Investing and Financing Activities of Wendy’s

During the year of 2012, change used for investment activities of Wendys totaled $189 million, improverd $131 million from 2011. The dickens largest investment funds activities appeargond in Wendys statement of cash devolve are capital expenditures and acquisitions. Cash capital expenditures of Wendys in 2012 totaling $197. 6 million, including $71. 9 million for reimaged and wise Image Activation eaterys, $13. 5 million for new restaurants, $28. 0 million for point-of- trade equipment, $23. 2 million for the construction of a new building at its corporate headquarters and $61. million for motley capital projects. In the middle of 2012, Wendys acquired 54 franchised restaurants. The purchase monetary value was $38. 1 million in cash. Wendys also agreed to get hold of the real estate, buildings and improvements related to some of the acquired restaurants which were considered part of the purchase transaction. Wendys did non incur any material acquisition-related costs. Some other important investing activities involved the investment in limited partnerships of indirect 18. 5% please in Arbys Restaurant Group, Inc. and approximately 11% cost method investment in Jurlique International Pty Ltd. On February 2, 2012, Wendys completed the sale of its investment in Jurlique and received production of $27. 4 million. Wendys did this because introductory to 2009, Wendys had determined that all of its remaining $8. 5 million investment in Jurlique was impaired. Wendys realized that Jurlique cannot help them make profit and clear-cut to sell all of investment in Jurlique to protect stockholders equity. In the meantime, Wendys can use this money to strength their capital expenditures.The increase in cash used for investing activities is mainly because of the sale of Arbys in 2011. Wendys sold Arbys for $130. 0 million in cash and indirectly retained an 18. 5% interest in Arbys and during 2012, Wendys received a $4. 6 million dividend from the investment in A rbys. Wendys decided to sell Arbys because Arbys has been a weaker performer than Wendys in recent years after Wendys and Arbys were co-ordinated in 2008. We deem it wise to sell Arybs because Wendys no longer need to worry about the poor performance of Arbys but can earn the dividend.On the other hand, cash used for investing activities of McDonalds totaled $3. 2 billion in 2012, increased $596 million. The increase primarily reflected higher capital expenditures and lower proceeds from sales of restaurant businesses. During the year of 2012, the dickens largest investing activities appeared in the statement of cash flow of McDonalds are capital expenditures and sales of restaurant business and property. The two most important financing activities for Wendys are the proceeds from long debt and the re leavements of long-term debt.On May 15, 2012, Wendys entered into a Credit Agreement including a senior secured term bestow facility of $1,125. 0 million, of which net proceeds was $1,113. 8 million with draws on May 15, 2012 and July 16, 2012. Proceeds from the 2012 Term lend were used to repay the outstanding amounts under the 2010 Term loanword of $467. 8 million, to redeem and purchase the outstanding Senior Notes of $565. 0 million and to pay substantially all of the Credit Agreement fees and expenses. The outflow of 2012 Term Loan constituted the second largest financing activity, the repayments of long-term debt.In these two activities, we can acknowledge out that Wendy uses almost 85% of the 2012 loan to reimburse its previous debt, which shows us that the phoner does not have enough debt-paying ability. A good company who has the ability to make profit to repay previous debt and make another(prenominal) investing is what all stockholders want to see, not using new loan to redeem old loan. In conclusion, we do not agree Wendys using these financing activities. They should improve their operation activities to increase profit.