Financial Analysis:

McDonalds Corporation

Overview
Largest fast food restaurant
operator
Serves 47 + million people daily
32,737 restaurants in 117
countries
System-wide sales of $33 + billion

Purpose of Analysis
To assist users in the decision making
processes.

Internal Users
Managers
Auditors
Officers

External Users
Shareholders
Lenders
Customers

Comparative Balance Sheet

Consolidated Balance Sheet
In millions, except per share data Decemeber 31,2010
2010
ASSETS
Current assets
Cash and equivalents
Accounts and notes receivable
Inventories, at cost, not in excess of market
Prepaid expenses and other current assets
Total current assets
Other assets
Investments in and advances to affiliates
Goodwill
Miscellaneous
Total other assets
Property and equipment
Property and equipment, at cost
Accumulated depreciation and amortization
Net property and equipment
Total assets
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
Accounts payable
Income taxes
Other taxes
Accrued interest
Accrued payroll and other liabilities
Current maturities of long-term debt
Total current liabilities
Long-term debt
Other long-term liabilities
Deferred income taxes
Shareholders equity
Preferred stock, no par value; authorized 165.0 million shares; issued none
Common stock, $.01 par value; authorized 3.5 billion shares; issued 1,660.6 million shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Common stock in treasury, at cost; 607.0 and 583.9 million shares
Total shareholders equity
Total liabilities and shareholders equity

2009 Dollar Change

Percent Change

$
$
$
$
$

2,387.00
1,179.10
109.90
692.50
4,368.50

$
$
$
$
$

1,796.00
1,060.40
106.20
453.70
3,416.30

$
$
$
$
$

591.00
118.70
3.70
238.80
952.20

32.91%
11.19%
3.48%
52.63%
27.87%

$
$
$
$

1,335.30
2,586.10
1,624.70
5,546.10

$
$
$
$

1,212.70
2,425.20
1,639.20
5,277.10

$
$
$
$

122.60
160.90
(14.50)
269.00

10.11%
6.63%
-0.88%
5.10%

$ 33,440.50 $
$ (11,909.00) $
$ 21,531.50 $
$ 30,224.90 $

1,041.90
(512.80)
529.10
1,747.30

3.12%
4.31%
2.46%
5.78%

$
$
$
$
$
$
$
$
$
$

307.90
(91.10)
(1.80)
4.90
(274.10)
(9.80)
(64.00)
936.70
223.80
53.50

48.41%
-45.01%
-0.65%
2.50%
-16.52%
-54.14%
-2.14%
8.87%
16.42%
4.18%

$
16.60
$
4,853.90 $
$ 31,270.80 $
$
747.40 $
$ (22,854.80) $
$ 14,033.90 $
$ 30,224.90 $

342.50
2,540.90
5.50
(2,288.60)
600.30
1,750.30

7.06%
8.13%
0.74%
10.01%
4.28%
5.79%

$
$
$
$

34,482.40
(12,421.80)
22,060.60
31,972.20

$
$
$
$
$
$
$
$
$

943.90
111.30
275.60
200.70
1,384.90
8.3
2,924.70
11,497.00
1,586.90
1,332.40

$
$
$
$
$
$
$

16.60
5,196.40
33,811.70
752.90
(25,143.40)
14,634.20
31,975.20

$
$
$
$
$
$
$
$
$

636.00
202.40
277.40
195.80
1,659.00
18.1
2,988.70
10,560.30
1,363.10
1,278.90

Balance Sheet
Summary
2010 Total Assets of $31,972.20 billion
up by 5.78% from 2009
Current Assets up 27.8% led by:
Cash up 32.9%
Prepaid Expenses & Other Current
Assets up by 27.9%
Accounts & Notes Receivable down
by 11.2%

Income Statement
Comparative Income Statement
In millions, except per share data Years ended December 31
REVENUES
Sales by Company-operated restaurants
Revenues from franchised restaurants
Total revenues
OPERATING COSTS AND EXPENSES
Company-operated restaurant expenses
Food & paper
Payroll & employee benefits
Occupancy & other operating expenses
Franchised restaurantsoccupancy expenses
Selling, general & administrative expenses
Impairment and other charges (credits),
Other operating (income) expense
Total operating costs and expenses
Operating income
Interest expensenet of capitalized interest
Nonoperating (income) expense
Gain on sale of investment
Income before provision for income taxes
Provision for income taxes
Net income
Earnings per common sharebasic
Earnings per common sharediluted
Dividends declared per common share
Weighted-average shares outstanding-basic
Weighted-average shares outstandingdiluted

2010
$ 16,233.30
$ 7,841.30
$ 24,074.60

$5,300.10
$4,121.40
$3,638.00
$1,377.80
$2,333.30
29.1
-$198.20
$16,601.50
$7,473.10
$450.90
$21.90

2009
$ 15,458.50
$ 7,286.20
$ 22,744.70

$5,178.00
$3,965.60
$3,507.60
$1,301.70
$2,234.20
-61.1
-$222.30
$15,903.70
$6,841.00
$473.20
-$24.30
-$94.90
$7,000.30
$6,487.00
$2,054.00
$1,936.00
$ 4,946.30 $ 4,551.00
$
4.64 $
4.17
$
4.58 $
4.11
$
2.26 $
2.02
$ 1,066.00 $ 1,092.20
$ 1,080.30 $ 1,107.40

2008
$ 15,560.90
$ 6,961.50
$ 23,522.40

$5,585.10
$4,300.10
$3,766.70
$1,230.30
$2,355.50
6
-$165.20
$17,079.50
$6,442.90
$522.60
-$77.60
-$160.10
$6,158.00
$1,844.80
$ 4,313.20
$
3.83
$
3.76
$
1.63
$ 1,126.60
$ 1,146.00

Income Statement
Summary
2010 Revenues of $24,074.60
billion
5.85% increase from 2009
Company-owned store revenue
$16,233.3 million
67.4% of total
Franchises/affiliates revenue
$7,841.3 million
32.6% of total

Income Statement
contd
Net Income went up 8.69%
Revenues up by 5.85%
Operating Costs and Expenses up by
only 4.4%
Total Op. Costs and Exp. 45.01%
Revenue
Most expenses increased by 5-11.8%
SG&A increased by only 4.4%

Net Income beats industry

McDonalds Profit Margin = 9.3%

Analysis
Based on comparative financial
statements
Revenue increased yearly from
2008 to 2010
McDonalds is above current
market margin
Total assets increased by 5.78%

Conclusion

Comparable sales grew 5.0% and guest counts rose 4.9%, building on
2009 increases of 3.8% and 1.4%, respectively.
Revenues increased 6% (5% in constant currencies).
Company-operated margins improved to 19.6% and franchised margins
improved to 82.4%.
Operating income increased 9% (9% in constant currencies).
Earnings per share was $4.58, an increase of 11%.
Cash provided by operations increased $591 million to $6.3 billion.
The Company increased the quarterly cash dividend per share 11% to
$0.61 for the fourth quarterbringing the current annual dividend rate to
$2.44 per share.
One-year ROIIC was 37.3% and three-year ROIIC was 38.3% or the period
ended December 31, 2010
The Company returned $5.1 billion to shareholders through share
repurchases and dividends paid

References
Mcdonalds.(n.d.).2010 Annual Report. Retrived
4/13/2011 from
http://www.aboutmcdonalds.com/etc/medialib/about
McDonalds/investor_relations3.Par.56096.File.dat/2
010%20Annual%20Report%20(print).pdf