Macdonald Financial Analysis Case Study

Excerpt from Case Study :

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…

Sources Used in Document:

Reference

McDonald. (2012) Annual Report, MacDonald Corporation .

Morning Star (2012).McDonald's Corporation MCD. USA.

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