Accounting Writing Assignment - Essay Example

The company that I selected for analysis was McDonald’s Corporation. The reason that this company interested me is because I see so many McDonald’s establishments across the United States. The first McDonald’s establishment was opened in 1955. The company grew rapidly across the United States. The company became a publicly traded company through an IPO at $22.50 a share in 1965 (Aboutmcdonalds). Today McDonald’s is the market leader in the fast food industry. The U.S. fast food industry is valued at $65 billion annually.

The revenues of the company in 2010 were $24 billion. The global comparable sales of the company increased by 5% and its earnings per shared by 11% (Annual Report: McDonald’s, 2010). The net income of the company in 2010 was $4,946 billion. Its net income increased by 8.67% in comparison with 2009. The net margin of the company was 20.60%. The earnings per share of the company in 2010 was $4.64, while its dividend per share was $2.26. The total assets and total equity of McDonald’s as of December 31, 2010 were $31,975 million and $14,634 million respectively.

The total liabilities of the company in 2010 were $17,341 million. The current assets of the company were $4,368 million, while its current liabilities were $2,924 million. The current ratio of McDonald’s in 2010 was 1.49. The current ratio measures the ability of a company to pay off its short term debts. A current ratio is good if is above 1.0. The current ratio of McDonalds is excellent. The return on assets (ROA) of McDonald’s in 2010 was 15.46%. The annual report contained a management report and discussion segment.

This section was very information and showed the perspective of the management and the strategic approach of the executive management team. The organization has 32,737 stores across 117 countries. Only 6,399 stores are operated by the company, the rest are independent franchises. The company earns a healthy 12% royalty fee on all sales of its franchisees as well as a 4% marketing fee. “The United States, Europe, and APMEA segments account for 34%, 40%, and 21% of total revenues respectively” (Annual Report: McDonald’s).

In Europe the hottest markets for McDonald’s are the United Kingdom, France, and Germany which for more than half the firm’s sales in Europe. International expansion has been very critical for the growth and success of the company. The United States fast food marketplace in its maturity stage and it is very saturated. The Sarbanes and Oxley Act of 2002 created a law that mandated that all public companies be audited by independent accounting firm. This section of the annual report is called the Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Report.

In 2010 the accounting firm Ernest & Young audited the financial statements of McDonald’s. The results of the audit state, “In our opinion, McDonald’s Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the COSO criteria” (Annual Report: McDonald’s). Due to the great profitability, strong sales, high return on assets, and solid liquidity position I would recommend investing in McDonald’s common stocks.

Work Cited PageAboutmcdonalds.com. 2011. “Our Company: McDonald’s History.” 3 November 2011. Annual Report: McDonalds. 2010. 3 November 2011.