Using the tools covered in this week's textbook readings for this assignment and Mcdonald's last 5 years of data, calculate Free Cash Flow Residual Earnings Abnormal Earnings Growth Consolidated Statement of Income USD ($) shares in Millions, $ in Millions 12 Months Ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 REVENUES Sales by Company operated restaurants $ 12,718 90 55 73 $ 15,295 00 62 12 $ 16,488 30 64 88 $ 18,169 30 66 21 $ 18,874 20 67 15 Revenues from franchised restaurants $ 10,101 50 44 27 $ 9,326 90 37 88 $ 8,924 70 35 12 $ 9,272 00 33 79 $ 9,231 50 32 85 Total revenues $ 22,820 40 100 00 $ 24,621 90 100 00 $ 25,413 00 100 00 $ 27,441 30 100 00 $ 28,105 70 100 00 OPERATING COSTS AND EXPENSES Food paper $ 4,033 50 17 67 $ 4,896 90 19 89 $ 5,552 20 21 85 $ 6,129 70 22 34 $ 6,361 30 22 63 Payroll employee benefits $ 3,528 50 15 46 $ 4,134 20 16 79 $ 4,400 00 17 31 $ 4,756 00 17 33 $ 4,824 10 17 16 Occupancy other operating expenses $ 2,847 60 12 48 $ 3,667 70 14 90 $ 4,024 70 15 84 $ 4,402 60 16 04 $ 4,393 20 15 63 Franchised restaurants occupancy expenses $ 1,790 00 7 84 $ 1,718 40 6 98 $ 1,646 90 6 48 $ 1,697 30 6 19 $ 1,624 40 5 78 Gross Margin $ 10,620 80 46 54 $ 10,204 70 41 45 $ 9,789 20 38 52 $ 10,455 70 38 10 $ 10,902 70 38 79 Selling, general administrative expenses $ 2,231 30 9 78 $ 2,384 50 9 68 $ 2,434 30 9 58 $ 2,487 90 9 07 $ 2,385 60 8 49 Other operating (income) expense, net $ (1,163 20) 5 10 $ 75 70 0 31 $ 209 40 0 82 $ 18 60 0 07 $ (247 20) 0 88 Total operating costs and expenses $ 13,267 70 58 14 $ 16,877 40 68 55 $ 18,267 50 71 88 $ 19,492 10 71 03 $ 19,341 40 68 82 Operating income $ 9,552 70 41 86 $ 7,744 50 31 45 $ 7,145 50 28 12 $ 7,949 20 28 97 $ 8,764 30 31 18 Interest expense net of capitalized interest of $5 3, $7 1 and $9 4 $ 921 30 4 04 $ 884 80 3 59 $ 638 30 2 51 $ 570 50 2 08 $ 521 90 1 86 Nonoperating (income) expense, net $ 57 90 0 25 $ (6 30) 0 03 $ (48 50) 0 19 $ 6 70 0 02 $ 37 90 0 13 Income before provision for income taxes $ 8,573 50 37 57 $ 6,866 00 27 89 $ 6,555 70 25 80 $ 7,372 00 26 86 $ 8,204 50 29 19 Provision for income taxes $ 3,381 20 14 82 $ 2,179 50 8 85 $ 2,026 40 7 97 $ 2,614 20 9 53 $ 2,618 60 9 32 Net income $ 5,192 30 22 75 $ 4,686 50 19 03 $ 4,529 30 17 82 $ 4,757 80 17 34 $ 5,585 90 19 87 Consolidated Balance Sheet USD ($) $ in Millions Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013 Current assets Cash and equivalents $ 2,463 80 $ 1,223 40 $ 7,685 50 $ 2,077 90 $ 2,798 70 Accounts and notes receivable $ 1,976 20 $ 1,474 10 $ 1,298 70 $ 1,214 40 $ 1,319 80 Inventories, at cost, not in excess of market $ 58 80 $ 58 90 $ 100 10 $ 110 00 $ 123 70 Prepaid expenses and other current assets $ 828 40 $ 565 20 $ 558 70 $ 783 20 $ 807 90 Assets of businesses held for sale $ $ 1,527 00 $ $ $ Total current assets $ 5,327 20 $ 4,848 60 $ 9,643 00 $ 4,185 50 $ 5,050 10 Other assets Investments in and advances to affiliates $ 1,085 70 $ 725 90 $ 792 70 $ 1,004 50 $ 1,209 10 Goodwill $ 2,379 70 $ 2,336 50 $ 2,516 30 $ 2,735 30 $ 2,872 70 Miscellaneous $ 2,562 80 $ 1,855 30 $ 1,869 10 $ 1,798 60 $ 1,747 10 Total other assets $ 6,028 20 $ 4,917 70 $ 5,178 10 $ 5,538 40 $ 5,828 90 Property and equipment Property and equipment, at cost $ 36,626 40 $ 34,443 40 $ 37,692 40 $ 39,126 10 $ 40,355 60 Accumulated depreciation and amortization $ (14,178 10) $ (13,185 80) $ (14,574 80) $ (14,568 60) $ (14,608 30) Net property and equipment $ 22,448 30 $ 21,257 60 $ 23,117 60 $ 24,557 50 $ 25,747 30 Total assets $ 33,803 70 $ 31,023 90 $ 37,938 70 $ 34,281 40 $ 36,626 30 Current liabilities Accounts payable $ 924 80 $ 756 00 $ 874 70 $ 860 10 $ 1,086 00 Income taxes $ 265 80 $ 267 20 $ 154 80 $ 166 80 $ 215 50 Other taxes $ 275 40 $ 266 30 $ 309 00 $ 330 00 $ 383 10 Accrued interest $ 278 40 $ 247 50 $ 233 10 $ 233 70 $ 221 60 Accrued payroll and other liabilities $ 1,146 20 $ 1,159 30 $ 1,378 80 $ 1,157 30 $ 1,263 80 Current maturities of long term debt $ $ 77 20 $ $ $ Liabilities of businesses held for sale $ $ 694 80 $ $ $ Total current liabilities $ 2,890 60 $ 3,468 30 $ 2,950 40 $ 2,747 90 $ 3,170 00 Long term debt $ 29,536 40 $ 25,878 50 $ 24,122 10 $ 14,989 70 $ 14,129 80 Long term income taxes $ 2,370 90 $ 1,010 60 Other long term liabilities $ 1,154 40 $ 1,053 70 $ 2,074 00 $ 2,065 90 $ 1,669 10 Deferred income taxes $ 1,119 40 $ 1,817 10 $ 1,704 30 $ 1,624 50 $ 1,647 70 Shareholders' equity (deficit) Preferred stock, no par value authorized 165 0 million shares issued none $ $ $ $ $ Common stock, $ 01 par value authorized 3 5 billion shares issued 1,660 6 million shares $ 16 60 $ 16 60 $ 16 60 $ 16 60 $ 16 60 Additional paid in capital $ 7,072 40 $ 6,757 90 $ 6,533 40 $ 6,239 10 $ 5,994 10 Retained earnings $ 48,325 80 $ 46,222 70 $ 44,594 50 $ 43,294 50 $ 41,751 20 Accumulated other comprehensive income $ (2,178 40) $ (3,092 90) $ (2,879 80) $ (1,519 70) $ 427 60 Common stock in treasury, at cost 866 5 and 841 3 million shares $ (56,504 40) $ (52,108 60) $ (41,176 80) 35,177 10 32,179 80 Total shareholders' equity (deficit) $ (3,268 00) $ (2,204 30) $ 7,087 90 $ 12,853 40 $ 16,009 70 Total liabilities and shareholders' equity (deficit) $ 33,803 70 $ 31,023 90 $ 37,938 70 $ 34,281 40 $ 36,626 30

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Question: Using the tools covered in this week's textbook readings for this assignment and Mcdonald's last 5 years of data, calculate: * Free Cash Flow. *

Using the tools covered in this week's textbook readings for this assignment and Mcdonald's last 5 years of data, calculate: * Free Cash Flow. * Residual Earnings. * Abnormal Earnings Growth

Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017		Dec. 31, 2016		Dec. 31, 2015		Dec. 31, 2014		Dec. 31, 2013
REVENUES
Sales by Company-operated restaurants	$ 12,718.90	55.73%	$ 15,295.00	62.12%	$ 16,488.30	64.88%	$ 18,169.30	66.21%	$ 18,874.20	67.15%
Revenues from franchised restaurants	$ 10,101.50	44.27%	$ 9,326.90	37.88%	$ 8,924.70	35.12%	$ 9,272.00	33.79%	$ 9,231.50	32.85%
Total revenues	$ 22,820.40	100.00%	$ 24,621.90	100.00%	$ 25,413.00	100.00%	$ 27,441.30	100.00%	$ 28,105.70	100.00%
OPERATING COSTS AND EXPENSES
Food & paper	$ 4,033.50	17.67%	$ 4,896.90	19.89%	$ 5,552.20	21.85%	$ 6,129.70	22.34%	$ 6,361.30	22.63%
Payroll & employee benefits	$ 3,528.50	15.46%	$ 4,134.20	16.79%	$ 4,400.00	17.31%	$ 4,756.00	17.33%	$ 4,824.10	17.16%
Occupancy & other operating expenses	$ 2,847.60	12.48%	$ 3,667.70	14.90%	$ 4,024.70	15.84%	$ 4,402.60	16.04%	$ 4,393.20	15.63%
Franchised restaurants-occupancy expenses	$ 1,790.00	7.84%	$ 1,718.40	6.98%	$ 1,646.90	6.48%	$ 1,697.30	6.19%	$ 1,624.40	5.78%
Gross Margin	$ 10,620.80	46.54%	$ 10,204.70	41.45%	$ 9,789.20	38.52%	$ 10,455.70	38.10%	$ 10,902.70	38.79%
Selling, general & administrative expenses	$ 2,231.30	9.78%	$ 2,384.50	9.68%	$ 2,434.30	9.58%	$ 2,487.90	9.07%	$ 2,385.60	8.49%
Other operating (income) expense, net	$ (1,163.20)	-5.10%	$ 75.70	0.31%	$ 209.40	0.82%	$ 18.60	0.07%	$ (247.20)	-0.88%
Total operating costs and expenses	$ 13,267.70	58.14%	$ 16,877.40	68.55%	$ 18,267.50	71.88%	$ 19,492.10	71.03%	$ 19,341.40	68.82%
Operating income	$ 9,552.70	41.86%	$ 7,744.50	31.45%	$ 7,145.50	28.12%	$ 7,949.20	28.97%	$ 8,764.30	31.18%
Interest expense-net of capitalized interest of $5.3, $7.1 and $9.4	$ 921.30	4.04%	$ 884.80	3.59%	$ 638.30	2.51%	$ 570.50	2.08%	$ 521.90	1.86%
Nonoperating (income) expense, net	$ 57.90	0.25%	$ (6.30)	-0.03%	$ (48.50)	-0.19%	$ 6.70	0.02%	$ 37.90	0.13%
Income before provision for income taxes	$ 8,573.50	37.57%	$ 6,866.00	27.89%	$ 6,555.70	25.80%	$ 7,372.00	26.86%	$ 8,204.50	29.19%
Provision for income taxes	$ 3,381.20	14.82%	$ 2,179.50	8.85%	$ 2,026.40	7.97%	$ 2,614.20	9.53%	$ 2,618.60	9.32%
Net income	$ 5,192.30	22.75%	$ 4,686.50	19.03%	$ 4,529.30	17.82%	$ 4,757.80	17.34%	$ 5,585.90	19.87%

Consolidated Balance Sheet - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and equivalents	$ 2,463.80	$ 1,223.40	$ 7,685.50	$ 2,077.90	$ 2,798.70
Accounts and notes receivable	$ 1,976.20	$ 1,474.10	$ 1,298.70	$ 1,214.40	$ 1,319.80
Inventories, at cost, not in excess of market	$ 58.80	$ 58.90	$ 100.10	$ 110.00	$ 123.70
Prepaid expenses and other current assets	$ 828.40	$ 565.20	$ 558.70	$ 783.20	$ 807.90
Assets of businesses held for sale	$ -	$ 1,527.00	$ -	$ -	$ -
Total current assets	$ 5,327.20	$ 4,848.60	$ 9,643.00	$ 4,185.50	$ 5,050.10
Other assets
Investments in and advances to affiliates	$ 1,085.70	$ 725.90	$ 792.70	$ 1,004.50	$ 1,209.10
Goodwill	$ 2,379.70	$ 2,336.50	$ 2,516.30	$ 2,735.30	$ 2,872.70
Miscellaneous	$ 2,562.80	$ 1,855.30	$ 1,869.10	$ 1,798.60	$ 1,747.10
Total other assets	$ 6,028.20	$ 4,917.70	$ 5,178.10	$ 5,538.40	$ 5,828.90
Property and equipment
Property and equipment, at cost	$ 36,626.40	$ 34,443.40	$ 37,692.40	$ 39,126.10	$ 40,355.60
Accumulated depreciation and amortization	$ (14,178.10)	$ (13,185.80)	$ (14,574.80)	$ (14,568.60)	$ (14,608.30)
Net property and equipment	$ 22,448.30	$ 21,257.60	$ 23,117.60	$ 24,557.50	$ 25,747.30
Total assets	$ 33,803.70	$ 31,023.90	$ 37,938.70	$ 34,281.40	$ 36,626.30
Current liabilities
Accounts payable	$ 924.80	$ 756.00	$ 874.70	$ 860.10	$ 1,086.00
Income taxes	$ 265.80	$ 267.20	$ 154.80	$ 166.80	$ 215.50
Other taxes	$ 275.40	$ 266.30	$ 309.00	$ 330.00	$ 383.10
Accrued interest	$ 278.40	$ 247.50	$ 233.10	$ 233.70	$ 221.60
Accrued payroll and other liabilities	$ 1,146.20	$ 1,159.30	$ 1,378.80	$ 1,157.30	$ 1,263.80
Current maturities of long term debt	$ -	$ 77.20	$ -	$ -	$ -
Liabilities of businesses held for sale	$ -	$ 694.80	$ -	$ -	$ -
Total current liabilities	$ 2,890.60	$ 3,468.30	$ 2,950.40	$ 2,747.90	$ 3,170.00
Long-term debt	$ 29,536.40	$ 25,878.50	$ 24,122.10	$ 14,989.70	$ 14,129.80
Long-term income taxes	$ 2,370.90	$ 1,010.60	-
Other long-term liabilities	$ 1,154.40	$ 1,053.70	$ 2,074.00	$ 2,065.90	$ 1,669.10
Deferred income taxes	$ 1,119.40	$ 1,817.10	$ 1,704.30	$ 1,624.50	$ 1,647.70
Shareholders' equity (deficit)
Preferred stock, no par value; authorized 165.0 million shares; issued none	$ -	$ -	$ -	$ -	$ -
Common stock, $.01 par value; authorized 3.5 billion shares; issued 1,660.6 million shares	$ 16.60	$ 16.60	$ 16.60	$ 16.60	$ 16.60
Additional paid-in capital	$ 7,072.40	$ 6,757.90	$ 6,533.40	$ 6,239.10	$ 5,994.10
Retained earnings	$ 48,325.80	$ 46,222.70	$ 44,594.50	$ 43,294.50	$ 41,751.20
Accumulated other comprehensive income	$ (2,178.40)	$ (3,092.90)	$ (2,879.80)	$ (1,519.70)	$ 427.60
Common stock in treasury, at cost; 866.5 and 841.3 million shares	$ (56,504.40)	$ (52,108.60)	$ (41,176.80)	-35,177.10	-32,179.80
Total shareholders' equity (deficit)	$ (3,268.00)	$ (2,204.30)	$ 7,087.90	$ 12,853.40	$ 16,009.70
Total liabilities and shareholders' equity (deficit)	$ 33,803.70	$ 31,023.90	$ 37,938.70	$ 34,281.40	$ 36,626.30

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