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Essay / Research Paper Abstract
This 4 page paper examines the financial performance of McDonalds in 2002 and compares it to 2001 as well as with the industry averages and to the performance of close competitor Wendy’s. The financial results and ratios are interpreted and trends are identified to indicate the companies areas of weakness and potential improvement. The bibliography cites 1 source.
Page Count:
4 pages (~225 words per page)
File: TS14_TEMcD001.rtf
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Unformatted sample text from the term paper:
increase has slowed down, if we look at the net revenue figures these are increasing, but this increase is becoming harder to create as we see the net profit
reduce from 11% in 2001 down to 6.3% ion 2002. This may be seen as indicative of the way in which the industry is moving, as the net profit margin
for the industry as a whole is only 5.7% and as such McDonalds still has a superior performance. However, with the greater effort required to gain sales, it can
also be argued that many potential economies of scale are being lost with the diseconomies of scale when company is in a difficult position. When comparing McDonalds to
Wendys the size of the company is apparently different, but the net profit margin is also greater with 7.41% in 2002. This indicates that Wendys are operating in a more
efficient manner, and McDonalds may be able to look to learn some lessons from their competitor, especially when it comes to overhead costs as the gross profit for McDonalds at
55%, is far greater than that of both the industry at 37.4% and Wendys at 26.94%. This indicates that McDonalds are gaining a great advantage from their direct costs,
but are then losing it with their other related costs, such as overheads. This gives the company an idea where to look for disproportionate costs which are unusual for the
industry. Despite this discrepancy the company does appear to be performing well in measures that look to the overall efficiency of the way resources are used. The return on
equity is a measures used by many investors to assess efficiently. At first glance the company appears to be performing well, with a return on equality of 9%, which remains
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