Financial Analysis of Mcdonalds

Topics: McDonald's, Financial ratio, Financial ratios Pages: 11 (3040 words) Published: July 21, 2012
Financial Analysis of the McDonald’s Corporation


I.Brief Description of the Company
The McDonald’s Corporation is one of the world’s most known and leading restaurant retailers to provide fast, convenient and tasty food to millions of customers worldwide each day. Headquartered in the United States and a company that began with small beginnings, and a simple burger it now has expanded menu that includes healthy food. Currently, the McDonald name and its brand serves to approximately 64 million customers each day, in over 333,000 local restaurants locations, in about 119 countries. II.Company History

The McDonald name and history began in 1940 when Dick and Mac McDonald open their doors in San Bernardino, California to the public as “McDonald’s Barbeque Restaurant” and featured a large menu and car hop service. As time progressed the brothers simplified their menu, kept their hit item the 15 cent burger on the menu and introduced French fries to the menu and triple thick milkshakes.

In1954, Ray Kroc, a salesman tries to sell the brothers multi-mixers, but instead has a stroke of luck, a sense of timing and an idea borne in his head and hamburgers become his future. A short year later in Illinois, Kroc opens his first McDonalds in Illinois and approximately ten years later, there are 700 locations throughout the United States and becomes a public company by 1965. With a vision, a great team, a quality burger, McDonalds changes the course of history and becomes one of the most familiar names worldwide. With its signatures arches, its 15 cent burgers, its triple thick milkshakes, the introduction of Ronald McDonald, its approach to business and cleanliness, it’s not too much of surprise that merely 12 years after Ray Kroc’s first opening, the company became international and opened doors in Canada and Puerto Rico.

Throughout its history McDonald’s has made great debuts from its signature burger, to its fries, the debut of the Big Mac or the opening of the Ronald McDonald House, this organization has gone above and beyond to prove that it is unstoppable and it is here to stay both in our stomach’s and In our community as it reached across the table to show a more philanthropic side to the world. III.Organization

The McDonald’s Corporation is a recognized franchiser and over seventy-five percent of its restaurants worldwide are owned and operated through franchises. All the McDonald’s restaurants are operated by a franchisee, an affiliate or the company itself. The revenue stream for McDonald’s corporation comes from its restaurants they own, rents, royalties and fees paid for the franchises. The business model of McDonald’s is both unique and definitive. Not only do they collect marketing and franchise fees, but they also calculate rent which is based on a percentage of sales. McDonald’s also rent or leases all of its franchisee’s locations, and they do not sell products directly to its franchisee’s but rather arrange the sale of food and materials through third party sources. All franchise agreements are based on location, age, country and contract and the business model for the U.S. is not the same globally. In fact, the U.K. business model is vastly different, such as most of their McDonald’s locations are owned by the company itself and less than thirty percent are owned by individuals of the franchises.

Per McDonald’s Annual Report their Board of Directors consists of 14 members with extensive and an impressive professional background. These Board Members maintain the ethics and corporate governance of their corporation worldwide and make sure they fulfill all their business duties ethically and in adherence with McDonald’s belief system. They also oversee such things as the Ronald McDonald House. The Senior Level Organization is headed by Jim Skinner who is the Vice Chairman and the Chief Executive Officer of the McDonald’s Corporation. Upon becoming CEO...
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