This website uses cookies to ensure you have the best experience. Learn more

Stock Investment Report For Mcd

2655 words - 11 pages


Prepared by: A. Smith
Date: 07/04/2011

Industry Overview

McDonalds Corporation (NYSE : MCD) is an American industry that is undoubtedly the world's leading fast-food service organization. Since its incorporation in 1955, McDonald's Corporation has spanned its services over 119 countries in 6 continents. About 80% of the restaurants are run by franchisees or through joint ventures with local business-people. The popular chain is well known for its Big Macs, Quarter Pounders, and Chicken McNuggets as well as more recent additions in response to changing customer palates - salads, wraps and smoothies. Helped by these new menu offers and the Mc Café line-up, ...view middle of the document...

Liquidity Ratios
Liquidity measures a company's capacity to pay its debts as they come due.
There are two ratios for evaluating liquidity.

- Current Ratio: shows how capable a business is in paying current liabilities
by using current assets only. It’s computed by:
Total Current Assets/Total Current Liabilities
For MCD (2011 Q1): 3824.2/4254.1 = .899
This indicates that MCD had only $.899 in short-term resources to service every $1 of current debt meaning the company was short of carrying an adequate level of liquid assets.

- Net Working Capital: used in order to help measure the cash and operating liquidity position of the business firm. It’s computed by:
Total Current Assets – Total Current Liabilities
For MCD (2011 Q1): 3824.2 – 4254.1 = - 429.9 million
This reinforces what the current ratio indicated i.e. after MCD pays its short-term debt it’ll be $429.9 million short in cash. There’s no operating liquidity cushion!

Cash management and the management of operating liquidity are important for the survival of a business. MCD can make a profit, but if they have a problem with their cash position, it doesn’t bode well.

Activity Ratios
Activity ratios are mainly of 3 types – accounts receivable turnover, inventory turnover and total asset turnover – and they evaluate how effectively the company manages and employs its assets.

- Accounts Receivable Turnover: shows how fast the business is collecting its receivables. It’s computed by: Total Net Sales/ Accounts Receivable

For MCD (2011 Q1) = 6,111.6/ 1,160.3 = 5.27
This means that MCD was turning its receivables about 5.3 times a year and also that every $1 invested in receivables was generating $5.27 in sales.

- Inventory Turnover: shows how many times the company sells its inventory. Faster turnovers are viewed as a positive trend as they increase cash flow and reduce warehousing and other related costs. This ratio is computed by:Total Net Sales / Inventory

For MCD (2011 Q1) = 6,111.6/111.5 = 54.81
This indicates that MCD is holding inventory for a little over a day for the last quarter. Being a fast-food services industry, one would look for such an inventory holding period.

- Total Assets Turnover: shows how efficiently a company generates sales on every $1 of assets. A volume indicator, this ratio measures the ability of the company's assets to generate sales. It’s computed by: Total Sales / Total Assets

For MCD (2011 Q1): 6,111.6/32,080.2 = .19
This suggests that MCD is generating 19 cents from every $1 invested in assets. It also indicates pricing strategy as companies with high profit margins have low asset turnovers.

Leverage Ratios
Leverage ratios indicate a company's vulnerability to risk. Two ratios – debt-equity and times interest earned – help evaluate leverage.

- Debt-Equity Ratio:...

Other Papers Like Stock Investment Report for Mcd

The History of Mcdonald's Essay

2686 words - 11 pages McDonald's. Mankato, MN: Creative Education, 2009. Print. Heller, L. (2011, March 8). Subway Is Now Bigger Than McDonald's - DailyFinance. Business News, Stock Quotes, Investment Advice - DailyFinance. Retrieved December 7, 2011, from "History of McDonald's Restaurants ::" History of McDonald's Restaurants :: N.p., n.d. Web. 10 Nov. 2012

Management Planning: Mcdonalds Essay

904 words - 4 pages /Response_to_Chicken_McNugget_Rumor.html (2009). Healing and hope for kids. Retrieved from /csr/report/community/support_of_rmhc.html? DCSext.destination= support_of_rmhc.html (2008). McDonald's Funds $100,000 Scholarships to Four Hispanic Students. Retrieved from http

International Financial Management

1423 words - 6 pages ) Government policy is another factor caused by imperfect market. This may have a significant effect on the investment climate in a particular host country, either directly through fiscal investives, monetary policies or the regulatory regime, or indirectly through the prevailing social environment. In addition, it also has firm-specific advantages. For example, Due to its powerful advertisings, when people talk about the McDonald’s, almost everyone will

Tim Hortons Strategic Analysis

1455 words - 6 pages campaigns and launch of new products * Marketing success in the “Roll Up the Rim” campaign * Introduction of specialty coffees and fruit smoothies * Percentage increase in revenue from 2010 to 2011 greater than McDonald’s and Starbucks * 12.48% revenue increase between 2010 and 2011 whereas only 12.17% for McDonald’s and 9.35% for Starbucks respectfully Tim Horton’s weaknesses: * Stock price isn’t increasing as

Financial Analysis of Mcdonald's Corporation

1652 words - 7 pages 2015, Don Thompson retires as President and CEO of the company. March 1, 2015 Steve Easterbrook became the CEO of McDonald’s. On July 1, wages will be one dollar over the local minimum wage at all company owned restaurants. All employees will be eligible for paid time off benefits after one year of service. July 16, 2015, McDonald’s declares quarterly cash dividend of $0.85 per share of common stock. During the year of 2015, McDonald’s

Case Analysis

5600 words - 23 pages the new products are developed by McD, it owns the trademark that makes it hard for competitor to replicate * There is a risk that the new menu might not be preferred by customers, McD can minimise these risk since it continue to offer its iconic core products and McD has the advantage of global network and its deepening connection with customers | Yes * Optimising its menu will further differentiate its brand from rivals * Customer will

Week 5 Problem Set

1279 words - 6 pages Week 5 Problem Set Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_5_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox. Chapter 10 (pages 345–348): 4. You bought a stock one year ago for $50 per share and sold it today for $55 per share. It paid a $1 per share dividend today

Blah Blah Blah

1277 words - 6 pages I. Introduction II. Two types of dilutive securities are convertible bonds and convertible preferred stock. A. Convertible bonds can be converted to other corporate securities during some specific time after issuance. B. Convertible preferred stock, includes an option for the holder to convert preferred shares into a certain number of common shares. Unlike convertible bonds, convertible preferred stock is considered equity (unless

Financiall Analysis

1601 words - 7 pages relatively low and is expected to keep decreasing in the future; 2) positive trend in the increasing value of real estate market; 3) financing activities, since 2008, are presented as cash outflows to buy back stock and pay dividends, which is beneficial for the investors. Price growth detractors for McDonald’s: 1) the sales growth is negative (-10.60%) in current quarter and shows no signs of significant improvement in the following year of

Stock Project Report

2497 words - 10 pages : 156.60% ^DJI performance: 8.84% Proportion of investment: 60.68% Period: 1/22/2016-3/24/2016 (8 weeks) Stock price activity 1/22: The stock price is down 9.01% and closed at 3.94. I think it is a good chance to buy the stock. So I buy it at 3.94. 3 1/26: The report shows the net income for fourth quarter is -4.1 billion, the number is better than predict. The stock price is up 6.6% and closed at 4.2. 1/29: Moody downgrade FCX from

Stock Anlysis

970 words - 4 pages and easier to use, and they have a Mac version. QB also has an online version that is VERY affordable, but limited and more appropriate for home finances. Both products are dependable and excellent. 2 – Explain the results from the four scenarios I. Scenario 1 Tab show there are $100,000 investment in six (6) difference stock companies. It shows the daily historical price with open, close, Gain/Loss for each stock company from 3/1/11

Related Essays

Financial Management. Investment Appraisal Report Of Organique For Archers Organic Foods Plc

4812 words - 20 pages content of this report has considered for this purpose is that of Organique, an unquoted thriving French based company that is looking to expand and establish wider European links. Obtaining a controlling interest of Organique will require an investment of 75% of the available shares. To evaluate whether or not this company represents a worthwhile purchase will require a full financial investment appraisal.1.4Before embarking on such an investment

Mcdonald's Corporation Financial Essay

811 words - 4 pages their cash flow and current assets have increased steadily since 2009 (Standard and Poor’s, 2012). McDonald’s Corporation is the leader in market value with $98.5 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

Acc 300 Week 5 Team Assignment Problem Set Pe 2, E7 5, E7 6, E7 9

2283 words - 10 pages . Oct. 1 Sold the CRT bonds for $77,000 less $1,300 brokerage fees. The fair values of the NJK and SEK common stocks were at $39 and $30 in every corresponding share at December 31. Instructions (a) Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T account form.) (b) Prepare the adjusting entry at December 31, 2012, to report the investments at fair value. All securities are

Mcdonald’s Corporation Essay

1796 words - 8 pages targeted them with nonfood related products, such as playland, clothes and toys. Untapped markets : McD Social responsibilities and other concern * Stated principal in annual report “being good coorporate citizen means treating people with fairness an d integrity, and sharing success with the communities in which we do business” that makes overall corporate strategy includes many charitable programs. * Ronald McDonald house