Financial Exposure of McDonald’s Corp. Success as a Market Leader

Abstract

The purpose of this study is to explore the financial aspects of McDonald's success as a market leader despite of the global recession and tough competition offered by Yum brands. Financial ratio analysis, horizontal analysis, vertical analysis and DuPont analysis are applied for 9 years financial data of McDonald's. And it is discovered that efficient operations, strong short and long term solvency position, high profitability, highly loyal customer, broader network expansion and the value adding menu are major factors of its success. But it has to improve its asset utilization efficiency to remain No. 1 in highly competitive fast food industry. The expected learning outcomes of this case study is to illustrate the success factors, particularly in financial terms which provides a strong base for a business organization to maintain its competitive position & leadership. The readers are expected to be able to get an understanding of the following terms at the completion of this study: an understanding of calculation and interpretation of basic financial ratios and its implications for financial managers, investors and creditors; the significance of various financial analysis for a business organization, the importance of understanding the external business environment and how that environment poses threats as well as new opportunities for the businesses operating in it. This case study is designed for the students of BBA/MBA and helpful in the courses of corporate finance and financial reporting analysis.