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Ratio Analysis

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Has the financial performance of McDonald's Corporation improved or declined year-over-year? Provide an analysis of the performance of the firm based on the analysis tools used, and a summary of the company's financial performance and assessment of whether it has improved or declined year-over-year in terms of profitability, asset utilization, and liquidity.

Analysis techniques include the following:

Comparative financial statements
Trend analysis
Ratio analysis
Percentage analysis

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Solution Summary

Comparative financial statements
Trend analysis
Ratio analysis
Percentage analysis

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MC DONALDS CORPORATION
1. RATIO ANALYSIS
LIQUIDITY
Current Ratio = Current Assets/Current Liabilities
2011 = 4,403,000/3,509,200 = 1.25
2010 = 4,368,500/2,924,700 = 1.49
2009 = 4,368,500/2,988,700 = 1.46
Quick Ratio = (Current Assets - Inventory)/Current Liabilities
2011 =( 4,403,000 - 116,800)/ 3,509,200 = 1.22
2010 = (4,368,500 - 109,900)/2,924,700 = 1.46
2009 = (4,368,500 - 106,200)/2,988,700 = 1.43
ACTIVITY
RECEIVABLES TURNOVER = Net Sales/Average Receivables
2011 = 27,006,000/[( 1,334,700 + 1,179,100)/2]
= 27,006,000/1,256,900 = 21.49

2010 = 24,074,600/[( 1,179,100 +1,060,400)/2]
= 24,074,600/2239500 =10.75

INVENTORY TURNOVER = Cost of Goods Sold/Average Inventory
2011 = 16,319,400/[( 116,800 ...

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