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McDonald's Corporation Analysis

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McDonald’s Corporation Analysis

1) Summary of the Company: McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants. There are over 31,000 McDonald’s locations worldwide primarily selling hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, and desserts.
2) Financial Ratios Analysis:
1. Net Profit Margin- The net profit margin of 18.34 percent for 2008 indicates that 18.34 cents of net income was generated for each dollar of sales. The significant increase of 7.83 percent, from 2007’s 10.51 percent, yielded an additional $1.84 billion in profit on the company’s $23.52 billion in revenue.
2. Gross Profit Percentage- McDonald’s gross profit percentage for 2008 was …show more content…

15. Free Cash Flow- McDonald’s FCF increased from 2007’s $1.16 billion to almost $2 billion, which is a huge increase indicating the company has enough to cash flow from operations to purchase property, plant, and equipment and pay dividends to shareholders.
3) Recent Company News: On 2/16/10 Burger King, the second largest U.S. hamburger chain after McDonald 's, said it would serve Starbuck’s “Seattle 's Best” coffee in about 7,250 U.S. outlets by September making it a direct challenge to McDonald’s strong sales of its new coffee items. On the other hand, TheStreet.com Ratings Investment Analyst Jake Lynch recently reported McDonald’s to be a top dividend-paying stock to buy because its fourth-quarter net income increased 23% to $1.2 billion, revenue jumped 7.3% to $6 billion, and its stock has increased 15% in the past year.
4) Company Strengths: Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.
5) Threats & Risk Factors: The key

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