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Essay / Research Paper Abstract
This 10 page paper conducts a ratio analysis of the McDonalds Corporation between the years 1998 – 2002. Throughout the paper all ratios are explained and calculations are demonstrated. The bibliography cites 7 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEMcDrat.rtf
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and success or progress can be measured in many ways. For financial development, ratio analysis of the annual accounts is a good measure. Ratio analysis has many advantages. Ratios are
measures that can be used to compare different elements of the financial accounts. These will make comparisons between items which appear on the profit and loss statement or the balance
sheet. The reliability and usefulness of the ratios will depend on many factors, including the way in which the ratios are put together as a result of the underlying accounting
practices. The profit margin is a common ratio which is used by many stakeholders and is a primary efficiency ratio. This
is a measure of other net profit and is expressed as a percentage of the profit compared to the turnover. The basic calculation is the net profit before interest and
tax divided by the turnover (Elliott and Elliott, 2000). It is often used as a benchmark by which the company can be compared with other companies. The level of the
margin will depend on a range of factors, such as pricing policy and industry. Whilst the figure is interesting the understanding of a companys position needs to be considered in
a greater context, such as the way in which this is moving against the companys own performance and how it compares to the industry average. Applying this to McDonalds we
get the following 1998 1999 2000 2001 2002 Income 12,421,400 13,259,300 14,243,000 14,870,000 15,405,700 Net income 2,721,200 3,280,400 3,312,200 2,782,200 2,036,200
Net Profit Margin (net profit / income x 100). 21.91 24.74 23.25 18.71 13.22 The profit margin can
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