Case 10.14 LO 5 Calculate ROI for geographic segments; analyze results-McDonald's Corp. McDonald's conducts operations worldwide and is managed in three prima geographic segments: U.S.; Europe; and Asia/Pacific, Middle East and Africa (APMEA A hybrid geographic/corporate segment (Other Countries and Corporate) reports on the results of Canada and Latin America as well as any unallocated amounts. McDonald allocates resources to, and evaluates the performance of, its segments based on operating income. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Corporate assets primarily include cash and cash equivalents, investments, deferred tax assets, and other assets. Refer to the following geographic segment data (in millions) from the 2014 annual report of McDonald's Corp.: Revenues .................. 2014 2013 2012 U.S. $ 8,561 8,851 8,814 Europe $11,077 11,300 10,827 APMEA $6,324 6,447 6,391 Other Countries & Corporate $1,389 1,477 1,535 $27,441 28,105 25,657 Operating income ............... $ 2014 2013 2012 $ 3,553 3,779 3.750 $ 3.280 3.371 3,196 $1,066 1,480 1,566 80 135 $ 7,949 8,765 8,604 Depreciation and amortization expense ..... $ $ 660 512 504 $ 338 $ 2014 2013 2012 $ 1,644 627 319 134 135 142 1,585 477 574 296 1,489 $34,281 Assets. 2014 2013 2012 $11,872 11.712 11.432 $12,811 15,096 14.223 $5.885 6,203 6,419 $3.713 3,615 3,312 36.626 35,386 Required: a. Based on a cursory review of the data, can you identify any significant tre the consolidated totals? Are there any notable trends in the data for specific ness segments? b. Using the DuPont model to show margin and turnover, calculate ROI for the three primary geographic segments for 2014. Round your percentage to one decimal place. ncant trends in for specific busi- chlage answers Chapter 10 Corporate Governance, Notes to the Financial Statements, and Other Disclosures d Looking only at the data presented here, which business segment appears to offer McDonald's Corp. the greatest potential for high returns in the future? Comment about the difficulties you may encounter when attempting to interpret the Other Countries and Corporate segment results. Can you think of any ways in which McDonald's could improve upon its clas- sification of geographic segment data? e Case 10.14 LO 5 Calculate ROI for geographic segments; analyze results-McDonald's Corp. McDonald's conducts operations worldwide and is managed in three prima geographic segments: U.S.; Europe; and Asia/Pacific, Middle East and Africa (APMEA A hybrid geographic/corporate segment (Other Countries and Corporate) reports on the results of Canada and Latin America as well as any unallocated amounts. McDonald allocates resources to, and evaluates the performance of, its segments based on operating income. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Corporate assets primarily include cash and cash equivalents, investments, deferred tax assets, and other assets. Refer to the following geographic segment data (in millions) from the 2014 annual report of McDonald's Corp.: Revenues .................. 2014 2013 2012 U.S. $ 8,561 8,851 8,814 Europe $11,077 11,300 10,827 APMEA $6,324 6,447 6,391 Other Countries & Corporate $1,389 1,477 1,535 $27,441 28,105 25,657 Operating income ............... $ 2014 2013 2012 $ 3,553 3,779 3.750 $ 3.280 3.371 3,196 $1,066 1,480 1,566 80 135 $ 7,949 8,765 8,604 Depreciation and amortization expense ..... $ $ 660 512 504 $ 338 $ 2014 2013 2012 $ 1,644 627 319 134 135 142 1,585 477 574 296 1,489 $34,281 Assets. 2014 2013 2012 $11,872 11.712 11.432 $12,811 15,096 14.223 $5.885 6,203 6,419 $3.713 3,615 3,312 36.626 35,386 Required: a. Based on a cursory review of the data, can you identify any significant tre the consolidated totals? Are there any notable trends in the data for specific ness segments? b. Using the DuPont model to show margin and turnover, calculate ROI for the three primary geographic segments for 2014. Round your percentage to one decimal place. ncant trends in for specific busi- chlage answers Chapter 10 Corporate Governance, Notes to the Financial Statements, and Other Disclosures d Looking only at the data presented here, which business segment appears to offer McDonald's Corp. the greatest potential for high returns in the future? Comment about the difficulties you may encounter when attempting to interpret the Other Countries and Corporate segment results. Can you think of any ways in which McDonald's could improve upon its clas- sification of geographic segment data? e