Mcdonald's Corporation Financial Essay

811 words - 4 pages

Industry Conditions
While a difficult economy has caused most consumers to spend less, the market for quick-service restaurants, has experienced slow growth recently (Standard and Poor’s, 2012). The increase in traffic from those switching from higher priced restaurants to quick-service restaurants has been balanced by the number of individuals who opt to eat at home to decrease their costs of eating out. Further, costs for quick-service restaurants have increased. According to Standard and Poor’s (2012), increases in food and paper costs this past year, have resulted in lower operating margins as restaurants are assuming the costs rather than increasing the cost of food for consumers. ...view middle of the document...

5 million with Starbucks a far-second at $40.5 million (Standard and Poor’s, 2012).
Economic Outlook for McDonald’s Corporation (MCD)
Investing in McDonald’s Corporation is a sound business decision. McDonald’s has a strong balance sheet. Anthony Dadlani (2008) believes that McDonald’s is really a real estate company. He further explains that the franchisees flip the burgers and run the restaurant but McDonald’s owns the best commercial property all over the world (Dadlani, 2008). In other words, all McDonald’s has to do is find good real-estate and their business model will make money. According to Kevin Murphy (2011), world population growth and an increase in the middle class, will create new opportunities for substantial growth for McDonald’s Corporation. In countries like China, India, Brazil, and Russia, there is increasing disposable income (Murphy, 2011). The volume of potential customers for McDonald’s Corporations worldwide is on the rise.
Likelihood of Investment
The financials for McDonald’s Corporation reflect opportunities for growth and expansion worldwide. According to Standard and Poor’s (2012), McDonald’s sales grew by 12% last year while net profit before taxes grew by 14.5%. Further, McDonald’s Corporation five year revenue growth rate is 5.26% and their five year earnings-per-share growth rate is a high 18% (Standard and Poor’s, 2012).  With great growth opportunities and global expansion opportunities, coupled with a dividend yield of 2.93%, this stock is a dependable financial investment at the current price (McDonald’s Corporation...

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