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Finance Analysis - Essay Example

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A. Brief description about the company - McDonald's is the largest food service company in the world. The company regards itself as the leading global food service retailer. With more than 30,000 restaurants serving more than 47 million people each day in 121 countries it is hard to argue!…
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Finance Analysis
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Download file to see previous pages As of today, more than 2.5 million people of the entire UK population trust the day-to-day operations of McDonalds and also the high standard quality of service and the value for the money spent by them3.
D. Main products and services - McDonald's menu concentrates on five main ingredients: beef, chicken, bread, potatoes and milk, which account for 255 million of food expenditure. The company's main menu lists its basic food offering: the Big Mac, which still exists as a major seller; other standard product names come from the McDonald's convention of adding a 'Mc' to a particular item. So, a chicken sandwich becomes a 'McChicken' sandwich and chicken nuggets become chicken 'McNuggets'. This idea has been extended to their dessert range, with the creation of the 'McFlurry' ice cream5.
E. Geographic area of operations - McDonald's is one of only a handful of brands that command instant recognition in virtually every country of the world. McDonald's began with one restaurant in the US in 1955 and today there are more than 26,500 restaurants in over 119 countries, serving around 39 million people every day - making McDonald's by far the largest food service company in the world6. ...
The business is managed as distinct geographic segments: United States; Europe; Asia/Pacific, Middle East and Africa (APMEA); Latin America; and Canada. In addition, throughout this report we present a segment entitled "Corporate& Other" that includes corporate activities and non-McDonald's brands (e.g., Boston Market). The U.S. and Europe segments each account for approximately 35% of total revenues. France, Germany and the United Kingdom (U.K.), collectively, account for approximately 60% of Europe's revenues; and Australia, China and Japan (a 50%-owned affiliate accounted for under the equity method), collectively, account for nearly 50% of APMEA's revenues. These six markets along with the U.S. and Canada are referred to as "major markets" throughout this report and comprise approximately 70% of total revenues.7
F. Recent developments - Extra Value Meals and Happy Meals are two of the most successful innovations of McDonalds. Extra Value Meals offer customers a hamburger, drink and fries sold together at a fixed money-saving price. Similarly, McDonald's Happy Meal boxes offer parents a simple and appealing package, with a smaller portioned meal served in a fun box with a toy. The reason behind the continued success of the family business of McDonalds is these innovations being instrumental.
FINANCIAL ANALYSIS
a. Sales and Income Record:
Fiscal Years
2001
2002
2003
2004
2005
2006
Sales ($)
14,738
15,201
16,825
18,594
19,832
21,586
% change in sales (each yr)
4
3.14
10.6
10.5
6.65
8.84
Net Income ($)
1,637
894
1,471
2,279
2,602
3,544
% change in net income (each yr)
69
-45
65
54
14
36
8
GRAPH OF SALES & NET INCOME, FY 2001 - ...Download file to see next pagesRead More
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