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Financial Statement Analysis Professional Challenge
Finance & Accounting
Pages 10 (2510 words)
Executive Summary McDonald’s is the most successful fast food restaurant chain in the world. The firm is the market leader in a $63 billion industry. The company has been in business for 56 years. The firm has the most sales and most stores in the industry…
The financial performance of Burger King and Sonic were used to compare McDonald’s financial performance during fiscal years 2010, 2009, and 2008. McDonald’s revenues grew by 5.8% in 2010 in comparison with the previous year. McDonald’s 2010 sales were 43 times larger than Sonic and 9.63 times larger than Burger King. One of the reasons McDonald’s generated such a large amount of sales is because the company receives 64 million customers on a daily basis. The net income of McDonald’s in 2010 was $4.94 billion. During the past two years the net income of McDonald’s has increased by 14.61%. The net incomes of Burger King and Sonic in 2010 were much lower than McDonald’s at $186.8 million and $21.2 million respectively. The ratio analysis performed on McDonald’s and the two competitors illustrated that McDonald’s is a superior company that had much better financial results than the competition. The net margin of McDonald’s was 20.54% which is twice as high as Burger King and nearly ten times larger than Sonic. McDonald’s return on assets in 2010 was 15.47%. In comparison with Sonic and Burger King the ROA of McDonald’s was 4.60 and 5.37 times higher respectively. All three companies had current ratios above 1.0 which means all companies are in a good position to pay off their short term debt. The company with the highest current ratio was McDonald’s with a metric of 1.49. ...
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