Analyze Financial Statements and Assess Performance
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Analyze the financial statements and assess whether the financial performance has improved or declined year-over-year.
Analysis techniques include the following:
â?¢ comparative financial statements
â?¢ trend analysis
â?¢ ratio analysis
â?¢ percentage analysis
How does McDonald's handle: Liquidity, Solvency, Profitability, and Management Efficiency such as inventory, assets etc.
Provide an analysis of the performance of the firm based on the analysis tools used
Provide 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.
Data attached:
McDonalds Corporation input your answers in the grey cells
Consolidated Income Statement
Fiscal Year Ended
Years ended December 31, 2010 % change 2009 % change 2008 % change
Sales by Company-operated restaurants $16,233.3 $15,458.5 $16,560.9
Revenues from franchised restaurants $7,841.3 $7,286.2 $6,961.5
Total revenues $24,074.6 100.00% $22,744.7 100.00% $23,522.4 100.00%
OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses
Food & paper $5,300.1 22.02% $5,178.0 22.77% $5,586.1 23.75%
Payroll & employee benefits $4,121.4 17.12% $3,965.6 17.44% $4,300.1 18.28%
Occupancy & other operating expenses $3,638.0 $3,507.6 $3,766.7
Franchised restaurants-occupancy expenses $1,377.8 $1,301.7 $1,230.3
Selling, general & administrative expenses $2,333.3 $2,234.2 $2,355.5
Impairment and other charges (credits), net $29.1 $(61.1) $6.0
Other operating (income) expense, net $(198.2) $(222.3) $(165.2)
Total operating costs and expenses $16,601.5 $15,903.7 $17,079.5
Operating income $7,473.1 $6,841.0 $6,442.9
Interest expense-net of capitalized interest of $12.0, $11.7 and $12.3 $450.9 $473.2 522.6
Nonoperating (income) expense, net $21.9 $(24.3) -77.6
Gain on sale of investment $- $(94.9) -160.1
Income before provision for income taxes $7,000.3 $6,487.0 6,158.00
Provision for income taxes $2,054.0 $1,936.0 1,844.80
Net income $4,946.3 $4,551.0 4,313.20
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Solution Summary
This solution illustrates how to perform vertical and horizontal analyses on a company's financial statements, and how to compute selected ratios, in order to determine whether its finance condition has improved or deteriorated.
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