Macdonald Financial Analysis

Financial Case Study Company Overview McDonald Corporation specializes in the food service globally. The company started operation in 1940, and in 1967, the MacDonald registered its trademark. The primary product of McDonald includes chicken, hamburgers, soft drink, French fries, dessert and milkshakes. Over the years, the company has expanded its menu and included wraps, fish, salads fruits and smoothies. Presently, the company operates its business through either affiliate or franchise globally and the company realizes bulk of its revenues from the fees collected from franchise.

Moreover, the company derives its revenues from the royalties and rents. Since MacDonald has started operations, the company has enjoyed rapid growth. At the end of the 2012 fiscal year, the company recorded the annual revenues of more than $25.7 billion with the net profits of $5.5 billion. The company also recorded the market capitalization of $94.5 billion. The company operates in 119 countries and presently, it serves approximately 69 million customers daily.

MacDonald has its headquarter in the United States, however, the company operates in all the continents such as North America, Europe, Latin America, Asia, Australia and Africa. In 2014, the company has opened its operations in Vietnam. ( Objective of this paper is to carry out financial analysis of the McDonald Corporation. The paper uses various financial tools to analyze the company financial performances. The paper uses 5-year financial records between 2008 and 2012 to carry out the company financial analysis a.

Sales Performances and Income Record Table 1 TTM 2013 2012 2011 2010 2009 2008 Revenue USD Mil 28,106 28,106 27,567 27,006 24,075 22,745 23,522 Gross Margin % 38.8 38.8 39.2 39.6 40.0 38.7 36.7 Operating Income (USD Mil) 8,764 8,764 8,605 8,530 7,473 6,841 6,443 Operating Margin % 31.2 31.2 31.2 31.6 31.0 30.1 27.4 Net Income (USD Mil) 5,586 5,586 5,465 5,503 4,946 4,551 4,313 Earnings -Per -- Share ( USD) 5.55 5.55 5.36 5.27 4.58 4.11 3.76 Dividends USD 3.12 3.12 2.87 2.53 2.26 2.05 1.63 Payout Ratio % 56.2 56.2 53.6 48.0 49.4 49.9 43.2 Shares Mil 1,006 1,006 1,020 1,045 1,080 1,107 1,146 Book -- Value- Per (Share USD_ 16.17 16.16 15.25 14.09 13.89 13.03 12.01 Operating Cash Flow ( USD Mil) 7,121 7,121 6,966 7,150 6,342 5,751 5,917 Cap Spending ( USD Mil) -2,825 -2,825 -3,049 -2,730 -2,136 -1,952 -2,136 Free Cash Flow (USD Mil) 4,296 4,296 3,917 4,420 4,206 3,799 3,782 Working Capital (USD Mil) 1,880 1,519 1,444 The table 1 reveals the company financial summary over the past 5 years.

As being revealed in the Table 1, the company recorded the sales of $23.5 billion at the end of the 2008 fiscal years however, the sales declined to $22.7 billion at the end of the 2009 fiscal year. The decline in sales between 2008 and 2009 was attributed to the global financial crisis that affected the global economy. However, at the end of the 2010 fiscal year, the company recorded sale growth by recording more than $24 billion dollars in sales. By the end of the 2012, fiscal year, the company has recorded sales of more than $27.5 billion.

Similarly, the company recorded increase in the net income between 2008 and 2012. At the end of the 2008 fiscal year, the company recorded the net income of 4.3 Billion dollars; however, at the end of 2012 fiscal year, the company recorded the growth of the net income of approximately $5.5 billion. Between 2008 and 2012, the company gross margin increased from 36.7% in 2008 to 38.8% at the end of the 2012 fiscal year. The company-operating margin also increased from 27.4% in 2008 to 31.2% at the end of the 2012 fiscal year. c. Company's major expenses for FY 2012 Expenses for FY 2012 (U.S.

Dollar In Million Operating Expenses Sales, General & Admin 2,445 Other Operating Expenses (244) Total Operating Expenses 2,212 Source: Morning Star (2012). Fig 1: MacDonald Expenses Distribution for the FY 2012 d. Comments on the expense distribution The company expenses distribution for the 2012 fiscal year consists of sales, general and admin. The company recorded the total expenses of approximately $2.2 billion dollars for the 2012 fiscal year. Moreover, other operating expenses consist of $244 million. The overall company operating expenses for the 2012 fiscal year are 2.21 Billion.

The pie chart shows the expenses distribution of the company for the 2012 fiscal year. Based on the data presented, the company.