Week_4_Casestudy_Nallapati

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Apr 3, 2024

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Financial Analysis of the Chosen Company Stock ticker symbol : exchange where traded __New York Stock Exchange (NYSE) ____________ Address of company headquarters _110 North Carpenter Street, Chicago, Illinois 60607, USA ________ Company phone number ____+1 630-623-3000 _________ Name: N. Divya Praneetha Student ID: 4260970 Webster University

PART 1, COMPANY OVERVIEW: a. Brief description of the company. One paragraph, briefly summarizing the company’s business. Ans: In the fast-food sector, McDonald's Corporation, also referred to as McDonald's, is a globally recognized fast-food restaurant company. Established in 1940 by Richard and Maurice McDonald, the company uses a franchising model and has thousands of locations across the globe. McDonald's is well known for its famous golden French fries, Happy Meals, and Big Mac menu items. The company's primary focus is on catering to a varied worldwide consumer base with convenient, reasonably priced, and uniformly standardized meal choices. McDonald's embraces versatility, frequently customizing its menu to fit regional preferences while preserving the essence of the brand. The company has shown a dedication to innovation over the years by implementing technology into its operations such as mobile ordering and self-service kiosks to improve customer satisfaction and maintain its position as a market leader in the cutthroat fast-food industry. b. Company history. Origin and major milestones (developments) etc. in the company’s history. Be sure to include milestones (developments) up to the current period. McDonald's Corporation History: Origin and Early Years (1940s-1950s): 1940: McDonald's was founded by Richard and Maurice McDonald in San Bernardino, California. The brothers managed a drive-in restaurant at first, but in 1948 they changed their business strategy to emphasize efficiency and quickness with a small menu consisting of just nine dishes. 1955: Ray Kroc, a Multimixer milkshake machine sales agent, joined the company. Seeing room for growth, Kroc took on the role of franchising agent and eventually bought the McDonald brothers' stock in the business. Franchising and Global Expansion (1960s-1980s): 1961: The first McDonald's restaurant outside the U.S. opened in Canada. 1967: McDonald's went public, and the first international restaurant opened in Puerto Rico. 1971: The opening of the first McDonald's in Japan marked the beginning of substantial international growth. 1984: McDonald's introduced the Chicken McNugget, becoming a significant addition to its menu. Innovations and Global Dominance (1990s-2000s): 1990: The first McDonald's in the Soviet Union opened in Moscow. 1994: McDonald's celebrated its 50th anniversary and introduced its first-ever salad option, reflecting a growing focus on healthier choices. 2003: The introduction of the "I'm Lovin' It" global marketing campaign marked a shift in the company's advertising strategy. 2008: McDonald's launched McCafe, a line of coffee beverages, expanding its offerings beyond

traditional fast food. Adaptation and Technology Integration (2010s-2020s): 2015: McDonald's announced plans to transition to cage-free eggs in the U.S. and Canada. 2017: The company introduced mobile ordering and payment capabilities in the U.S. 2020: During the COVID-19 pandemic, McDonald's focused on drive-thru, delivery, and digital options, highlighting the importance of adaptability in the face of global challenges. 2022: McDonald's continues to adapt its menu, emphasizing sustainability, and investing in digital technologies to enhance customer experience and streamline operations. From a modest California drive-in to a massive worldwide fast-food chain, McDonald's has grown over the years by embracing technology improvements, diversifying its client base, and consistently improving its menu. c. Organization. Describe how the company is structured. A visual such as a high-level organizational chart is recommended along with the description. A functional organizational chart is also fine. The structure of McDonald's Corporation: McDonald's Corporation has a hierarchical organizational structure and operates as a global, decentralized company. The company's extensive global network of franchise operations is supported by an organizational structure specifically created for it. An outline of McDonald's hierarchical structure is provided below: Business Level: Board of Directors: The Board of Directors is the highest level of authority at McDonald's and is in charge of managing the company's leaders and making strategic decisions. Executive Leadership Team: The Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), and other important executives in charge of various functional areas make up this team, which answers to the board. Structure of Operations: McDonald's is organized into worldwide divisions and regions, each of which is overseen by a regional president or vice president. Due to this framework, localized decision-making and regional adaptation are possible. Franchisees: A sizable percentage of McDonald's eateries throughout the globe use a franchise business model. Franchisees run and own their restaurants while collaborating closely with the company to uphold brand standards. Organized Function: McDonald's has several functional departments, including supply chain management, marketing, operations, finance, and human resources. Facets of the business's activities are under the purview of each department. Level of Restaurant:

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Managers of restaurants: Managers oversee the daily operations of restaurants. These supervisors make sure that the highest standards of quality, hygiene, and customer care are maintained at McDonald's. Crew Members: Workers doing cooking, serving, and customer service are among the front-line staff members at every restaurant. McDonald's can maintain worldwide brand standards uniformity and adaptability to local markets thanks to its organizational structure. While corporate assures alignment with broad strategy objectives, the decentralized structure empowers local decision-making and responsiveness to varied markets. The franchise model encourages local ownership and entrepreneurship by further decentralizing operations. A functional organizational chart d. Main products and services. Describe what the company sells; how it makes money. A visual such as a chart identifying main products or services by revenue is recommended. Main Products and Services: McDonald’s Corporation is well-known throughout the world for its wide range of quick-service menu items that appeal to a wide range of customers. The following goods and services are sold by the business as its main sources of income:

Main Course Items: Burgers: The Big Mac, Quarter Pounder, and other cheeseburgers are just a few of the famous McDonald's burgers. Chicken items: A range of chicken items are available on the menu, such as the McSpicy selections, Chicken McNuggets, and McChicken sandwiches. Fish Sandwich: A popular menu item, the Filet-O-Fish serves a sandwich made of fish fillets. Breakfast Foods: Egg McMuffin: A staple option for early-morning patrons, the Egg McMuffin is a hallmark breakfast dish. Hotcakes with Sausage: Hotcakes are a breakfast item at McDonald's that are typically served with sausage and syrup and butter. Drinks: Soft Drinks: McDonald's provides a range of sizes for both carbonated and non-carbonated drinks. Coffee and McCafe: Lattes, cappuccinos, and iced coffee are just a few of the coffee drinks offered under the McCafe brand. Smoothies and Shakes: Adding fruit to a drink menu gives it diversity. Sides and Snacks: French fries: A classic side dish, McDonald's is well-known for its golden fries. Salads and Wraps: To satisfy patrons looking for healthier options, the menu offers salads and wraps. Sweets: Apple Pies: The traditional apple pie is one of the dessert options that McDonald's offers. McFlurry: Soft-serve ice cream combined with a variety of toppings is the centerpiece of this well-known dish. McDonald's Revenue Generation: A combination of company-owned and franchised outlets provides McDonald's with revenue. Among the main sources of income are: Sales from Company-Owned Restaurants: McDonald's owns and runs a large number of restaurants throughout the world, and these establishments generate income solely from the sales of food and drink. Fees & Royalties for Franchises: The McDonald's franchise concept enables people or organizations to own and run McDonald's eateries. Franchisees receive startup fees, recurring royalties depending on sales, and advertising fund contributions in exchange for their services. Licensing and Other Revenue Streams: Partnerships, marketing, and licensing agreements could allow McDonald's to make more money. In general, the success of McDonald's franchise model—which encourages entrepreneurship and broadens the company's global reach—as well as the popularity of its menu items and efficient marketing techniques all contribute to the company's profitability. e. Geographic area of operations. Describe where the company sells its products. A visual such as a chart or map showing where the company operates is recommended.

The geographical area in which McDonald's operates: McDonald's Corporation is a multinational corporation that operates in many different nations on several continents. The global range of the company's operations includes almost all of the world's main markets. Where Products Are Sold by the Company: McDonald's is one of the most well-known and widely distributed fast-food franchises in the world, with goods sold in many different areas and nations. The business is well-represented in: North America: With a dense network of locations catering to a variety of areas, McDonald's has a strong presence in both the United States and Canada. Europe: With menu items tailored to local preferences, McDonald's has a strong presence in several European nations and serves a wide range of patrons. Asia-Pacific: With a strong international following in nations like China, Japan, Australia, and India, McDonald's adjusts their menu to suit local tastes in this region. Latin America: McDonald's serves a broad demographic with its menu while operating in several Latin American nations. Africa and the Middle East: The corporation has increased the scope of its operations in these regions, adding to its global reach. A major contributor to the business's success in a variety of regions has been its capacity to modify its menu to suit regional tastes and cultural norms. In these areas, McDonald's runs both company-owned and franchised locations, enabling a blend of localized offerings and worldwide brand standards. One of the biggest and most known fast-food businesses in the world, McDonald's is made possible by its wide geographic reach and adaptability. f. Recent developments. List recent major news stories, if any. McDonald’s also takes part in sustainability activities like environmental impact, sourcing responsibility and community involvement. In this case, it refers to the use of technology that is aimed at enhancing customer experience which include features such as mobile ordering and digital kiosks in addition with several tech-driven operational efficiency enhancements. There are few news updates regarding McDonald’s such as McDonald’s sets new goals for development, loyalty membership and cloud technology. McDonald’s Buys Out Carlyle Stake in China. McDonald’s revealed a huge plan of expanding its world-wide presence to 50,0 restaurants. PART 2, FINANCIAL OVERVIEW: a. Sales and Income Record : ------------- Fiscal Years ------------- 2018 2019 2020 2021 2022 Sales $21,257.8 $21364.4 $19207.8 _ $23,222. 9 $23,182.6

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Percent change in sales each year 6.84% 0.50% 10.10% 20.90% 0.17% Net Income $5,924.3 $6,025.4 $4,730.5 $7,545 $6,177.4 Percent change in net income each year 14.10% 1.71% 21.47% 59.36%. 18.10% GRAPH OF SALES & NET INCOME, FY 2018 - 2022 b . Comments on the Sales and Income Record The sales and net income earnings disposition for the years 2018 to 2022 display dynamic shifts in the economic overall performance of the organization. From 2018 to 2019, there has been economical increase in income, suggesting a regular increase. However, in 2020, there has been an extensive drop in sales, observed by using a sturdy recovery in 2021. The next year, 2022, showed a marginal decrease in sales, indicating noticeably strong performance. On the net profits front, 2018 to 2019 saw a nice fashion with an increase, however, a sizable decline took place in 2019 to 2020. The following year, 2021, witnessed a strong rebound in net income, even as 2022 showed a slight lower. These changes in each income and net earnings can be attributed to outside factors, market conditions, or strategic selections. The effect of occasions just like the COVID-19 pandemic would possibly

have played a position in the located versions. It is vital to take into account extra factors consisting of operating fees and market conditions for complete know-how of the enterprise's economic dynamics. While the precise motives in the back of those developments might require detailed analysis, this evaluation provides insights into the organization's financial trajectory over the desired duration. c. Expense Distribution : FY 2022 Major Expenses Cost of revenue: 10,696,800 Operational expenses: 2,807,200 Tax provision: 2,012,900. d. Comments on the Sales and Income Record The data provided for the year 2022 gives treasured insights into the enterprise's economic panorama. The sizeable value of revenue, totaling $10,696,800 the direct prices related to generating items or offerings. This discernment signifies critical things of operational performance, and a deeper evaluation of price drivers inside this category might share insights into production effectiveness and allocation. Operational expenses, amounting to $2,807,200. Constitute the daily fees crucial for maintaining commercial enterprise operations. Monitoring those charges is pivotal for budgetary management, permitting the identification of potential fee- saving possibilities and upgrades in operational performance. Additionally, the tax provision of $2,012,900 reflects the expected earnings taxes the agency expects to pay at some stage in the economic length. This element is critical for economics reporting and compliance, providing insights into the agency's tax approach and typical financial resilience. Collectively, these main rate categories provided a complete view of the organization's financial fitness, operational dynamics, and strategic priorities for the year 2022. Further analysis, mainly in contrast to revenue

and net profits figures, might offer an extra knowledge of the enterprise's financial overall performance and manual destiny financial decision-making. e. Assets Distribution : Year-end FY 2022 Assets: Cash ___2,583,800 Accounts receivable __2,115,000 ______ Inventory ___52,000 _____ Fixed Assets ___36339300 _____ Other Assets __45,011,400 ______ PIE CHART OF ASSETS, Year-end FY 2022 f. Comments on the Sales and Income Record The provided monetary picture exhibits key factors of the organization's asset shape as of the specified period. With $2,583,800 in coins, the corporation continues a strong role in phrases of on-the-spot liquidity, essential for meeting quick-time periods and capitalizing on strategical opportunities. Accounts receivable, totaling $2,115,000 signify remarkable amounts due from customers, the importance of effective receivables control for retaining a consistent coins glide. The stock price of $52,000 shows the price of products yet to be bought, highlighting the necessity of balancing stock levels for operational performance. Fixed assets, amounting to $36,339,300 represent lengthy-time period investments in tangible belongings like belongings and gadgets, critical for sustained operational stability and increase. The "Other Assets" totaling $ 45,011,400 economical diverse non-current assets not categorized somewhere else, warrant further scrutiny for a

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detailed breakdown of its components. Collectively, this balance sheet evaluation gives insights into the agency's liquidity, operational efficiency, and long-term investments. A complete analysis, considering liabilities and fairness, would provide a better understanding of the enterprise's usual financial position. g. Capital Structure : Year-end FY 2022 Capital Structure: Current Liabilities _3,802,100_______ Long-term & Other Liabilities __48,037,900______ Preferred Stock (if any) _____0___ Common Equity ____-6,033,400 ____ CAPITAL STRUCTURE PIE CHART, Year-end FY 2022 h. Comments on the Sales and Income Record The presented economic information gives a complete view of the employer's liabilities and fairness shape. Current liabilities, totaling $3,802,100 constitute brief- time period economic obligations expected to be settled within a year. Effectively handling these responsibilities is vital for retaining liquidity and typical economic stability. On the other hand, long-time periods and other liabilities amounting to $48,037,900 symbolize great and prolonged financial commitments. A thorough understanding of the nature and phrases of these liabilities is vital for assessing the enterprise's lengthy-term financial health and handling associated dangers. The absence of desired stock in the fairness shape is indicated by way of a fee of $0 indicating a simplified possession model without extraordinary desired shares. Common fairness, worth $6,033,400, represents the residual interest in the

organization's assets after deducting liabilities. This nice common fairness displays a net worth because of common shareholders. PART 3, RATIO ANALYSIS: (1) LIQUIDITY: FY 2022 FY 2023 Current Ratio: Chosen Co. ____ ____ Competitor ____ ____ Quick Ratio: Chosen Co. ____ ____ Competitor ____ ____ Comments On The Company’s Liquidity: Be sure to include comments! The numbers are meaningless by themselves. Comment on what you see. What story do the numbers tell? (2) ASSET MANAGEMENT FY 2022 FY 2023 Total Asset Turnover: Chosen Co. ____ ____ Competitor ____ ____ Average Collection Period: Chosen Co. ____ ____ Competitor ____ ____ Comments On The Company’s Asset Management:

(3) DEBT MANAGEMENT: FY 2022 FY 2023 Total Debt to Total Assets: Chosen Co. ____ ____ Competitor ____ ____ Times Interest Earned: Chosen Co. ____ ____ Competitor ____ ____ Comments On The Company’s Debt Management: (4) PROFITABILITY: FY 2022 FY 2023 Net profit Margin: Chosen Co. ____ ____ Competitor ____ ____ Return on Assets: Chosen Co. ____ ____ Competitor ____ ____ Return on Equity: Chosen Co. ____ ____ Competitor ____ ____ Modified Du Pont Equation, FY 2023: Chosen Co. Competitor Net Profit Margin ____ ____ Total Asset Turnover ____ ____ Equity Multiplier ____ ____ Comments On The Company’s Profitability: (5) MARKET VALUE RATIOS: FY 2022 FY 2023

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PE Ratio: Chosen Co. ____ ____ Competitor ____ ____ Market to Book Ratio: Chosen Co. ____ ____ Competitor ____ ____ Comments On The Company’s Market Value Ratios: PART 4, CONCLUSIONS AND RECOMMENDATIONS - Summarize your analysis. Review your comments in the financial analysis section and provide your assessment of the overall status of the firm. Include any recommendations you think are appropriate. - List any other recommendations you have for the firm in view of your analysis. * End of report Outline *

Week_4_Casestudy_Nallapati

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