• McDonald’s Common Size Balance Sheet shows that current assets have

significantly increased in the last years in relation to current liabilities, which is

reflected in the improvement of the current ratio.

• The increase in current assets was mainly due to the increase in cash &

equivalents which was the result of an increase in cash from operations (as shown

in the statement of cash flows) due to higher sales and improved margins.

• Current maturities of long term debt are the primary reason for the increase in

current liabilities. The company paid off $800 million of debt in 2004 which in

turn is reflected in the continuous drop of long term liabilities over the last few

years.

Common Size Statement of Cash Flows (see appendix D)

• Cash flows from McDonald’s have improved over the last two years as reflected

by the significant increase in cash and cash equivalents.

• Net income has increased significantly

• At the same time cash from operations has also increased because of increasing

revenues and improved margins.

• Cash from investing activities has changed mainly due to less investing in

purchases of new restaurants, reflecting the swift of the company’s strategy

towards improving existing locations.

• At the same time financing payments have increased due to management’s

strategy to pay off debt and improve liquidity.

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