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McDonald's is measuring the performance of its outlets based on the following metrics: Outlet Sales Revenue Operating Income Investment Base Outlet A $2,000,000 $300,000 $1,000,000

McDonald's is measuring the performance of its outlets based on the following metrics:

Outlet

Sales Revenue

Operating Income

Investment Base

Outlet A

$2,000,000

$300,000

$1,000,000

Outlet B

$3,000,000

$450,000

$1,500,000

Outlet C

$4,000,000

$600,000

$2,000,000

Requirements:

  1. Calculate the Return on Investment (ROI) for each outlet.
  2. Determine the Residual Income (RI) for each outlet if the required rate of return is 10%.
  3. Compare the performance of the outlets based on ROI and RI.
  4. Prepare a performance report for McDonald's management.


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  1. Consider a retail company, Walmart Inc. For the past financial year, Walmart provided the following data:
    • Sales: $500,000,000
    • Cost of Goods Sold: $350,000,000
    • Operating Expenses: $100,000,000
    • Interest Expense: $10,000,000
    • Taxes: 20% of Earnings Before Taxes
    • Fixed Assets: $200,000,000
    • Current Assets: $150,000,000
    • Current Liabilities: $100,000,000
    • Long-Term Liabilities: $250,000,000
    • Shareholders' Equity: $200,000,000

Requirements:


    1. Prepare an Income Statement for Walmart.
    2. Calculate the Gross Margin and Operating Margin.
    3. Determine the Return on Assets (ROA) and Return on Equity (ROE).
    4. Calculate the Current Ratio and Quick Ratio (assuming Inventory is $50,000,000).
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