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Analyze McDonald's Financial Statement: growth, income, sales, expenses

See attach file.

Go to http://www.mcdonalds.com to find McDonalds' home page. Under the "Corporate" heading, select "Investors," and click on the most recent annual report (McDonalds may call it the "financial report").

Answer the following questions:

1. First open the balance sheet. Name two items on McDonalds' balance sheet that most likely represent unexpired (prepaid) costs. Name two items that most likely represent accruals of unrecorded expenses.

2. Has McDonalds grown in the past year? What did you look at to determine this?

3. Now look at McDonalds' income statement. Did the company's sales (revenues) grow during the past year? By how much? Did its income increase or decrease? By how much? Do the sales and income changes bode well or poorly for McDonalds' future?

4. Which financial statement provide evidence that McDonalds is a corporation, not a sole proprietorship or partnership?

5. Where can you find evidence in McDonalds' annual report that the financial statements were prepared using GAAP?

6. Explain how McDonalds' financial statement illustrate one of the basic concepts or principles found in this chapter of the text.

Solution Preview

Attached is the RTF file with the answers to the questions.

Go to http://www.mcdonalds.com to find McDonalds' home page. Under the "Corporate" heading, select "Investors," and click on the most recent annual report (McDonalds may call it the "financial report").

We are using 2007 Annual Report

Answer the following questions:

1. First open the balance sheet. Name two items on McDonalds' balance sheet that most likely represent unexpired (prepaid) costs. Name two items that most likely represent accruals of unrecorded expenses.

Unexpired (prepaid) costs: Prepaid expenses and other current assets, Assets of ...

Solution Summary

The solution analyzes McDonald's financial statements. The growth, income, sales and expenses are examined.

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