Balance Sheet 2014

(In Millions)
McDonalds
Cash &cash equivalents
$
2,077.90
Accounts & notes receivable
$
1,214.40
Inventory
$
110.00
Pre-paid expenses & other current assets
$
783.20
Current Assets sub-total $
4,185.50
Net property, plant & equipment
$
24,557.50
Goodwill
$
2,735.30
Other non-cuurent assets
$
2,803.10
Total Assets $
34,281.40
Accounts payable
$
860.10
Other current liabilites
$
1,887.80
Current liabilities sub-total $
2,747.90
Long-term debt
$
14,989.70
Other non-current liabilities
$
3,690.40
Common stock & additional paid-in capital
$
6,255.70
Net of treasury stock
$
(35,177.10)
Retained earnings
$
43,294.50
Other equity
$
(1,519.70)
Total Liabilites and Equity $
34,281.40

Yum!
$
$
$
$
$
$
$
$
$
$
$
$
$
$

$
$
$

578.00
325.00
301.00
442.00
1,646.00
4,498.00
700.00
1,501.00
8,345.00
1,972.00
439.00
2,411.00
3,077.00
1,253.00
--------------1,737.00
(133.00)
8,345.00

Income Statement 2014

(In millions)
McDonalds
Total revenue
$
27,441.3
COGS (reported as Food and paper)
$
6,129.7
Gross Profit $
21,311.6
SG&A Expense (include payroll, occupancy and
administrative expenses)
Other operating expenses (listed beneath administrative
expenses)
Operating Income
Interest and other income/expense
Earnings before Tax
Income tax expense
Net Income
Shares Outstanding
Stock Price

13,343.8

$
$
$
$
$
$

18.6
7,949.2
577.2
7,372.0
2,614.2
4,757.8
962.9
93.70

Yum!
$
$
$

13,279.0
3,678.0
9,601.0

7,423.0

$
$
$
$
$
$

662.0
1,516.0
89.0
1,427.0
406.0
1,021.0
434.0
73.14

Project 1: Operational Analysis

1. Inudstry Information
a.) The SIC (Standard Inducstrial Classification) code is a four digit number that classifies business by

b.) As an analyst, I would use the SIC code to determine what industry the business is in as well as use
code to help determine what competitors are in that same industry. I can also use the code to look up
statistcal data related to the business. In addition, I can use the statistical data to see how my busines
stands with other business of the same industry. Then I know what areas to improve and how I can he
improve my business.
c.) McDonald's and Yum's SIC code is 5812, which represents eating places.
2. Size

Percent

a.) McDonald's total revenue is larger than Yum's.

206.65%

b.) Mcdonalds market cap is larger than Yum's.

284.23%

3. Growth
a.) Yum's total revenue grew faster than
McDonald's
Percent
McDonalds total revenue growth (20132014)
-2.36%
Yum's total revenue growth (2013-2014)
1.49%
b.)Yum's Net income decreased at a slower rate compared to McDonald's.
McDonalds income growth (2013-2014)
Yum's income growth (2013-2014)
4. Liquidity
a.) McDonald's current ratio
McDonald's quick ratio
Yum's current ratio
Yum's quick ratio

-14.82%
-4.04%

1.52
1.20
0.68
0.37

b.) McDonald's current quick ratio show that they can pay off their liabilites using their assets 1.52 tim
1.2 times using cashe and cash equivalents. Yum's current and quick ratio show that they can pay off
liabilites using their assets .68 times and .37 times using cash and cash equivalents.
c.) McDonalds is more liquid than Yum because they can pay off their liabilites faster as shown by the
and current ratio.

5. Profitability
Mcdonalds' operating profit margin
Mcdonalds' gross profit margin
Mcdonalds' net profit margin
Yum's operating profit margin
Yum's gross profit margin
b.) McDonalds' has a lead in all 3 key profit
Yum's
net
profit
margin
margins.
This
indicates
that McDonalds' is

0.2897
0.7766
0.1734
0.1142
0.7230
0.0769

spending a smaller proportion of their revenue on

costs in comparison with Yum.
c.)
Total Asset turnover for McDonalds
Total Asset turnover for Yum!

0.80
1.59

d.) McDonalds makes $0.80 per dollar of asset and Yum makes $1.59 per dollar of asset.

e.) McDonald's has a lead in all 3 key profit margins. This shows that McDonalds is more effectivve at
generating profits because they are better retaining the money that they earn. They are keeping more
revenue instead of paying back costs.

f.)Yum has a higher asset turnover ratio which makes it more efficient than McDonalds at generating m
per dollar of asset.
6. Financing
a.)
Mcdonald's debt ratio
Yum's debt ratio

Perccent
63%
81%

b.) The debt ratio shows how much a company depends on money borrowed. The lower the percentag
less dependent the compnay is on loans(debt).

c.) Yum! has a greater degree of financial risk because of a higher debt ratio, which means a bigger re
invested capital.

7, Return on shareholders' investment

a.)
Mcdonald's ROE
Yum's ROE

Percent
37%
64%

b.) The ROE for the companies show how much profit the company generates with the money shareho
have invested into them. Mcdonalds earns about a 37% profit from ivestments from shareholders whi
makes about a 64% profit from shareholder investments..

c.) Yum provided a higher return on owners' invested capital because their ROE is higher than McDona
ROE.
8. Shareholdervalue
a.)
McDonald's EPS
Yum EPS

$
$

4.94
2.35

b.) Each McDonald's share is worth $4.94 and each Yum! share is worth $2.35

c.)McDonald's earned more income on behalf of each shareholder because its share worth is greater t
Yums share worth.
d.)
McDonald's P/E Ratio
18.96
Yum P/E Ratio
31.09
e.) Investors in McDonald's can expect to invest $18.96 for every $1 of McDonald's earnings. Investors
Yum! can expect to invest $31.09 for every $1 of Yum! earnings.
f.) Share holders were willing to pay more for Yum shares as you can see from the higher P/E ratio.

l Analysis

digit number that classifies business by industry

t industry the business is in as well as use that

dustry. I can also use the code to look up the
he statistical data to see how my business
what areas to improve and how I can help
eating places.

Larger
Larger

McDonald's.

their liabilites using their assets 1.52 times and

nd quick ratio show that they can pay off their
h and cash equivalents.

off their liabilites faster as shown by the quick

es $1.59 per dollar of asset.

ws that McDonalds is more effectivve at

ey that they earn. They are keeping more of the
efficient than McDonalds at generating money

money borrowed. The lower the percentage the

gher debt ratio, which means a bigger retrun on

mpany generates with the money shareholders

fit from ivestments from shareholders while Yum!

because their ROE is higher than McDonald's

re is worth $2.35

older because its share worth is greater than

very $1 of McDonald's earnings. Investors in

gs.

you can see from the higher P/E ratio.