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MCDONALDS CORP

NYSE/MCD

ONE MCDONALD'S PLAZAOAK BROOK IL 60523

630-623-3000

NAME

Company Overview

Description/Structure

The McDonald’s Corporation consists of approximately 420,000 as of year-end 2014 and operates in more than 100 Counties providing relevant food and drinks at reasonable competitive prices. The organization is owned and operated as company owned and 80% franchised restaurants franchisees which contribute to the Company’s revenue. The company maintains a mixture of both company and franchise restaurants in an effort to maintain optimal performance economic, financial, geographical factors and ability to maintain the McDonalds Brand are all considered when determining property ownership and franchise opportunities. McDonald’s Cooperation relies on franchisees for innovative ideas and the franchisees rely on the strength of the McDonald’s name. The business structure allows McDonald’s to capitalize on cash flow from the franchisees and according the business narrative, the Company requires franchisees to meet rigorous standards and ideal candidates are aggressive investors. Of the 36,258 restaurants in 119 countries at year-end 2014, 29,544 were franchised (including 20,774 franchised to conventional franchisees, 5,228 licensed to developmental licensees and 3,542 licensed to foreign affiliates ("affiliates"). The largest developmental licensee operates approximately 2,100 restaurants in 19 countries in Latin America and the Caribbean. Royalties from a percent of sales, net results in equity in earnings are received from foreign market affiliates with Japan being the largest affiliate with 3,100 restaurants.

Main Products

McDonald’s menu primarily focuses on hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages. In addition, the restaurants sell a variety of seasonal food and drink selections as promotional offers. In addition to burgers the restaurant also offers a limited breakfast menu that includes McDonald’s restaurants in the U.S. and many international markets offer a full or limited breakfast menu that includes but not limited to Egg McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches and hotcakes.

Geographic Operations

According the SEC annual report McDonald’s is geographically located in the United States ("U.S."), Europe, and Asia/Pacific, Middle East and Africa ("APMEA"), Canada and Latin America. The U.S., Europe and APMEA segments account for 32%, 40% and 23% of total revenues. The United Kingdom ("U.K."), France, Russia and Germany, collectively, account for 68% of Europe’s revenues; and China, Australia and Japan (a 50%-owned affiliate accounted for under the equity method), collectively, account for 52% of APMEA’s revenues. These seven markets along with the U.S. and Canada are “major markets” and comprise 75% of total revenues.

Recent Developments

Challenges for the cooperation include rising competition of fast food restaurants and coffee shops and food safety incidents. The cooperation is currently facing severe food safety concerns that can have negative impact on business. Although, food safety remains a top priority for McDonalds, recent food safety incidents, including instances of food-borne illness, have occurred in the food industry in the past, and could occur in the future. In 2014, food quality issues were discovered at a supplier to McDonald’s and other food companies in China that affected markets in both China and Japan. A continuation of food safety issues will affect the brand, decrease in sales/revenue and a loss of loyalty in customers.

PART 2, FINANCIAL OVERVIEW:

a. Sales and Income Record:

------------- Fiscal Years -------------

2014 2013 2012 2011 2010

Sales 18,169 18,875 18,603 18,293 16,233

Percent change in

sales each year 3.9% (1%) 1.7% (11%)

Net Income 4,758 5586 5465 5503 4946

Percent change in

net income each year 14.8% ( 2%) .7% (10%)

GRAPH OF SALES & NET INCOME, FY 2010 – 2014

COMMENTS: Comment on the trends you see in your numbers and on the graph.

Be sure to include comments! The numbers and the chart are meaningless by themselves. Comment on what you see.

b. Expense Distribution:

FY 2012

Major Expenses:

Company-operated restaurant expenses
Food & paper			6,318.2
Payroll & employee benefits			4,710.3
Occupancy & other operating expenses			4,195.2
Franchised restaurants-occupancy expenses			1,527.0
Selling, general & administrative expenses			2,455.2
Other operating (income) expense, net			(243.5)

PIE CHART OF EXPENSES, FY 2012

Note – Do not “explode”

the pie slices

COMMENTS: Comment on the company’s expense distribution.

c. Assets Distribution:

Year-end FY 2013

Assets:

Cash 2,798.7

Accounts receivable 1,319.8

Inventory 123.7

Prepaid expenses and other current assets 807.9

5050.1

Other assets: 5,828.9

Property and Equipment : 25,747.3

PIE CHART OF ASSETS, Year-end FY 2013

COMMENTS: Comment on the company’s asset distribution.

c. Capital Structure:

Year-end FY 2012

Capital Structure:

Current Liabilities

Accounts payable 1086.

Income taxes 215.5

Other taxes 383.1

Accrued interest 221.6

Accrued payroll and other liabilities 1,263.8

Long-term debt 14,129.8

Other Liabilities 1,669.1

Deferred income taxes 1,647.7

Common Equity 16.6

CAPITAL STRUCTURE PIE CHART, Year-end FY 2012

COMMENTS: Comment on the company’s capital structure.

PART 3, RATIO ANALYSIS:

(1) LIQUIDITY:

FY 2011 FY 2012

Current Ratio:

McDonalds ____ ____

Wendy’s ____ ____

Quick Ratio:

McDonalds ____ ____

Wendy’s ____ ____

Comments On McDonalds Liquidity:

Be sure to include comments! The numbers are meaningless by themselves. Comment

on what you see. What story do the numbers tell?

(2) ASSET MANAGEMENT

FY 2011 FY 2012

Total Asset Turnover:

McDonalds ____ ____

Wendy’s ____ ____

Average Collection Period:

McDonalds ____ ____

Wendy’s ____ ____

Comments On McDonalds Asset Management:

(3) DEBT MANAGEMENT:

FY 2011 FY 2012

Total Debt to Total Assets:

McDonalds ____ ____

Wendy’s ____ ____

Times Interest Earned:

McDonalds ____ ____

Wendy’s ____ ____

Comments On McDonalds Debt Management:

(4) PROFITABILITY:

FY 2011 FY 2012

Net profit Margin:

McDonalds ____ ____

Wendy’s ____ ____

Return on Assets:

McDonalds ____ ____

Wendy’s ____ ____

Return on Equity:

McDonalds ____ ____

Wendy’s ____ ____

Modified Du Pont Equation, FY 2012:

McDonalds Wendy’s

Net Profit Margin ____ ____

Total Asset Turnover ____ ____

Equity Multiplier ____ ____

Comments On McDonalds Profitability:

(5) MARKET VALUE RATIOS:

FY 2011 FY 2012

PE Ratio:

McDonalds ____ ____

Wendy’s ____ ____

Market to Book Ratio:

McDonalds ____ ____

Wendy’s ____ ____

Comments On McDonalds Market Value Ratios:

PART 4, CONCLUSIONS AND RECOMMENDATIONS

Summarize your analysis. Review your comments in the financial analysis section and provide your assessment of the overall status of the firm. Include any recommendations you think are appropriate.

List any other recommendations you have for the firm in view of your analysis.

Sales 2014 2013 2012 2011 2010 18169 18875 18603 18293 16233 Net Income 2014 2013 2012 2011 2010 4758 5586 5465 5503 4946