McDonald?s Corp. McDonald?s conducts operations worldwide and is managed in three primary geographic segments: U.S., International Lead
Question:
McDonald?s Corp. McDonald?s conducts operations worldwide and is managed in three primary geographic segments: U.S., International Lead Markets (including Australia, Canada, France, Germany, and the UK), and High Growth Markets (including China, Italy, Korea, Poland, Russia, Spain, Switzerland, and the Netherlands). A hybrid geographic/ corporate segment, Foundational Markets & Corporate, reports on the results of all other countries as well as any unallocated amounts. McDonald?s allocates resources to, and evaluates the performance of, its segments based on operating income. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Corporate assets primarily include cash and cash equivalents, investments, deferred tax assets, and other assets. Refer to the following geographic segment data (in millions) from the 2017 annual report of McDonald?s Corp.:
Required:
a. Based on a cursory review of the data, can you identify any significant trends in the consolidated totals? Are there any notable trends in the data for specific business segments?
b. Using the DuPont model to show margin and turnover, calculate ROI for each of the three primary geographic segments for 2017. Round your percentage answers to one decimal place.
c. Looking only at the data presented here, which business segment appears to offer McDonald?s Corp. the greatest potential for high returns in the future?
d. Comment about the difficulties you may encounter when attempting to interpret the Foundational Markets and Corporate segment results.
e. Can you think of any ways in which McDonald?s could improve upon its classification of geographic segment data?
Step by Step Answer:
Accounting What the Numbers Mean
ISBN: 978-1260565492
12th edition
Authors: David Marshall, Wayne McManus, Daniel Viele