Income statements for McDonald’s Corporation and Yum! Brands, Inc. for the fiscal year 2022 are as follows:

($ millions)	McDonald’s Corporation	Yum! Brands, Inc.
Net sales	$23,223	$7,200
Cost of sales	8,453	2,815
Gross profit	14,770	4,385
Operating expenses:
Selling, general, and administrative (SG&A)	5,139	1,529
Research and development (R&D)	1,217	456
Operating income	8,414	2,400
Interest and other (income) expense	1,963	654
Interest and investment income	(612)	(182)
Earnings before provision for income taxes	7,063	1,928
Provision for income taxes	1,601	510
Net earnings	$5,462	$1,418

Required:

1. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for each company in fiscal year 2022. Assume a tax rate of 28%.
2. Disaggregate the ROA into profit margin (PM) and asset turnover (AT) components. Identify which factor drives the ROA for each company.
3. Assess the trend in operating income over the past five years. How does it impact each company’s financial health?
4. Evaluate the debt-to-equity ratio for McDonald’s Corporation and Yum! Brands, Inc. What does it suggest about their financial leverage?
5. Compare the net profit margins of McDonald’s Corporation and Yum! Brands, Inc. What insights can be drawn about their profitability?