mc donald’s group 3 1.le thi thuy linh 2.tu ngoc hinh 3.pham thanh an 4.nguyen thi my hang

Mc Donald’s

Group 3

1. Le Thi Thuy Linh2. Tu Ngoc Hinh3. Pham Thanh An4. Nguyen Thi My Hang

Recomendation

Conclusion

Ratios analysis

Common size

Introduction

Content

Introduction1. History

Name McDonald's Corporation

Industries served Restaurants, Food

Geographic areas served Worldwide

Headquarters U.S.

Current CEO Don Thompson

Revenue $ 27.56 billion (2012)

Profit $ 5.46 billion (2012)

Employees 1,800,000 (2013)

McDonald’s is the world’s leading fast food restaurant chain with more than 34,000 local restaurants serving approximately 69 million people in 119 countries each day.

Introduction2. Product of Mc Donald’s

Delicious, freshly made, and oh-so-satisfying. From the Big Mac to our Premium Grilled Chicken Club to our classic Cheeseburger, McDonald’s sandwiches make the meal

From our ever-popular Chicken McNuggets, our fabulously fresh salads or the classic Filet-O-Fish, both chicken and fish from McDonald’s are delicious choices.

Burger

Chicken, fish and pork

Introduction

From wholesome choices like Fruit & Maple Oatmeal and the Egg White Delight McMuffin to the savory Sausage Biscuit to the sweet McGriddles sandwich

No meal is complete without a drink! From Diet Coke to low-fat milk to fresh-brewed hot coffee

The McFlurry is a soft-serve ice cream dessert, that has pieces of candy or cookies mixed into it

Breakfast

Beverages

Desserts and Shakes

3. Mc Donald’s in Viet Nam

• In 10/02/2014, McDonald's Corporation opened the first restaurant in Vietnam.

• Strategically located at the busy roundabout at intersection of Dien Bien Phu and Nguyen Binh Khiem Streets in District 1.

• McDonald's 350-seat restaurant.

• With a total floor area more than 1,300 square meters on a property close to 3,000 square meters, the restaurant is designed as a modern dining destination

Introduction

4. Competitors

Introduction

Competition for McDonald’s is mainly due to demand and choices, prices, and nutrition values. Demand and choices play roles in competition because fast food companies have to create a wide variety menu to satisfy all customers. If one restaurant has more variety and innovation on the menu, consumers are more likely to go to that restaurant.

We choose the Burger King is the main competitor of McDonald’s that we can compare them together. The reason why we choose it because same as McDonald, Burger King also had a longer history, it appeared in 1954 and now it has about 11 million customers over the world

Focus on plan to win to attract customers and expansion in other countries

Expansion in market share by more investments in Asia

S-O Strategies

Minimize customers losses by provide low cost menu and discounts

W-T Strategies

More control on franchise dealers to maintain McDonald’s reputation and quality.

Provide new product and keep innovation

S-T Strategies

Not use Trans fat in all worldwide McDonald's

Replace the production components cans into an environment – friendly material

W-T Strategies

SWOT

Introduction

5. Analysis SWOT

Common size

Income Statement(%)

2011 2012 2013

MD BK MD BK MD BK

Sales 100 100 100 100 100 100

COGS 60.43 60.68 60.76 53.29 61.21 19.58

Gross profit 51.24 20.33 51.09 29.74 51.71 61.82

EBIT 31.58 21.34 31.21 26.96 31.18 51.28

Interest expense

1.82 9.69 1.87 11.36 1.86 17.45

EBT 31.58 11.65 31.21 15.61 31.18 33.83

Net Income 20.38 3.77 19.82 5.97 19.87 20.39

Common size

Balance sheet (%)

2011 2012 2013

MD BK MD BK MD BK

Cash 7.08 8.22 6.60 9.83 7.64 13.50

Account receivable 4.05 2.74 3.89 3.22 3.60 3.08

Inventory 0.35 0.25 0.34 0.12 0.34 0.02

Current asset 13.35 12.94 13.91 16.00 13.79 18.43

Non-current asset 17.44 1.99 16.35 3.19 15.91 6.24

Total asset 100 100 100 100 100 100

Account payable 2.91 1.76 3.23 1.23 2.97 0.53

Current liabilities 10.64 8.44 9.62 7.15 8.65 5.94

Equity 43.62 25.96 43.22 21.12 43.71 26.01

Total Liabilities & equity

100 100 100 100 100 100

Common size

Cash flow (%)

Consolidated Statement of Cash flow

Year 2011 2012 2013

Cash provided by operation 7150.1 6966.1 7120.7

Cash used for investing activities (2570.9) (3167.3) (2673.8)

Cash used for financing activities (4533.0) (3849.8) (4043.0)

Ratios analysis

01. Activity Ratios

- Short-term activity ratios- Long-term activity ratios

Our group focused to analyze 4 ratios to understand all McDonald’s financial situation

02. Liquidity ratios

- Current ratio- Quick ratio- Cash from operation ratio- Description of the contents

03. Long-term debt and solvency ratios

- Debt to total capital- Debt to equity- Time interest earned- Financial leverage

04. Profitability ratios

- Net profit margin- Gross profit margin- ROS- ROA- ROE

Activity ratios

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Activity ratiosShort-term activity ratios

Inventory turnover 140.2038 140.4671 143.9735

DOH 2.5677 2.5629 2.5005

Receivables turnover 20.8569 20.3446 21.4862

DOS 17.2605 17.6951 16.7549

Working capital turnover 16.5371 22.8506 23.1057

Payable turnover 25.2307 26.2143 28.3498

Number of day of payables 13.7329 12.6985

Long-term activity ratios

Total asset turnover 0.7806 0.8063 0.8314

Fixed asset turnover 1.1148 1.1604 1.2031

Activity ratios

Activity ratios (cont.)

The inventory turnover ratio=𝐶𝑜𝑠𝑡𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

=17,203

(123.7+121.7 )/2=140.2038

Because of McDonald’s is the merchandise company so most of inventories of company only focus on finished goods.

1. Short-term activity ratios1.1 The inventory turnover ratios

Inventory Turnover, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 140.2038 140.4671 143.9735

Burger King 57.0127 102.9412 97.5945

Data of Inventory of McDonald’s from 2010 to 2013Year 2010 2011 2012 2013

Inventories (million) 109.9 116.8 121.7 123.7

Average Inventories 113.35 119.25 122.7


Dec, 2011 Dec, 2012 Dec,20130

20

40

60

80

100

120

140

160 143.9735 140.4671 140.2038

97.5945102.9412

57.0127

McDonald'sBurger King

Activity ratios (cont.)1. Short-term activity ratios

1.2. Average number of day inventory in stock

Days of inventory on hand, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 2.5677 2.5629 2.5005

Burger King 3.2488 2.6516 2.8289

Dec, 2011 Dec, 2012 Dec,20130

1

2

3

4

2.5005 2.5629 2.5677

2.8289 2.65163.2488 McDonald's

Burger King

Average numberof day inventory∈stock=360

𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟=

360140.2038

=2.5677


Thereceivable turnover=𝑆𝑎𝑙𝑒𝑠

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠=

28,105.7(1,319.8+1,375.3)/2

1. Short-term activity ratios1.3. The receivable turnover

Receivables Turnover, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 20.8569 20.3446 21.4862

Burger King 6.3914 11.8800 15.2785

Data of Receivable of McDonald’s from 2010 to 2013Year 2010 2011 2012

Account receivable (million)

1,179.1 1,334.7 1,375.3

Average account receivable 1256.9 1355


Dec, 2011 Dec, 2012 Dec,20130

5

10

15

20

2521.4862

20.3446 20.8569

15.2785

11.88

6.3914



1.4. Average number of day receivable outstanding

DOS (Days of sales outstanding), comparison with Burger King Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 17.2605 17.6951 16.7549

Burger King 56.3256 30.3029 23.5625

Dec, 2011 Dec, 2012 Dec,20130

10

20

30

40

50

60 McDonald'sBurger King

Average numberof dayreceivable outstanding=360

The receivable turnover=

36020.8569

=17.2605


Working capital turnover=𝑆𝑎𝑙𝑒𝑠

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑤𝑜𝑟𝑘𝑖𝑛𝑔𝑐𝑎𝑝𝑖𝑡𝑎𝑙=

28,105.7(1880.1+1519)/2

=16.5371

1. Short-term activity ratios1.5. Working capital turnover

Working capital turnover, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 16.5371 22.8506 23.1057

Burger King 1.8775 5.2988 13.3442

Year Current assets Current Liabilities Net working capital

2011 4,403.0 3,509.2 893.8

2012 4,922.1 3,403.1 1519.0

2013 5,050.1 3,170.0 1880.1


Dec, 2011 Dec, 2012 Dec,20130

5

10

15

20

25 23.1057 22.8506

16.5371

13.3442

5.2988

1.8775



1.6. Payable turnover

Year Begin Inventories

COGS Ending Inventories

Purchase

2011 109.9 16,319.4 116.8 16,326.3

2012 116.8 16,750.7 121.7 16,755.6

2013 121.7 17,203.0 123.7 17,205

Data of Account Payable of McDonald’s from 2010 to 2013Year 2010 2011 2012

Account payable (million) 943.9 961.3 1,141.9

Average account payable 952.6 1051.6

InventoriesBegin Inventories Purchases COGSEnding Inventories

So: Purchase = Ending inventories + COGS – Begin Inventories


2011 2012 201302468

1012141618

17.138415.9334 15.445

13.849912.6511

4.6232


Payable turnover=h𝑃𝑢𝑟𝑐 𝑎𝑠𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠=

17,205(1,086+1,141.9)/2

=15.445

Payables Turnover, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 15.9334 17.1384

Burger King 4.6232 12.6511 13.8499


1.7. Number of days of payable

, comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 23.5940 21.0055

Burger King 77.8681 28.4560 25.9929

Dec, 2011 Dec, 2012 Dec,20130

20

40

60

80

21.0055 23.594 23.308523.594 28.456

77.8681McDonald'sBurger King

Number of daysof payable=360

𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜=

36025.2307

=14.2683


Total asset turnovers=𝑆𝑎𝑙𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠=

28,105.7(36,626.3+35,386.5)/2

=0.7806

2. Long-term activity ratios2.1. Asset turnover


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 0.7806 0.8063 0.8314

Burger King 0.2012 0.3536 0.4154

According to Income statement of McDonald’s, our group finds out that most of total asset of McDonald’s also come from Net property plant and equipment


Dec, 2011 Dec, 2012 Dec,20130

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.90.7806 0.8063 0.8314

0.41540.3536

0.2012



¿ asset turnover=𝑆𝑎𝑙𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑛𝑒𝑡 𝑓𝑖𝑥𝑒𝑑𝑎𝑠𝑠𝑒𝑡𝑠=

28,105.7(25,747.3+24,677.2)/2

=1.1148

2. Long-term activity ratios2.2. Fixed asset turnover


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 1.1148 1.1604 1.2031

Burger King 1.3592 2.0619 2.1897


Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5

1.1827 1.1171 1.0916

2.18972.0619


Liquidity ratios

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Liquidity analysis

Current ratio 1.593 1.446 1.255

Quick ratio 1.554 1.411 1.221

Cash ratio 0.8829 0.6865 0.6656

%Inventory/CA 2.45% 2.47% 2.65%

Cash flow from operation ratio 2.239 2.057 2.052

Liquidity analysis

Liquidity ratios (cont.)

Current ratio=𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

=5,050.13,170

=1.593

1. Current ratio


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 1.593 1.446 1.255

Burger King 3.1052 2.2386 1.5328

Liquidity ratios(cont.)

Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5

3

3.5

1.2551.446

1.5931.5328

2.2386

3.1052



Quick ratio=𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠=

5,050.1−123.73,170

=1.554

2. Quick ratio


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 1.554 1.411 1.221

Burger King 3.1017 2.2217 1.5037


Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5

3

3.5



h𝐶𝑎𝑠 𝑟𝑎𝑡𝑖𝑜=h𝐶𝑎𝑠 +𝑀𝑎𝑟𝑘𝑒𝑡 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

=2,798.73,170.0

=0.8829

3. Cash ratio


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 0.8829 0.6865 0.6656

Burger King 0.9731 1.3743 2.2743


2011 2012 20130

0.5

1

1.5

2

2.5

0.665600000000001 0.6865

0.8829

2.2743

1.3743



Cash ¿operation ratio=Cash flow ¿ operation ¿𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

=7,1003,170

=2.239

4. Cash from operation ratio


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 2.239 2.057 2.052

Burger King 0.9399 0.5641 0.8615


Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5


Long-term debt and solvency ratio

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Long-term debt and solvency analysis

Capitalization table and debt ratio

Debt to total capital 1.122 1.116 1.285

Debt to equity 0.198 0.223 0.244

Interest coverage ratios

Times interest earned 0.4531 0.4538 0.4617

Financial leverage 2.2878 2.3138 2.2925

Long-term debt and solvency analysis

Long-term debt and solvency ratio (cont.)

Debt ¿ total capital=𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡𝑇𝑜𝑡𝑎𝑙 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

=14,129,80030,139,500

=0.47

1. Debt to total capital


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 0.47 0.47 0.46

Burger King 169.1098 62.5214 50.3569


Dec, 2011 Dec, 2012 Dec,20130

20

40

60

80

100

120

140

160

180

1.285 1.116 1.122

50.356962.5214

169.1098



Debt ¿equity=𝑇𝑜𝑡𝑎𝑙𝑑𝑒𝑏𝑡𝑇𝑜𝑡𝑎𝑙𝑒𝑞𝑢𝑖𝑡𝑦

=3,170

16,009.7=0.198

2. Debt to equity


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 0.198 0.223 0.244

Burger King 2.8441 3.7353 2.8528


Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5

3

3.5

4



Time interest earned=𝐸𝐵𝐼𝑇

𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒=

8,764.3521,900

=16.72

3. Time interest earned


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 16.72 16.64 17.26

Burger King 2.2029 2.3744 2.9390


Dec, 2011 Dec, 2012 Dec,20130

2

4

6

8

10

12

14

16

1817.3 16.64 16.72

2.939 2.3744 2.2029



Financial leverage=𝑡𝑜𝑡𝑎𝑙𝑎𝑠𝑠𝑒𝑡𝑠𝑡𝑜𝑡𝑎𝑙𝑒𝑞𝑢𝑖𝑡𝑦

=36,626.316,009.7

=2.2878

4. Financial leverage

comparison with Burger King

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 2.2878 2.3138 2.2925

Burger King 3.8441 4.7353 3.8528


Dec, 2011 Dec, 2012 Dec,20130

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5


Profitability ratio

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Profitability analysis

Net profit margin 19.89% 19.82% 20.38%

Gross profit margin51.71% 51.09% 51.24%

ROS 19.89% 19.82% 20.38%

ROA 15.52% 1598% 1694%

ROE 35.71% 36.82% 37.92%

Profitability analysis

Profitability ratio (cont.)

Net profit margin=𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒𝑅𝑒𝑣𝑒𝑛𝑢𝑒

=5,589.9

28,105.7=19.89 %

1. Net profit margin


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 19.89% 19.82% 20.38%

Burger King 20.39% 5.97% 3.77%


Dec, 2011 Dec, 2012 Dec,20130

0.05

0.1

0.15

0.2

0.25



Gross profit margin=Gross profit𝑅𝑒𝑣𝑒𝑛𝑢𝑒

=14,534.728,105.7

=51.71 %

2. Gross profit margin


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 51.71% 51.09% 51.24%

Burger King 61.82% 29.74% 20.33%


Dec, 2011 Dec, 2012 Dec,20130

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.5124 0.5109 0.5171

0.2033

0.2974

0.618200000000001



ROS=𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒𝑆𝑎𝑙𝑒𝑠

=5,585.9

28,105.7=19.89 %

3. ROS


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 19.89% 19.82% 20.38%

Burger King 20.39% 5.97% 3.77%


Dec, 2011 Dec, 2012 Dec,20130

0.05

0.1

0.15

0.2

0.25

0.2038 0.1982 0.1989

0.0377

0.0597000000000001

0.2039



ROA=𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑡𝑜𝑡𝑎𝑙𝑎𝑠𝑠𝑒𝑡𝑠=

5,589.9(36,626.3+35,386.5)/2

=15.52 %

4. ROA


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 15.52% 15.98% 16.94%

Burger King 4.10% 2.11% 1.56%


Dec, 2011 Dec, 2012 Dec,20130.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00% 16.94%15.98% 15.52%

0.0156 0.0211

0.041



ROE=𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒𝑡𝑜𝑡𝑎𝑙𝑒𝑞𝑢𝑖𝑡𝑦=

5,589.9(16,009.7+15,293.6 )/2

=0.3571

5. ROE


Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

McDonald’s 35.71% 36.82% 37.92%

Burger King 17.37% 8.97% 6.09%


Dec, 2011 Dec, 2012 Dec,20130.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00% 37.92% 36.82% 35.71%

0.0609

0.0897000000000001

0.1737 McDonald'sBurger King

Dupont

ROE = ROA x Leverage

Dec 31, 2013

35.51% 15.52% 2.2878

Dec 31, 2012

36.97% 15.98% 2.3138

Dec 31, 2011

38.83% 16.94% 2.2925

Two-component disaggregation of ROE

Dupont

ROE = Net profit

margin

x Asset turnov

er

x Leverage

Dec 31, 2013

35.52% 19.89% 0.7806 2.2878

Dec 31, 2012

36.97% 19.82% 0.8063 2.3138

Dec 31, 2011

38.84% 20.38% 0.8314 2.2925

Three-component disaggregation of ROE

Recommendation

The investors should concern in investing McDonald’s because:

Both of their revenue and net profit were increasing significantly with a stable growth in the future.

Strong finance situation:-use less debt in total asset-both of current ratio and quick ratio also higher

than 1-The amounts of cash reserve are also high

Conclusion

McDonald still doesn’t have competitors in fast food factor.

Most of ratios also are higher and equal to benchmark and McDonald’s have been maintained their ratios throughout from 2011 to 2013

McDonald’s should improve their Dupont ratios

Thank You!

mc donald’s group 3 1.le thi thuy linh 2.tu ngoc hinh 3.pham thanh an 4.nguyen thi my hang

Documents

hang slide

pork slide

worldwide mcdonalds

world slide

shakes slide

mcdonalds reputation

mcdonalds sandwiches

analysis swot slide