This document provides instructions for students to conduct a financial ratio analysis of McDonald's Corporation for 2008 and develop an internal factor evaluation (IFE) matrix. Students are asked to:
1. Calculate 20 key financial ratios for McDonald's using data from its income statement and balance sheet. Classify each ratio as a strength, weakness, or neutral factor.
2. Work with a team to develop an IFE matrix for McDonald's by identifying important internal factors, assigning each a weight and rating, and calculating an overall score. The matrix should include strengths like market diversification and brand positioning as well as weaknesses such as product diversification.
This document provides instructions for students to conduct a financial ratio analysis of McDonald's Corporation for 2008 and develop an internal factor evaluation (IFE) matrix. Students are asked to:
1. Calculate 20 key financial ratios for McDonald's using data from its income statement and balance sheet. Classify each ratio as a strength, weakness, or neutral factor.
2. Work with a team to develop an IFE matrix for McDonald's by identifying important internal factors, assigning each a weight and rating, and calculating an overall score. The matrix should include strengths like market diversification and brand positioning as well as weaknesses such as product diversification.
This document provides instructions for students to conduct a financial ratio analysis of McDonald's Corporation for 2008 and develop an internal factor evaluation (IFE) matrix. Students are asked to:
1. Calculate 20 key financial ratios for McDonald's using data from its income statement and balance sheet. Classify each ratio as a strength, weakness, or neutral factor.
2. Work with a team to develop an IFE matrix for McDonald's by identifying important internal factors, assigning each a weight and rating, and calculating an overall score. The matrix should include strengths like market diversification and brand positioning as well as weaknesses such as product diversification.
This document provides instructions for students to conduct a financial ratio analysis of McDonald's Corporation for 2008 and develop an internal factor evaluation (IFE) matrix. Students are asked to:
1. Calculate 20 key financial ratios for McDonald's using data from its income statement and balance sheet. Classify each ratio as a strength, weakness, or neutral factor.
2. Work with a team to develop an IFE matrix for McDonald's by identifying important internal factors, assigning each a weight and rating, and calculating an overall score. The matrix should include strengths like market diversification and brand positioning as well as weaknesses such as product diversification.
Assurance of Learning Exercise 4A Performing a Financial Ratio Analysis for McDonald’s
Corporation (MCD)
Purpose Financial ratio analysis is one of the best techniques for identifying and evaluating internal strengths and weaknesses. Potential investors and current shareholders look closely at firms’ financial ratios, making detailed comparisons to industry averages and to previous periods of time. Financial ratio analyses provide vital input information for developing an IFE Matrix.
Instructions
Step 1 On a separate sheet of paper, number from 1 to 20. Referring to McDonald’s
income statement and balance sheet (pp. 31–32), calculate 20 financial ratios for 2008 (2019) for the company. Use Table 4-7 as a reference. Step 2 In a second column, indicate whether you consider each ratio to be a strength, a weakness, or a neutral factor for McDonald’s.
m er as Ratio Formula Result Factor
co (30/12/2019 consideration
eH w )
o. Current ratio Current assets rs e 0.9826 Weakness Current liabilities ou urc Quick ratio Current assets−inventory 0.9687 Weakness Current liabilities o
Debt-to-total-assets ratio Total debt 1.173 Weakness
aC s
Total assets v i y re
Debt-to-equity ratio Total debt -6.78 Weakness
' Total stockholder s equity Long-term debt-to equity Long−term debt -4.15 Weakness ed d
ratio Total stockholder s' equity
ar stu
Times-interest-earned Profits before interest ∧taxes 8.084 Strength
¿ assets to which competitor you compare) Total assets turnover Sales 0.4436 Neutral (same as Total assets above) Accounts receivable Annual credit sales 9.476 Strength turnover Accounts receivable Average collection period Accountsreceivable 38.52 Neutral Total credit sales/ 365
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https://www.coursehero.com/file/58644424/HOMEWORK-WEEK-4docx/ Gross profit margin Sales−cost of goods sold 0.527 Strength Sales Operating profit margin Earnings before interest ∧taxes(EBIT ) 0.4216 Strength Sales Net profit margin Net income 0.286 Neutral Sales Return on total assets Net income 0.127 Neutral (ROA) Total assets Return on stockholders’ Net income -0.734 Weakness equity (ROE) Total stockholder s' equity Earnings per share (EPS) Net income 362.97 Strength Nº of shares of common stock outstanding Price-earnings ratio Market price per share 22.47 Strength Earnings per share
m er as Sales (%) Annual percentage growth in total sales (2019) 0.24% Strength
co eH w Net income (%) Annual percentage growth in profits (2019) 1.71% Strength
o. rs e ou urc Assurance of Learning Exercise 4B Constructing an IFE Matrix for McDonald’s Corporation
Purpose This exercise will give you experience in developing an IFE Matrix. Identifying and o
prioritizing factors to include in an IFE Matrix fosters communication among functional and aC s
divisional managers. Preparing an IFE Matrix allows human resource, marketing,
v i y re
production/operations, finance/accounting, R&D, and management information systems
managers to articulate their concerns and thoughts regarding the business condition of the firm. This results in an improved collective understanding of the business. ed d
Instructions ar stu
Step 1 Join with two other individuals to form a three-person team. Develop a team IFE Matrix for McDonald’s. IFE MATRIX FOR MCDONALD’S sh is
Step 2 What strategies do you think would allow McDonald’s to capitalize on its major strengths? What strategies would allow McDonald’s to improve upon its major weaknesses?
McDonald’s best chance to capitalize its major strengths is to continue its global expansion, both in developing and full developed markets. Meanwhile, it should take advantage of its brand value and use it to differentiate from its competitors.
m On the other hand, in order to improve its major weaknesses, the company should
er as focus in the development of new products, mainly in the fast food industry and in the
co innovation of new menus.
eH w o. rs e ou urc o aC s v i y re ed d ar stu sh is Th
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