This Learning Activity involves preparing a preliminary financial analysis of on

ID: 2648217 • Letter: T

Question

This Learning Activity involves preparing a preliminary financial analysis of one of the largest firms in the world, McDonalds Corporation.

Locate the annual reports (10-K) of McDonalds (MCD) for the most recent three years reported.

For this assignment, do NOT use the Dupont Method (if applicable).

Using the financial statements, calculate and analyze the following financial ratios for McDonalds for the most recent three years reported:

Profit Margin

Return on Assets

Return on Equity

Debt to Total Assets

Times Interest Earned

Current Ratio

Quick Ratio

Present your ratios first. Then, analyze each ratio trend. The analysis should address the following questions:

Is the ratio trend increasing or decreasing?

Why is there an increasing trend or a decreasing trend?

Is this trend favorable or unfavorable? Why?

What might the firm do to change the ratio?

Explanation / Answer

The available data of the company for three consecutive years are given below:

Annual report (Partial)

(Dollar in millions)

Heads

31st December 2013

31st December 2012

31st December 2011

Net revenues

28,105.7

27,567.0

27,006.0

Net income

5,585.9

5,464.8

5,503.1

Total assets

36,626.3

35,386.5

34,889.1

Stockholders