Business Analysis - Part II (SECOND PAPER)



Analysis of Business Environment for “McDonalds”

Introduction

Mc Donald's have secured its position as one of the best fast food chains across the world, for quite a longer time now. It has always listened to its “valued” customers, and continues building its brand strategies. A positive brand image gives Mc Donald's highest success in fast food chains. Mc Donald's have always performed in the consistent way, which means it provides customer satisfaction throughout. It has always provided best marketing and advertising campaigns. Economic legal and technological changes take them to the better way and bring success in the market. The company has gain loyal customers throughout the years. The company believes in the 4 P's of marketing and has always considered them to be the best to attract customers.

The success factor of Mc Donald's is the continued marketing research and its ongoing marketing research. The researches have helped them to create a right marketing mix for the company. They have put their efforts to identify the buying decision that is significant for the company to sell its products (Schulz, 2001). The company do not fail to impress customers psychologically they have given the equivalent attention to the physical product benefits and the psychological needs of the product.

The marketing of Mc Donald's has created positive brand image in the mind of the consumer. Mc Donald's has catered all types of customer and has customized the menu according to the customer there are different kids' meals regular meals and meals for the business executive. The Dollar menu at the Mc Donald's is the greatest example of retaining the customer and attracting a broad variety of customer with different preferences including college students. Mc Donald's does not only earn profits, but have also exhibited social responsibility in their endeavors. Ronald Mc Donald's House charity is one of the houses founded for helping the poor families and their children. The objective of Marketing of Mc Donald's is not only about growing the business itself; but influencing the lives of the consumers in every “positive” manner possible.

Analysis of Financial Health of Company

McDonald's envisions dominating the global industry of food service. The global dominance means setting the performance standard for customer satisfaction while increasing market share and profits to their strategies of convenience, value and execution. Let us see the major ratios of the company over a period of 4 years and look into its financial health:

Profitability Ratios

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

ROA % (Net)

15.9

15.51

14.87

8.2

12.01

ROE % (Net)

34.51

33.2

30.01

15.58

23.16

ROI % (Operating)

28.49

27.21

26.3

15.52

17.81

EBITDA Margin %

35.25

34.97

32.87

21.99

26.27

Calculated Tax Rate %

30.05

30.64

30.51

35.79

31.63

Revenue per Employee

60,187

59,077

58,645

58,427

46,422

Liquidity Ratios

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Quick Ratio

1.22

0.95

1.18

0.67

1.01

Current Ratio

1.49

1.14

1.39

0.8

1.21

Net Current Assets % TA

4.52

1.41

3.44

(3.12)

2.13

Debt Management

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

LT Debt to Equity

0.79

0.75

0.76

0.48

0.54

Total Debt to Equity

0.79

0.75

0.76

0.53

0.55

Interest Coverage

16.03

13.86

11.87

8.96

10.77

Asset Management

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Total Asset Turnover

0.77

0.78

0.81

0.78

0.73

Receivables Turnover

21.5

22.84

23.64

23.28

25.39

Inventory Turnover

120.87

116.23

115.31

100.19

91.5

Accounts Payable Turnover

30.48

36.21

37.7

31.25

28.34

Accrued Expenses Turnover

50.71

50.56

57.01

58.21

55.46

Property Plant & Equip Turnover

1.1

1.09

1.14

1.09

1.06

Cash & Equivalents Turnover

11.51

11.79

11.6

11.07

6.75

Per Share

12/31/2010

12/31/2009

12/31/2008

12/31/2007

12/31/2006

Cash Flow per Share

5.95

5.27

5.24

4.1

3.52

Book Value per Share

13.89

13.03

12

13.11

12.84

Different ratios of the company are calculated with the given data of the company from (financial statements and balance sheets). The ratio analysis provides in-depth and timely information to the management for critical strategic decision making. Different ratios are calculated in the ...