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Case 10-14 (Static) Calculate ROI for geographic segments; analyze results-McDonald's Corp LO 5 McDonald's conducts operations worldwide and is managed in three primary geographic
Case 10-14 (Static) Calculate ROI for geographic segments; analyze results-McDonald's Corp LO 5 McDonald's conducts operations worldwide and is managed in three primary geographic segments: U.S., International Lead Markets (including Australia, Canada, France, Germany, and the UK), and High Growth Markets (including China, Italy, Korea, Poland, Russia. Spain, Switzerland, and the Netherlands). A hybrid geographic/corporate segment, Foundational Markets & Corporate, reports on the results of all other countries as well as any unallocated amounts. McDonald's 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 2017 annual report of McDonald's Corp.: Revenues Operating income 2017 2016 2015 U.S. $ 8,006.4 8,252.7 8,558.9 International High Growth Lead Markets $ 7,340.3 Markets Foundational Markets & Corporate Total $5,533.2 $1,940.5 7,223.4 7,614.9 6,160.7 6,172.8 2,985.1 3,066.4 2017 $ 4,822.4 $ 3,166.5 2016 2015 3,768.7 3,612.0 2,838.4 2,712.6 $2,001.4 1,048.8 841.1 $ 362.4 Depreciation and amortization expense 2017 $ 524.1 $ 461.1 $231.7 $146.5 2016 510.3 451.6 362.0 2015 515.2 460.9 363.9 192.6 215.7 Assets 2017 $12,648.6 $11,844.3 $4,480.7 $4,830.1 88.6 (20.2) Company $22,820.4 24,621.9 25,413.0 $ 9,552.7 7,744.5 7,145.5 $1,363.4 1,516.5 1,555.7 $33,803.7 2016 11,960.6 2015 11,806.1 9,112.5 11,136.3 5,208.6 4,742.1 5,248.6 9,747.7 31,023.9 37,938.7 Required: b. Using the DuPont model to show margin and turnover, calculate ROI for each of the three primary geographic segments for 2017 (Do not round Intermediate calculations. Round your percentage answers to 1 decimal place.) US International Lead Markets High Growth Markets) RO(%) 34.1
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