A presentation about McDonalds done for my Business class

1. McDonalds (MCD)
Kimberly Phan – Jonathan Davila – Yolanda Navarro – Matt Rivamonte
1

2. 2 Outline
 Introduction: Presentation of the company, facts, and information.
 Current Stock Prices and Historical Trends:
 Stock price charts and trends.
 Discussion of reasons for increases and decreases in stock prices compared to other
companies.
 Financial Statement Analysis:
 Common size income statement and balance sheet (Trend Analysis)
 Horizontal Analysis for key figures (Trend Analysis)
 Ratio Analysis:
 Liquidity Ratios: Ratios that are used to determine a company's ability to pay off its short-term
debt obligations. Generally, the higher the value of the ratio, the larger the margin of safety
that the company possesses to cover short-term debts.
 Solvency Ratios: Ratios that are used to measure the size of a company's after-tax income,
excluding non-cash depreciation expenses, as compared to the firm's total debt obligations. It
provides a measurement of how likely a company will be to continue meeting its debt
obligations.
 Profitability Ratios: Ratios that are used to assess a business's ability to generate earnings as
compared to its expenses and other relevant costs incurred during a specific period of time.
For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio
from a previous period is indicative that the company is doing well.
 Industry Analysis/Current Events: Recap of the Industries averages and current events
that have affected the companies performance.
 Conclusion: Recommendation on the purchasing of McDonalds stock.
 Bibliography: Compilation of sources used.

3. 3
Intro
 Mc Donald’s Corporation is a chain of
hamburger fast food restaurants. It is the world’s
largest chain in this industry serving up to 64
million customers daily all around the world.
 Today McDonalds is presented in 119 countries
with its headquarters still in the United States. It
operates over 33,000 locations worldwide. Each
fast food restaurant is owned by either the
corporation itself, a franchisee, or an affiliate.
 The company has an intricate and different
business design. While expanding to franchise
owning, the company itself still owns and
operates over 15% of their restaurants. They have
continuously increased their dividends for their
shareholders, for 25 consecutive years.

4. 4 This picture has gold lights across the Contiguous United States,
each representing the distance to the nearest McDonald’s.
Within the next year, McDonald’s plans to spend $2.9
billion in capital expenditures. This will include the
opening of more than 1,300 restaurants and 2,400
renovations of currently operating locations.

5. Current Stock Prices and Historical Trends 5
McDonald’s Corporation currently has a 52-week high of $95.45 and a
low of $72.14. They are afloat around $93.00 currently. The stock has
steadily increased 22% for the past year, which is clearly better than the
market at large considering the current economic downturn.
The company has affirmed an increase in their targets of annual growth
from 3% to 5%, operating income from 6% to 7%, and their return on
invested capital in the high teens.
Reasons for their growth include the broadening of their dollar menu,
beneficial to those who are watching their money on food intake.
It has been noted that the company continues to make a significant part
of their profitable income on their McCafe beverages. The prices of their
McCafe line are comparable to that of Starbucks (SBUX) and other
leading beverage companies.

6. The Company’s recent announcement to their Board of Directors 6
declaring their most recent quarterly cash dividend of $0.70 per share of
their common stock to shareholders of December 15th. This is significant
because it represents an increase of 15% over their previous dividend rate.
As shown in the historical chart above, for one year, McDonald’s growth
from November 2010 to November 2011 has substantially grown
disregarding all of the economic barriers that have slowed down growth
all across the stock market. In comparison to its competitor Jack and the
Box, the two follow a similar pattern but McDonald’s still stays above in its
market value.

7. Horizontal Comparative Balance Sheet
7 For the Years Ended December 31, 2010, 2009 and 2008
Dec 31, Dec 31,
% Dec 31, 2009 %
2010 2008
Assets
Cash and Cash Equivalents 2,387,000 32.9% 1,796,000 (13.0%) 2,063,400
Net Receivables 1,179,100 11.2% 1,060,400 13.9% 931,200
Inventory 109,900 3.5% 106,200 (4.8%) 111,500
Other Current Assets 692,500 52.6% 453,700 10.3% 411,500
Total Current Assets 4,368,500 27.9% 3,416,300 (2.9%) 3,517,600
Long Term Investments 1,335,300 10.1% 1,212,700 (0.8%) 1,222,300
Property Plant & Equipment 22,060,600 2.5% 21,531,500 6.3% 20,254,500
Goodwill 2,586,100 6.6% 2,425,200 8.4% 2,237,400
Other Assets 1,624,700 (0.9%) 1,639,200 33.3% 1,229,700
Total Assets 31,975,200 5.8% 30,224,900 6.2% 28,461,500
According to the horizontal analysis, the comparative balance sheet
indicates that McDonald’s Corp.’s current assets have decreased 2.9% from
2008 to 2009, and increased 27.9% from 2009 to 2010. Its property plant and
equipment has increased 6.3% from 2008 to 2009, and increased 2.5% from
2009 to 2010. Its total assets also increased, from 2008 to 2009 it has increased
6.2% and from 2009 to 2010 it has increased 5.8%.

8. Dec 31,
Dec 31, 2010 % % Dec 31, 2008
8 Liabilities
2009
Accounts Payable 2,916,400 (1.8%) 2,970,600 18.5% 2,506,100
Short/Current Long Term Debt 8,300 (54.1%) 18,100 (43.1%) 31,800
Total Current Liabilities 2,924,700 (2.1%) 2,988,700 17.8% 2,537,900
Long Term Debt 11,497,000 8.9% 10,560,300 3.7% 10,186,000
Other Liabilities 1,586,900 16.4% 1,363,100 (3.3%) 1,410,100
Deferred Long Term Liability 1,332,400 4.2% 1,278,900 35.3% 944,900
Charges
Total Liabilities 17,341,000 7.1% 16,191,00 7.4% 15,078,900
Stockholders’ Equity
Common Stock 16,600 0% 16,600 0% 16,600
Retained Earnings 33,811,700 8.1% 31,270,800 8.0% 28,953,900
Treasury Stock (25,143,400) (11.3%) (22,854,800) (12.6%) (20,289,400)
Capital Surplus 5,196,400 7.1% 4,853,900 5.5% 4,600,200
Other Stockholder Equity 752,900 0.7% 747,400 637.8% 101,300
Total Stockholder Equity 14,634,200 4.3% 14,033,900 4.9% 13,382,600
Net Tangible Assets 12,048,100 3.8% 11,608,700 4.2% 11,145,200
Their total current liabilities have increased 17.8% from 2008 to 2009, which is not a very good thing; however, it has
decreased 2.1% from 2009 to 2010 and that means they are paying off their debts. Their total liabilities on the other
hand has increased 7.4% from 2008 to 2009, and increased 7.1% from 2009 to 2010, which is better than the previous
year. They have increased their retained earnings by 8.0% from 2008 to 2009, and increased 8.1% from 2009 to 2010.
Total stockholders’ equity also has increased from 2008 to 2009 by 4.9%, and 2009 to 2010 has increased 4.3% which
is a little bit less than the previous year. Last but not least, net tangible assets has increased 4.2% from 2008 to 2009
and increased 3.8% from 2009 to 2010.

9. Horizontal Comparative Income Statement
For the Years Ended December 31, 2010, 2009, and 2008
Dec 31, 2010 % Dec 31, 2009 % Dec 31, 2008
9
Total Revenue 24,074,600 5.8% 22,744,700 (3.3%) 23,522,400
Cost of Revenue 14,437,300 3.5% 13,952,900 (6.3%) 14,883,200
Gross Profit 9,637,300 9.6% 8,791,800 1.8% 8,639,200
Selling General and Administrative 2,135,100 6.1% 2,011,900 14.6% 2,355,500
Non Recurring 29,100 147.6% (61,100) 26.6% (48,500)
Operating Income or Loss 7,473,100 9.2% 6,841,000 8.0% 6,332,200
Total Other Income/Expenses Net (21,900) (118.4%) 119,200 (49.9%) 237,700
Earnings Before Interest and Taxes 7,451,200 7.1% 6,960,200 4.2% 6,680,600
Interest Expense 450,900 (4.7%) 473,200 (9.5%) 522,600
Income Before Tax 7,000,300 7.9% 6,487,000 5.3% 6,158,000
Income Tax Expense 2,054,000 6.1% 1,936,000 4.9% 1,844,800
Net Income From Continuing Ops 4,946,300 8.7% 4,551,000 5.5% 4,313,200
Net Income 4,946,300 8.7% 4,551,000 5.5% 4,313,200
Net Income Applicable To Common 4,946,300 8.7% 4,551,000 5.5% 4,313,200
Shares
According to the horizontal analysis, the comparative income statement indicates that total revenue of
McDonald’s Corp. has decreased 3.3% from 2008 to 2009; however, it has increased 5.8% from 2009 to
2010 which means McDonald’s has done better in 2010 than previous two years. The cost of revenue is
highest at 2008 and it decreased 6.3% in 2009, but then it increased 3.5% from 2009 to 2010. According to
gross profit, operating income or loss, and net income, McDonald’s Corp. has done better in 2010 than
the previous two years. It has increased 1.8% from 2008 to 2009 and increased 9.6% from 2009 to 2010 in
gross profit. It has also increased 8.0% from 2008 to 2009 and increased 9.2% from 2009 to 2010 in
operating income. Furthermore, its net income has increased 5.5% from 2008 to 2009 and increased 8.7%
from 2009 to 2010.

10. Ratio
10
Analysis
Jack in the
Ratios McDonalds Industry
Box
Debt to Equity 93.94 98.29 82.17
Current Ratio 0.87 0.96 1.16
Accounts Receivable Turnover 23.81 35.12 197.50
Inventory Turnover 145.93 49.33 39.41
Net Sales to Assets .83 1.62. 1.55
Rate Earned on Total Assets 16.92% 4.47% 7.29%
Rate Earned on Common
39.80% 20.82% 13.11%
Stockholders’ Equity
Operating Margin 31.32 4.74 7.75
EPS 12.61 29.17 ---
P/E Ratio 18.38 12.25 28.44

11. 11
The End
Hope you enjoyed our Presentation!