Investing and Financing Activities of Wendy’s

During the year of 2012, cash used for investing activities of Wendys number $189 million, increased $131 million from 2011. The two largest investing activities appeared in Wendys statement of cash flow are great(p) expenditures and acquisitions. Cash great(p) expenditures of Wendys in 2012 totaling $197. 6 million, including $71. 9 million for reimaged and new Image Activation restaurants, $13. 5 million for new restaurants, $28. 0 million for point-of-sale equipment, $23. 2 million for the manifestation of a new building at its corporate headquarters and $61. million for various capital projects. In the middle of 2012, Wendys acquired 54 franchised restaurants. The purchase come inlay was $38. 1 million in cash. Wendys also agreed to lease the real estate, buildings and improvements related to some of the acquired restaurants which were considered part of the purchase transaction. Wendys did not start out any material acquisition-related costs. Some other important investin g activities involved the investment in limited partnerships of indirect 18. 5% interest 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 receive proceeds of $27. 4 million. Wendys did this because prior to 2009, Wendys had determined that all of its remaining $8. 5 million investment in Jurlique was impaired. Wendys realized that Jurlique chiffoniernot jockstrap them straighten out profit and decided 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 Arbys. Wendys decided to sell Arbys because Arbys has been a weaker performer than Wendys in recent years after Wendys and Arbys were merged 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 gross sales of restaurant businesses. During the year of 2012, the two 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-term debt and the re conductments of long-term debt.On May 15, 2012, Wendys entered into a character Agreement including a senior secured term loan 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 marge Loan were used to repay the outstanding amounts under the 2010 Term Loan 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 find out that Wendy uses almost 85% of the 2012 loan to reimburse its previous debt, which shows us that the company does not have enough debt-paying ability. A good company who has the ability to make profit to repay previous debt and make another 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.