McDonald’s is also in good standing with its general creditors and has secured

bondholders. All of this leads us to the conclusion that McDonald’s is not in any

danger of bankruptcy.

Analysis of Asset Utilization Ratios

Yum
Measure 2004 2003 2002 2001 2000 Wendy's Yum Industry
1. Cash Turnover Sales 20.361743 41.64359 41.164195 35.41319 37.65499 20.89 70.95
2. Account Receivable Turnover 25.763108 21.56309 17.736242 17.71926 23.540203 30.67 52.7 63.63
3. Sales to Inventory 137.70098 142.1858 141.85727 145.2148 181.09345 66.09 125.15
4. Working Capital Turnover -6.247444 -5.45876 -6.781275 -6.59423 -4.631569 -24.72 -14.04
5. Fixed Asset Turnover 0.9385052 0.890228 0.8589046 0.866119 0.9540204 1.61 2.68
6. Total Assets Turnover 0.7103688 0.688256 0.6625395 0.672577 0.767856 1.16 1.58 1.77

Analysis of Asset Utilization:

By looking at McDonald’s accounts receivable turnover ratio (the # of times

a company completely clears out all of its outstanding credits) we notice that it is

extremely lower than the industry standards as well as its top two competitors. This

low ratio solidifies our previous findings that the company should re-assess its

credit policies in order to ensure the timely collection of imparted credit not earning

interest for the firm. We can clearly see that its competitors are doing a better job

of either operating on a cash basis or its extension of credit and collections of

account receivable is more efficient.

McDonald’s fixed asset turnover and total asset turnover has shown a steady

but slow improvement over the years. Compared to the industry and its competitors

we can see here that McDonald’s has not been able to effectively manage the

company’s investments in plant, property and equipment. The company is not

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