Financial Analysis
By Brenda Hudson, John Doe and Mary Smith BUS307 Research Project
Franchises/affiliates revenue
$4,345.1 million 25.3% of total
McDonalds Current Assets are 7.4% of Total Assets vs. Wendys (14.6%)
Long-term Debt
Largest Liability 36.6% of assets (compare to Wendys (21.9%)) Decreased by 3.7%
Quick Ratio
McDonalds: 0.71 vs. Industry: 0.572 vs. Wendys 0.56
BEP, ROA, ROE trending up, but well below industry and competition Price/Earnings is lower than industry, higher than Wendys
McDonalds: 21.59 vs. Industry: 27.73 vs. Wendys: 20.65
McDonalds Debt
Current Liabilities up by 2.6% $9.7 billion in Long-term debt
(including current maturities)
3% decrease from 2002 16 bonds maturing from 2004 to 2033 at coupon rates of 4.15% to 8.875% Weighted Average Interest Rate on total debt = 4.1% Long Term Debt Ratings:
Moodys: A2, S&P: A, Fitch A
Twelve Stock Splits Average annual stock appreciation of 20.8% Stock Repurchase of $439 million in 2003 (18.9 million shares)
Hedges are planned to combat weak foreign currencies Strategies for PR and food safety in light of mad cow disease in some areas Tighten Quality Control within franchises Expand Partner Brands be own competitor Cross-sell other products in restaurants
McDonalds is restaurant segment leader 40% domestic quick-service restaurant market share Generates tremendous cash flow
(Over $2 billion in 2003)
Growth possibilities
They are beyond high growth phase in US, but still room for same-restaurant improvement and new restaurants in some US markets Continue to replicate US success internationally
Fast food restaurant market segment in trouble, but McDonalds is the leader in this segment.