on this ratio, McDonald's is a better investment option because of higher ratio, it shows that McDonald's is generating more revenues per dollar of assets which implies better performance.
4. Financial leverage= Total debt/total equity
Disney = 39228/44993 = 0.8718
McDonald's = 30583/16058 = 1.2817
Based on this ratio, Disney is a better investment ratio because McDonald's ratio is more than 1, which means it has more debt than equity and it shows higher burden on the company to repay principal and interest.
5. Profit margin= Net income/Sales
Disney= 7523/48718 = 0.1544
McDonald's= 5521/28049 = 0.1968
Based on this ratio, McDonald's is a better option as it has earner more income per dollar of sales, which means it is more profitable and is performing better
6. Return on equity= Net income/Equity
Disney= 7523/44993 = 0.1672
McDonald's= 5521/16058 = 0.3438
Based on this ratio, McDonald's is a better option as is it is providing higher return to its shareholders.
Final Conclusion: McDonald looks a better investment option for both a bond holder and a shareholder.