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Table of Contents
1.Introduction..............................................................................................................................................3
1.1.Kentucky Fried Chicken (KFC) Background.....................................................................................3
1.2 MC Donald’s......................................................................................................................................5
2. Ratio analysis...........................................................................................................................................8
..................................................................................................................................9
Ratio Analysis of KFC/MCDonalds

3.Shareholders & stockholders..................................................................................................................14

3.1KFC....................................................................................................................................................14
3.2Mc Donald’s......................................................................................................................................15
4.Conclusion..............................................................................................................................................16
4.1 KFC...................................................................................................................................................16
4.2 McDonald’s......................................................................................................................................16
5. Recommend..........................................................................................................................................17
6. References.............................................................................................................................................18
7. Appendix................................................................................................................................................19
7.1 KFC...................................................................................................................................................19
KFC Statement for 2014/15.....................................................................................................................................20
7.2 McDonald’s......................................................................................................................................21
McDonald’s statement for 2014/15 ..............................................................................................................................23

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1. Introduction
1.1. Kentucky Fried Chicken (KFC) Background
Company Name KFC HOLDINGS (MALAYSIA)
BERHAD  

Stock Name KFC    

Category Financial Results

Reference No KH-080820-33648

KFC is a fast food restaurant founded in 1930. Pete Harman became the
first Kentucky Fried Chicken franchisee with a store in Salt Lake in 1952.
KFC sells chicken pieces, wraps, salads and sandwiches but originally
focus in fried chicken .KFC is present in 110 countries and territories
around the global. It has in excess of 5,200 outlets in the USA and more
than 15,000units in other side of the world. Many KFC locations are co-
locate with one or more of Yum!Brands restaurants, Long John Silver’s,
Taco Bell, Pizza Hut or A&W Restaurant. KFC is among the best-
established brands under the QSR Brands Bhd in the Western Quick Service Restaurants market.
It is by far the most popular restaurant chain in the Malaysia, commanding a Market share of
over 44% per cent. With about more than 600 KFC restaurants in Malaysia, Singapore and
Brunei, KFC sees millions of people flocking to its various outlets year in, year out. The first
KFC in Malaysia was opened in 1973 on Jalan Tunku Abdul Rahman. Today there are more than
500 KFC Restaurants nationwide and still counting.
Dinner Plate, Colonel Chicken Rice Combo, Toasted Twlster, Zinger Burger are some of the
famous and popular Products or food menu in KFC Malaysia. Colonel’s menu, Breakfast,
Family, Teens, kids meals are services that the KFC offer to customer for any age. Kid’s meals
served with a choice of chicken, side, fries, drink and toys of the month and also have dinner

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palate for dinner time or family package for 4to5 persons. Some locations are selling KFC
Mashies balls of mashed potato cooked in original recipe batter.
KFC is a subsidiary of Yum! Brands, one of the largest restaurant companies in the world. KFC
had sales of $23 billion in 2015. By December 2015, there were 18,875 KFC outlets in 118
countries and places around the world. There are 4,563 outlets in China, 4,491 in the United
States, and 9,821 across the rest of the world. Outlets are owned by franchisees or directly by the
company. Eleven percent of outlets are company owned, with the rest operated by franchise
holders. Although capital intensive, company ownership allows for faster expansion of the chain.
Against this background, 2011 was yet another year of outstanding achievement for KFC. Most
importantly, a fundamentally stellar financial performance has enabled the Group to continue
making major capital investments that will secure the future of the Group for years to come,
while maintaining a healthy bottom line for the period under review. In short, for KFC, after five
years of remarkable growth, 2011 was a story of consolidation that has positioned the Group to
take the next leap forward in 2014 and beyond.
1.2 MC Donald’s
McDonald’s is the world’s top quick service
restaurant chain with more than 34,000 restaurants
worldwide, serving more than 69 million customers
daily in over 100 countries. In Malaysia,
McDonald’s serves over 13 million customers a
month in more than 250 restaurants nationwide.
McDonald’s employs more than 12,000 Malaysians
in its restaurants across the nation providing career,
training and development opportunities. The
beginning of McDonald's started with Raymond
Albert Kroc. Ray Kroc was the exclusive distributor
of a milk shake maker called the Multimixer.
Meanwhile, two brothers, Richard and Maurice
McDonald owned and ran a hamburger restaurant in
San Bernadino, California, in the 1950s. Ray Kroc
heard how well the McDonald brothers were doing

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using his Multimixers to serve their customers. He met up with them and acquired the
franchising right from them to run McDonald's restaurants.A great success story was in the
making. In 1955, Ray Kroc founded the McDonald's Corporation and opened the first restaurant
in Des Plaines, Illinois. In 1961, he bought out the McDonald brothers. And the rest, as they say,
is history. McDonald's grew into the largest restaurant organisation in the world. Today, there are
more than 33,000 McDonald's restaurants in 119 countries. Ray Kroc died in 1984 but his legacy
is very much alive. His success story continues with McDonald's families of employees,
franchisees and suppliers. His commitment, dedication and achievements continue to live on at
McDonald's restaurants across the world.
From the statement of McDonald’s operations strategy, it is clear that both consistent and high-
performance quality are considered order winners, while speed, cost, and innovation are
considered order qualifiers.
Evaluation of the operations strategy:

* Internal and external consistency - Looking at the operations strategy along the seven
dimensions, they all support the operations mission and the business strategy from the previous
page.

* Contribution to competitive advantage - Systemic strategy creates unmatched consistency

in operations that has been difficult to imitate.
They believes that McDonald’s performance under these circumstances is due in large part to the
commitment and experience of your senior management team, led by Jim Skinner, Vice
Chairman and CEO. Jim is a strong leader and a tireless advocate for McDonald’s customers and
for our shareholders.

Liquidity Ratio
Liquidity refers to the ability of asset to be converted easily into cash without affecting the value
of the asset. Liquidity ratios refer to the ability of the company to discharge its claims or short-
term obligations by cash and assets that can be converted into cash in a short period. Liquidity is
important in operating the business activities. A poor liquidity status is an early indication that
the company is facing fundamental problems. The liquidity ratios are shown in Figure below:

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Profitability Ratio
The profitability ratio measures the effectiveness of the company in generating returns from
investments and sales. It is used as a sign to determine the business's efficiency and effectiveness
in achieving its profit objective. Profitability ratios are shown in Figure below:

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2. Ratio analysis

Formula KFC McDonald’s

2015 2015
RM RM

Current Ratio Current Assets ÷ Current 447,657 ÷ 365,796= 3,416.3 ÷ 2,988.7=

Liabilities = Current ratio
1.22 1.14

Quick Ratio Current Assets – (447,657 - 218) ÷ (3,416.3 – 166.2) ÷

Inventory 365,796 = 0.62 Times 2,988.7 = 0.96 Times
Current liability

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 Total Assets Sales÷ Total asset 1,290,032÷ 1,218,933= 4,030.0÷ 3,225=
Turnover 1.058 7.5

Inventory Cost of goods ÷ inventory 1,078,498÷ 172,339= 12,651÷ 106.2=

Turnover 6.258 119.13

Debt Ratio Total liabilities ÷Total 486,222÷ 1,290,470= 2,988.7 ÷30.255=

asset 0.377 0.54

Debt Equity Total Debt ÷ 120.4÷791.8= 44.83÷46.43=

Ratio Shareholders equity 0.152 1.15

Net Profit Net profit × 100 132,797 × 100 = 159,702 × 100 =

Margin 1,078,498 1,167,928
Sales
12.31 % 20.1 %

Return on Net income × 100 132,797 × 100= 159,702 × 100=

Assets 1,290,470 1,583,032
Total asset
10.30% 14.90%

Return on Net income × 100 132,797 × 100 = 237.80 × 100 =

Equity 791,757 46.43
Shareholders' Equity
16.77% 31.89%

Ratio Analysis of KFC and MCDONALD’S 2015

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 Ratio Analysis 2014

Formula KFC McDonald’s

2014 2014
RM RM

Current Ratio Current Assets ÷ Current 174,337÷ 30,113 4,185.5 ÷ 2747.9=

Liabilities = Current ratio
=5.78 1.52

Quick Ratio Current Assets – 174,337÷ 30,113 (4185.5 – 110) ÷

Inventory = 5.7 Times 2,747.9 = 1.48 Times
Current liability

Total Assets Sales÷ Total asset 2522.40÷ 46.4= 27.44÷ 34.281=

Turnover 54.23 0.80

Inventory Cost of goods ÷ inventory - -

Turnover

Debt Ratio Total liabilities ÷Total 577.8÷ 1583= 34281.4 ÷12.853=

asset 0.37 0.625

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 Debt Equity Total Debt ÷ Shareholders 160.5÷990.2= 14.990 ÷12.853=
Ratio equity 0.162 1.17

Net Profit Net profit × 100 159,702 ÷ 1,167,928 × 4.758 × 100 =

Margin 100 27.441
Sales
= 13.67 % 17.34 %

Return on Net income × 100 159,702 × 100= 4.758 × 100=

Assets 1,583,032 34.28
Total asset
10.08% 13.88%

Return on Net income × 100 159,702 × 100 = 4.758 × 100 =

Equity 990,247 12.853
Shareholders' Equity
16.12% 37.02%

Ratio Analysis of KFC and MCDONALD’S 2014

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 KFC McDonald’s Analysis
2015/14
2015/14
Current Ratio 1.22 / 5.78 1.14 / 1.52 The Both company is secure
at the year 2015/14 in
paying current debts as the
company have enough cash
on hand to meet accounts
payable. The higher the
ratio to be greater than 1,
the more financially secure
a company is in the short
term as a company have
enough cash on hand to
meet accounts payable.
Increase in current ratio
over a period of time may
suggest improved
liquidity of the company
or a more conservative
approach to working
capital management. A
decreasing trend in the
current ratio may suggest
a deteriorating liquidity
position of the business or
a leaner working capital
cycle of the company
through the adoption of
more efficient
management practices.

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Quick Ratio 0.75 / 5.7 Times 0.96 / 1.48 Times The quick ratio in year
2014/15, shows that firm
KFC had little problems in
paying its current debt
since little bit below 1 with
selling its most liquid assets
to cover its short term
debts.
Total Assets Turnover 1.058 / 54.23 7.5 / 0.80 Total asset for KFC in
2014/15. The asset turnover
ratio for KFC is therefore
1.058 2015. McDonald’s in
2015 total asset is 7.5 RM
get a better turnover than
KFC
Inventory Turnover 6.258 /5.82 119.13 / Inventory turnover in 2015
is 6.26, in 2014 is 5.82.This
means Inventory turnover
in 2015 is better than 2014
for KFC.
Debt Ratio 2.654 / 0.37 0.54 / 0.625 Debt ratio greater than 1
indicates that the company
has more debt than assets
and liabilities of less than 1
indicates that the
company's assets is greater
than the debt. In 2015debt
ratio of KFC is more than 1;
this means KFC has more
debt than assets.
Debt Equity Ratio 0.152 / 0.162 1.15 / 1.17 Debt equity ratio one of the
important part of company.
This is leverage financial of
company to how much
interest pay to shareholders.
Debt equity ratio of
McDonald’s in 2015 is 1.15
and KFC is 0.152.IN 2014
McDonalds is 1.17 and KFC
is 0.162.

Net Profit Margin 12.31 % / 13.67 % 20.1 % / 17.34 % The KFC in, 2014/15 shows
low ratio of profitability this
means that a company is
more efficient at converting
sales into actual profit but
McDonald’s with 20.1% net
profit margin in 2015 shows

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Return on Assets
Return on Equity
high ratio of profitability.
10.30% / 10.08% 14.90 % / 13.88 % Decreeing return of asset
from 2015 by 10.30% to
14.90% but return of asset
in higher values of return
on assets show
McDonald’s business is
more profitable. This is
happen also in 2014.
16.77% / 16.12% 31.89 % /37.02 % Shareholders help to KFC
and McDonald’s
profitability ratio from
them. Return on equity of
the KFC are 16.12% in
2015 and 16.12% in
2014, 31.89% in 2015
and 37.02& in 2014 and
more satisfactory
compared for the industry
average. This shows that
the management of the
company is more efficient
compared to the industry
average.

3. Shareholders & stockholders

3.1KFC
Number of shareholder in KFC is 198,275. The Group presents basic and diluted earnings
per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit
or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all dilutive potential ordinary
shares, which comprise convertible notes and share options granted to employees.

3.2Mc Donald’s
During the 2015, the company came back $5. 1 million to shareholders as a result of a mix of
stocks repurchased and dividends settled, providing your three-year complete to $16. 6 million
under the Company’s $15 million to $17 million income came back to shareholders goal for

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2013 as a result of 2015. Outstanding common stock with no specified expiration date. In 2015,
approximately 50 million shares were repurchased for $2.9 billion, of which 8 million shares or
$0.5 billion were purchased under the new program. The Company reduced its shares
outstanding at year end by over 3% compared with 2014, net of stock option exercises

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 4. Conclusion
4.1 KFC. According to KFC financial statement report they have audited the financial
statements of KFC Holdings (Malaysia) Bhd, which comprise the statements of financial
position as at 31 December 2016 of the Company, and the statements of comprehensive income,
statements of changes in equity and statements of cash flows of the company for the year then
ended.
Financial analysis quantitative relation is appropriate to be used once the corporate needs to
interpret the money statements of the corporate. Liquidity ratios like internet assets, current
quantitative relation and fast quantitative relation permits the mensuration of the company’s
ability to fulfil its short-run maturity claims. Plus management ratios live the company’s
effectuality in victimization the assets. The samples of this quantitative relation includes account
due turnover, average assortment amount, inventory turnover, average inventory sales amount,
mounted plus turnover and total plus turnover. Profitability ratio measures the effectiveness of
the corporate in generating returns from investment and sales; for instance profits margin, lucre
margin, come back on assets and come back on equity. In the end KFC is one of the biggest fast
food and popular in South East Asia by people and $23 billion dollar revenue in latest realise

4.2 McDonald’s according to McDonald’s financial statement report, company

completed a successful year in 2015. McDonald’s is considered to be the King of the fast food.
To achieve this greatness McDonald’s has tried hard for ages to prove itself in the competitive
environment of Fast food. The key factors in success of McDonald’s in my view is
innovation,customisation,good management and above all best Marketing strategies adopted by
McDonald’s. McDonald’s in India has a very bright future because of the customer’s bank,
customised approach from McDonalds towards its customers and above all the strong brand
Image.

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5. Recommend
In my opinion, from the above analysis we can conclude that McDonald’s much better than
KFC. Because when we read ratio analysis between McDonald’s and KFC we can analysis
McDonald’s is better. In net profit margin KFC just 12.31% but McDonald’s is 20.01% or if we
look at the efficiency ratios, McDonald's has higher debtor collection period and lower fixed
asset turnover than KFC .Also in return on asset and return on equity McDonald’s with 14.9% ,
31.89% more higher than KFC. In the end McDonald’s because of 3.8% comparable sales
growth and 9% earnings per share growth and also 16.6 Billion returned to shareholders in 2015.

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6. References
1) Accountant. (20.may.2016). McDonald's Annul report 2015. Available:
http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/C-
%5Cfakepath%5Cinvestors-2015-annual-report.pdf. Last accessed 23.2.2016.
2) Accountant. (2010). KFC Annual report. Available:
http://www.bursamalaysia.com/market/listed-companies/company-announcements#/?
category=AR&sub_category=all&alphabetical=All&company=3492. Last accessed
19.2.2016.
3) Accountant. (2014). Financial result . Available:
http://www.pocketzila.com/kfch/investor-relations/kfch-financial-results/annual-report/.
Last accessed 2.25.2016

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 7. Appendix
7.1 KFC

31.12.2009
RM '000
Assets
Property,queipment and
plant 773,241
intangible assets 68,674
Investment properties 898
Other investments 0
Total non-current assets 842,813
Inventories 172,339
Trade and Other receivables 151,869
Cash and cash equivalents 123,449
Total current assets 447,657
Total assets 1,290,470
Equity

Share capital 198,275

Reserves 45,977
Retained earnings 547,505
Total equity attributable 791,757
Minority interests 12,491
Total equity attributable 803,248
Liabilities
Loan and borrowings 84,387
Deferred tax liabilities 32,940
Employee benefits 3,099
Total non-current liabilities 120,426
Trade and Other payables 321,187
Current tax liabilities 12,159
Loan and borrowings 32,049
Employee benefits 401
Total current liabilities 365,796
Total liabilities 486,222

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Total equity and liabilities 1,290,470

31.12.2009
RM '000
Revenue 2,297,431
Cost of sale 1,078,498
Gross Profit 1,218,933
Other income 21,557
Administrative expenses 122,394
Selling and Marketing 914,919
Other expenses 7,723
Result from operating activities 195,454
Finance cost 5,439
Profit before tax 190,015
income tax expense 57,218
Profit for the year 132,797
Foreign currency translation differences for
foreign operations 944
Fair value of available-for-sale financial assets 0
Net surplus arising from revaluation of properties 0
Total other comprehensive income for the year 944
Total comprehensive income for the year 133,741
Profit attributable
Owners of the Company 130,403
Minority interests 2,394
Profit for the year 132,797
Total comprehensive income for the year 133,741
Basic earnings per ordinary share (sen) 16.4
Diluted earnings per ordinary share (sen) 0
KFC Statement for 2015

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7.2 McDonald’s

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 McDonald’s statement for 2015

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 McDonald’s statement for 2014

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 McDonald’s statement for 2014

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 McDonald’s statement for 2014

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 McDonald’s statement for 2014

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 KFC’s statement for 2014

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