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McDonalds Stock Market Project
 

McDonalds Stock Market Project

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A presentation about McDonalds done for my Business class

A presentation about McDonalds done for my Business class

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    McDonalds Stock Market Project McDonalds Stock Market Project Presentation Transcript

    • McDonalds (MCD)Kimberly Phan – Jonathan Davila – Yolanda Navarro – Matt Rivamonte 1
    • 2 Outline  Introduction: Presentation of the company, facts, and information.   Current Stock Prices and Historical Trends:  Stock price charts and trends.  Discussion of reasons for increases and decreases in stock prices compared to other companies.   Financial Statement Analysis:  Common size income statement and balance sheet (Trend Analysis)  Horizontal Analysis for key figures (Trend Analysis)   Ratio Analysis:  Liquidity Ratios: Ratios that are used to determine a companys ability to pay off its short-term debt obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.  Solvency Ratios: Ratios that are used to measure the size of a companys after-tax income, excluding non-cash depreciation expenses, as compared to the firms total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations.  Profitability Ratios: Ratios that are used to assess a businesss ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitors ratio or the same ratio from a previous period is indicative that the company is doing well.   Industry Analysis/Current Events: Recap of the Industries averages and current events that have affected the companies performance.   Conclusion: Recommendation on the purchasing of McDonalds stock.   Bibliography: Compilation of sources used.
    • 3Intro Mc Donald’s Corporation is a chain of hamburger fast food restaurants. It is the world’s largest chain in this industry serving up to 64 million customers daily all around the world. Today McDonalds is presented in 119 countries with its headquarters still in the United States. It operates over 33,000 locations worldwide. Each fast food restaurant is owned by either the corporation itself, a franchisee, or an affiliate. The company has an intricate and different business design. While expanding to franchise owning, the company itself still owns and operates over 15% of their restaurants. They have continuously increased their dividends for their shareholders, for 25 consecutive years.
    • 4 This picture has gold lights across the Contiguous United States, each representing the distance to the nearest McDonald’s. Within the next year, McDonald’s plans to spend $2.9 billion in capital expenditures. This will include the opening of more than 1,300 restaurants and 2,400 renovations of currently operating locations.
    • Current Stock Prices and Historical Trends 5McDonald’s Corporation currently has a 52-week high of $95.45 and alow of $72.14. They are afloat around $93.00 currently. The stock hassteadily increased 22% for the past year, which is clearly better than themarket at large considering the current economic downturn.The company has affirmed an increase in their targets of annual growthfrom 3% to 5%, operating income from 6% to 7%, and their return oninvested capital in the high teens.Reasons for their growth include the broadening of their dollar menu,beneficial to those who are watching their money on food intake.It has been noted that the company continues to make a significant partof their profitable income on their McCafe beverages. The prices of theirMcCafe line are comparable to that of Starbucks (SBUX) and otherleading beverage companies.
    • The Company’s recent announcement to their Board of Directors 6declaring their most recent quarterly cash dividend of $0.70 per share oftheir common stock to shareholders of December 15th. This is significantbecause it represents an increase of 15% over their previous dividend rate.As shown in the historical chart above, for one year, McDonald’s growthfrom November 2010 to November 2011 has substantially growndisregarding all of the economic barriers that have slowed down growthall across the stock market. In comparison to its competitor Jack and theBox, the two follow a similar pattern but McDonald’s still stays above in itsmarket value.
    • Horizontal Comparative Balance Sheet 7 For the Years Ended December 31, 2010, 2009 and 2008 Dec 31, Dec 31, % Dec 31, 2009 % 2010 2008 Assets Cash and Cash Equivalents 2,387,000 32.9% 1,796,000 (13.0%) 2,063,400 Net Receivables 1,179,100 11.2% 1,060,400 13.9% 931,200 Inventory 109,900 3.5% 106,200 (4.8%) 111,500 Other Current Assets 692,500 52.6% 453,700 10.3% 411,500 Total Current Assets 4,368,500 27.9% 3,416,300 (2.9%) 3,517,600 Long Term Investments 1,335,300 10.1% 1,212,700 (0.8%) 1,222,300 Property Plant & Equipment 22,060,600 2.5% 21,531,500 6.3% 20,254,500 Goodwill 2,586,100 6.6% 2,425,200 8.4% 2,237,400 Other Assets 1,624,700 (0.9%) 1,639,200 33.3% 1,229,700 Total Assets 31,975,200 5.8% 30,224,900 6.2% 28,461,500According to the horizontal analysis, the comparative balance sheetindicates that McDonald’s Corp.’s current assets have decreased 2.9% from2008 to 2009, and increased 27.9% from 2009 to 2010. Its property plant andequipment has increased 6.3% from 2008 to 2009, and increased 2.5% from2009 to 2010. Its total assets also increased, from 2008 to 2009 it has increased6.2% and from 2009 to 2010 it has increased 5.8%.
    • Dec 31, Dec 31, 2010 % % Dec 31, 2008 8 Liabilities 2009 Accounts Payable 2,916,400 (1.8%) 2,970,600 18.5% 2,506,100 Short/Current Long Term Debt 8,300 (54.1%) 18,100 (43.1%) 31,800 Total Current Liabilities 2,924,700 (2.1%) 2,988,700 17.8% 2,537,900 Long Term Debt 11,497,000 8.9% 10,560,300 3.7% 10,186,000 Other Liabilities 1,586,900 16.4% 1,363,100 (3.3%) 1,410,100 Deferred Long Term Liability 1,332,400 4.2% 1,278,900 35.3% 944,900 Charges Total Liabilities 17,341,000 7.1% 16,191,00 7.4% 15,078,900 Stockholders’ Equity Common Stock 16,600 0% 16,600 0% 16,600 Retained Earnings 33,811,700 8.1% 31,270,800 8.0% 28,953,900 Treasury Stock (25,143,400) (11.3%) (22,854,800) (12.6%) (20,289,400) Capital Surplus 5,196,400 7.1% 4,853,900 5.5% 4,600,200 Other Stockholder Equity 752,900 0.7% 747,400 637.8% 101,300 Total Stockholder Equity 14,634,200 4.3% 14,033,900 4.9% 13,382,600 Net Tangible Assets 12,048,100 3.8% 11,608,700 4.2% 11,145,200Their total current liabilities have increased 17.8% from 2008 to 2009, which is not a very good thing; however, it hasdecreased 2.1% from 2009 to 2010 and that means they are paying off their debts. Their total liabilities on the otherhand has increased 7.4% from 2008 to 2009, and increased 7.1% from 2009 to 2010, which is better than the previousyear. They have increased their retained earnings by 8.0% from 2008 to 2009, and increased 8.1% from 2009 to 2010.Total stockholders’ equity also has increased from 2008 to 2009 by 4.9%, and 2009 to 2010 has increased 4.3% whichis a little bit less than the previous year. Last but not least, net tangible assets has increased 4.2% from 2008 to 2009and increased 3.8% from 2009 to 2010.
    • Horizontal Comparative Income StatementFor the Years Ended December 31, 2010, 2009, and 2008 Dec 31, 2010 % Dec 31, 2009 % Dec 31, 2008 9 Total Revenue 24,074,600 5.8% 22,744,700 (3.3%) 23,522,400 Cost of Revenue 14,437,300 3.5% 13,952,900 (6.3%) 14,883,200 Gross Profit 9,637,300 9.6% 8,791,800 1.8% 8,639,200 Selling General and Administrative 2,135,100 6.1% 2,011,900 14.6% 2,355,500 Non Recurring 29,100 147.6% (61,100) 26.6% (48,500) Operating Income or Loss 7,473,100 9.2% 6,841,000 8.0% 6,332,200 Total Other Income/Expenses Net (21,900) (118.4%) 119,200 (49.9%) 237,700 Earnings Before Interest and Taxes 7,451,200 7.1% 6,960,200 4.2% 6,680,600 Interest Expense 450,900 (4.7%) 473,200 (9.5%) 522,600 Income Before Tax 7,000,300 7.9% 6,487,000 5.3% 6,158,000 Income Tax Expense 2,054,000 6.1% 1,936,000 4.9% 1,844,800 Net Income From Continuing Ops 4,946,300 8.7% 4,551,000 5.5% 4,313,200 Net Income 4,946,300 8.7% 4,551,000 5.5% 4,313,200 Net Income Applicable To Common 4,946,300 8.7% 4,551,000 5.5% 4,313,200 SharesAccording to the horizontal analysis, the comparative income statement indicates that total revenue ofMcDonald’s Corp. has decreased 3.3% from 2008 to 2009; however, it has increased 5.8% from 2009 to2010 which means McDonald’s has done better in 2010 than previous two years. The cost of revenue ishighest at 2008 and it decreased 6.3% in 2009, but then it increased 3.5% from 2009 to 2010. According togross profit, operating income or loss, and net income, McDonald’s Corp. has done better in 2010 thanthe previous two years. It has increased 1.8% from 2008 to 2009 and increased 9.6% from 2009 to 2010 ingross profit. It has also increased 8.0% from 2008 to 2009 and increased 9.2% from 2009 to 2010 inoperating income. Furthermore, its net income has increased 5.5% from 2008 to 2009 and increased 8.7%from 2009 to 2010.
    • Ratio 10 Analysis Jack in theRatios McDonalds Industry BoxDebt to Equity 93.94 98.29 82.17Current Ratio 0.87 0.96 1.16Accounts Receivable Turnover 23.81 35.12 197.50Inventory Turnover 145.93 49.33 39.41Net Sales to Assets .83 1.62. 1.55Rate Earned on Total Assets 16.92% 4.47% 7.29%Rate Earned on Common 39.80% 20.82% 13.11%Stockholders’ EquityOperating Margin 31.32 4.74 7.75EPS 12.61 29.17 ---P/E Ratio 18.38 12.25 28.44
    • 11 The EndHope you enjoyed our Presentation!