Hi There,

There is a group project I'm working on and need help with my part. I will post the entire question, and note the part I have to do. I will also post the first of the project that we did to give a background on what the project entails. Let me know if this can be done. Attached you will see the first part of the project, and below you will see what I have to do as the project progresses.

This is the second part of the project.

Stage 2 (10% of grade): The analysis portion of the project (stage 2) is valued at 10 percent of your final grade, and consists of writing a 3-page, double-spaced paper supported by spreadsheets, graphs, etc. including financial and stock performance; international subsidiary analysis; country analysis; exposure and hedging analysis; currency analysis; tax analysis; industry and competitor analysis; and exposure analysis (transactions, translation, operating, and economic). Any charts, graphs and financial reports are not included in the 3-page requirement. This stage should be submitted in your assignment folder.

I have to do this part:International Subsidiary Analysis, Country Analysis, Currency Analysis

This must be a 3 PAGE paper analysis, with also must have has charts, graphs, or any other financial reports.Thewritten part must be 3 pagedouble spaced, and thenseparatelyhave charts, graphs, etc.

Again, see attached for the first part of theprojectto see the company we started theresearchon. I will also needed references.

Running Head: McDONALD'S CORPORATION CASE STUDY (GROUP 1) Running Head: McDONALD'S CORPORATION CASE STUDY (GROUP 1) MCDONALD'S CORPORATION (MCD) - FINANCIAL CASE STUDY Finance 460 Professor Anaya Farah By: Rabia Javed, Paul Biggs, Seong Hak Na McDONALD'S CORPORATION CASE STUDY (GROUP 1) 1 TABLE OF CONTENTS 1. Introduction 2. Cursory Analysis 3. Financial Ratios 3.1 Liquidity Ratios 3.2 Debt Ratios 3.3 Profitability Ratios 3.4 Valuation Ratios 3.5 Dividends 3.6 Growth Rates 3.7 Efficiency 3.8 Management Effectiveness 4. Financial Statements 5. References Page 2 Page 2 Page 4 Page 4 Page 4 Page 4 Page 6 Page 6 Page 7 Page 7 Page 8 Page 8 (Excel) Page 9 Introduction McDonald's Corporation (NYSE: MCD), is the world's largest fast food chain. The company was founded in 1940 and is based in Oak Brook, Illinois. McDonald's Corporation is #110/500 in the Fortune.com. The company operates and franchises McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company's restaurants offer various food products, soft drinks, coffee, and other beverages. McDONALD'S CORPORATION CASE STUDY (GROUP 1) 2 As of December 31, 2014, it operated 36,258 restaurants, including 29,544 franchised restaurants comprising 20,774 franchised to conventional franchisees, 5,228 licensed to developmental licensees, and 3,542 licensed to foreign affiliates; and 6,714 company-operated restaurants. The current strategy employed by management is to expand into high growth markets across Asia and Europe in addition to reimaging the franchise into established international markets across Europe, Asia, and Latin America (McDonald's-Home, n.d.). The company intends to invest $2 billion in capital expenditures with half of that used to open new restaurants (Annual, 2015). The goal is for half of those new establishments to be affiliated and developmental licensee market franchises. These types of franchises call for limited capital investment and increase available cash flows based upon royalties, percentage of sales, and earnings of unconsolidated affiliates. The challenge for McDonald's corporation in foreign markets is volatility in the currency exchange rates and establishing regional supply networks to minimize the cost in US exports. Managing these two hurdles can potentially reverse the 2014 Annual Report decline of 1% in global sales, 3.6% in guest counts, and 2% in consolidated revenues (2015). Cursory Analysis The current McDonald's CEO is working very hard at changing the outward image of the company. The focus is to make the current customers you have happy by increasing menu choices, speed of service, and providing a more open and candid relationship with the general public (Maidment, 2015). This rebranding not only applies to new franchises mentioned earlier, McDONALD'S CORPORATION CASE STUDY (GROUP 1) 3 but also to existing restaurants. This strategy will require capital investment for brick and mortar face lifts, individual ordering kiosks, and as limited delivery services are applied to stores across the globe. The key is to increase customer count and sales to avoid additional debt financing. As can be seen in the Morningstar report on McDonald's, debt to equity ratios have increased since 2012 from 48%/52% to a current ratio of 68%/32% (2016). This is supported by the debt to equity ratios provided below that show McDonald's ratio above the industry and sector averages. The largest concern for the franchise is the drop in revenue growth. The growth rate ratios below demonstrate an over 5% drop last quarter and an over 8% drop in the last 12 months in revenue growth. The strategy internationally must improve currency hedging efforts to counter the $1.9 billion lost in foreign currency adjustments based on last year's Annual Report (2015, p.30). The overall analysis and evaluation of the franchise will work to determine which emerging international markets, if any, are best suited to meet management's intent of increasing revenue with minimal capital investment. Financial Ratios All fundamentals are Trailing Twelve Months (TTM) unless noted. Preliminary data is based on the company's 8-K statement or press releases. MRQ = Most Recent Quarter 1.1 Liquidity Ratios - Liquidity ratios measure the company's ability to pay off its shortterm debt obligations. The higher ratio is better. Current Ratio (TTM) McDonald's Corp. 1.52 Industry Sector 1.12 1.05 McDONALD'S CORPORATION CASE STUDY (GROUP 1) Quick Ratio (TTM) Cash Ratio (TTM) 1.49 0.76 4 0.58 0.29 0.65 0.46 1.2 Debt Ratios - Debt ratios indicate a general idea of the company's overall debt load as well as its mix of equity and debt. A lower the percentage means that a company is using less leverage and has a stronger equity position. Debt to Equity (TTM) Debt to Capital (TTM) Interest Coverage (TTM) McDonald's Corp. 1.17 0.54 13.92 Industry Sector 0.76 0.43 9.05 0.92 0.48 11.51 1.3 Profitability Ratios - The ratios give users a good understanding of how well the company utilized its resources in generating profit and shareholder value. Gross Margin (MRQ) Gross Margin (TTM) Gross Margin - 5 Yr. Avg EBITD Margin (MRQ) EBITD Margin (TTM) EBITD - 5 Yr. Avg Operating Margin (MRQ) Operating Margin (TTM) Operating Margin - 5 Yr. Avg Pre - Tax Margin (MRQ) Pre - Tax Margin (TTM) Pre - Tax Margin - 5 Yr. Avg Net Profit Margin (MRQ) Net Profit Margin (TTM) Net Profit Margin - 5 Yr. Avg Effective Tax Rate (MRQ) Effective Tax Rate (TTM) Effective Tax Rate - 5 Yr. Avg McDonald's Corp. 39.17% 38.05% 50.14% 36.66% 32.1% 36.24% 30.69% 27.36% 30.8% 28.4% 25.12% 28.82% 19.79% 17.24% 19.59% 30.3% 31.37% 32.08% Industry 40.47% 39.54% 40.15% 26.93% 24.38% 25.22% 21.98% 18.99% 21.04% 20.31% 18.19% 19.05% 14.31% 12.66% 13.21% 29.56% -30.88% Sector 52.74% 51.34% 46.44% 27.32% 25.2% 27.63% 18.67% 15.13% 15.91% 15.45% 12.84% 13.77% 10.32% 8.86% 9.24% 32.05% -29.21% McDONALD'S CORPORATION CASE STUDY (GROUP 1) 5 1.4 Valuation Ratios - To estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Price / Earnings Ratio (TTM) P / E High - Expected EPS Price to Sales (TTM) Price to Sales - Expected EPS Price to Cash Flow Ratio (TTM) Price to Free Cash Flow Ratio (TTM) Price to Book (MRQ) Price to Tangible Book (MRQ) McDonald's Corp. 26.11 -4.41 -96.35 35.97 Industry 27.97 30.08 3.54 -185.2 40.97 13.6 19.73 Sector 11.72 20.5 18.17 19.62 1.72 1.48 -15.1 2.99 -- 1.5 Dividends - To indicate it is poised to continue raising its annual dividend per share. Dividend Yield Dividend Growth Rate- 5 Year Avg Payout Ratio Cumulative Dividend Payout McDonald's Corp. 2.88% 10.05% 62.14% 73.65% Industry Sector 1.06% 12.82% 2.33% 7.9% 24.78% 28.69% 87.74% 34.96% Ratio Payout Ratio - 5 Year Avg 53.62% 48.19% 50.17% 1.6 Growth Rates - To provide insight into the general direction and magnitude of growth for the overall economy. Y/Y Revenue Growth (MRQ) Q/Q Revenue Growth (MRQ) Y/Y Revenue Growth (TTM) Seq. Revenue Growth (TTM) Revenue 5 Year Average Growth Expected Revenue Growth (Y/Y) McDonald's Corp. -5.32% 1.81% -8.29% -1.43% 3.83% -- Industry 3.83% 1.71% 0.15% 0.96% 5.34% -- 1.7 Efficiency - How companies utilize their assets to generate income. Sector 2.63% 1.13% 2.4% 1.03% 5.4% 2.75% McDONALD'S CORPORATION CASE STUDY (GROUP 1) 6 Revenue / Employee (TTM) Net Income / Employee McDonald's Corp. 61,057 10,525 Industry 49,891 6,318 Sector 235,964 22,363 (TTM) Inventory Sales Ratio (TTM) Inventory Turnover Ratio 249.94 154.85 41.74 25.24 58.28 28.1 (TTM) Asset Turnover (TTM) Receivable Turnover (TTM) 0.76 22.2 1.06 30.31 0.51 8.02 1.8 Management Effectiveness - Company management uses shareholder's equity and company assets to produce an acceptable rate of return. Return on Assets (TTM) Return on Assets - 5 Yr. Avg. Return on Investment (TTM) Return on Investment - 5 Yr. Avg. Return on Equity (TTM) Return on Equity - 5 Yr. Avg. McDonald's Corp. 13.16% 16.26% 14.36% 17.92% Industry 13.39% 13.55% 15.95% 16.18% Sector 4.79% 4.94% 5.57% 5.83% 41% 37.21% 37.14% 34.5% 17.31% 15.69% Financial Statements- See attached Excel Sheet McDONALD'S CORPORATION CASE STUDY (GROUP 1) 7 References 10Q SEC Filings Details Third Quarter 2015 (September 30, 2015). Retrieved from https://www.last10k.com/sec-filings/MCD/0000063908-15-000081.htm Annual Report, (2014) McDonald's. Retrieved from McDonald's website; http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDonalds2014Ann ualReport.PDF CSIMarket, (2016). McDonald's Corporation (MCD). Retrieved from http://csimarket.com/stocks/at_glance.php?code=MCD Google Finance, (2016). McDonald's Corportation (MCD) Retrieved Janurary 27, 2016, from https://www.google.com/finance?fstype=ii&q=nyse:mcd Maidment, N. (2015). McDonald's new CEO has a modern strategy for fix the brand. Retrieved from http://www.businessinsider.com/r-the-burger-loving-brit-mcdonalds-new-ceo-takes-onsales-slump-2015-2 McDonald's-Home (n.d.). Company profile. Retrieved from http://www.aboutmcdonalds.com/content/mcd/investors/company-overview/company-overviewsegment-information.html Morningstar, (2016). McDonald's corporation-MCD. Retrieved from http://quicktake.morningstar.com/StockNet/bonds.aspx?Symbol=MCD&Country=USA Yahoo Finance, (2016). McDonald's Corporation (MCD). Retrieved January 28, 2016, from http://finance.yahoo.com/q?s=MCD&ql=1 McDONALD'S CORPORATION CASE STUDY (GROUP 1) 8