Chapter 24, Problem 5MAD

McDonald’s Corporation (MCD) operates company-owned and franchised restaurants in over 100 countries. The company operates primarily as a franchisor with approximately 85% of its current restaurants operated by franchisees. McDonald’s goal is to franchise approximately 95% of its restaurants in the long term.

McDonald’s operations are divided into the following segments:

• United States: Restaurants throughout the United States
• International Lead Markets: Restaurants in Australia, Canada, France, Germany, and the United Kingdom
• High Growth Markets: Restaurants in China, Italy, Korea, Poland, Russia, Spain, and Switzerland
• Foundational Markets & Corporate: Restaurants not contained in the preceding segments plus corporate activities

McDonald’s believes that the High Growth segment has significant potential for rapid growth and expansion. Recent data (in millions) for the first three primary segments are as follows:

1. a. Determine the profit margin for each of the three segments. Round to one decimal place.
2. b. Determine the investment turnover for the three segments. Round to two decimal places.
3. c. Use the DuPont formula to determine the return on investment for the three segments. Round to one decimal place.
4. d. Analyze and interpret the results of (a), (b), and (c).