McDonald’s 1998 financial statements contain the following selected data (in millions):

Instructions

(a) Compute these values:
(1) Working capital.
(2) Current ratio.
(3) Acid-test ratio.

(b) The notes to McDonald's financial statements show that subsequent to 1998 the com- pany will have future minimum lease payments under operating leases of $7,366.9 million. Discuss the implications of these unrecorded obligations for the analysis of McDonald's liquidity and solvency.
(4) Debt to total assets ratio.
(5) Times interest earned ratio.

Transcribed Image Text:

Current assets $ 1,309 Total assets 19,784 Interest expense Income taxes $ 414 757 Current liabilities 2,497 Net income 1,550 Total liabilities 10,260 Cash 299 Accounts receivable 609 Short-term investments 0