Financial Analysis of McDonalds Company

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Financial Analysis of the McDonald’s Company MCD, exchange where traded NYSE 2111 Midwest Road, Oak Brook, IL 60523 (630) 623-3000 PART 1, COMPANY OVERVIEW: a. McDonald’s is an American fast food chain that sells a variety of fast food alternatives, but most notably has earned its reputation and success for the hamburger. It is the largest fast food chain in the world, with globally recognized “golden arches” symbolizing a reliable meal can be had in over 119 countries. McDonald’s has continued to develop their menu to reflect the desire/demands of their customers. The current CEO of McDonald’s is Mr. Don Thompson. b. McDonald’s was started in the 1940s as a BBQ restaurant owned and operated by Richard and…show more content…
In order to increase their profit margin, McDonald’s must continue to try and find ways to reduce COGS. This is because many of the other expenses are much harder to influence. Selling General and Administrative (SG&A) expenses have most likely already been trimmed to the minimum over the company’s life, taxes are required by the Government, and interest expense makes up only a small portion of expenses. The company may need to do a cost-benefit analysis to determine what may be done to reduce COGS. One idea may to better vertically integrate the company, or to remove menu items which are unpopular and/or seasonal. c. Assets Distribution: Year-end FY 2011 Assets:  Cash 2.3 Accounts Receivable 1.3 Inventory 0.12 Fixed Assets (PP&E) 22.8 Other Assets 1.67  PIE CHART OF ASSETS, Year-end FY 2011 COMMENTS: As depicted in the chart, the companies’ assets are largely fixed. This comes as no surprise since the company consists of over 33,000 restaurant locations worldwide. The percentage of fixed assets as compared to current assets does mean though that the company is not liquid, which means it cannot quickly convert its assets to cash. The low inventory which actually makes up just 0.4% of the asset distribution is normal due to the fact that the company is a restaurant chain, and much of the product has a quick shelf life. c. Capital Structure: Year-end FY 2011 Capital Structure:
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