McDonalds Executive Summary

Executive Summary

Ray Kroc once said "If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours" (thinkexist.com,1999-2010, para. 1). What started out as the dream for two brothers in 1940 later transformed into a multi-billion dollar fast-food restaurant corporation by Ray Kroc. McDonald's has enjoyed many years of success and is one of the leading fast-food restaurants in the world. Despite the financial crisis that started in 2007, they have managed to operate consistently and experience an increase in net profitability over the last three years.

History

On May 15, 1940, brothers Richard and Maurice McDonald opened McDonald's Bar-B-Que in San Bernardino, CA. The restaurant featured carhops who served guests in their cars and was very successful recognizing over $200,000 in sales annually. In 1948, the brothers revamped the establishment adding self-service windows providing faster service to their customers (Scanlon, 2010).

In 1954, the brothers decided that they wanted to expand their operations through franchising. At this same time, a milkshake machine salesman named Ray Kroc happened upon the McDonald brothers. According to an article written by Donna Scanlon (2010), "Kroc was curious why his customers may need so many milkshake machines. After observing their operation, Kroc formed a partnership with the McDonald brothers" (para. 7). On April 15, 1955 in Des Plaines, Illinois, Ray Kroc opened the first McDonald's franchise (McDonald's 2011). In 1961, he purchased the McDonald brother's equity in the company and began to lead McDonald's into worldwide expansion.

On April 15, 1965, Ray Kroc celebrated McDonald's 10th anniversary by taking the company public, offering 300,000 shares at $22.50 per share (Byron Priece Visual Publications, Inc. and Forbes Inc., 1996). In 1967, McDonald's moved outside the borders of the United States opening restaurants in Canada and Puerto Rico, and has not looked back. In 2005, McDonald's celebrated its 50th anniversary. Today, McDonald's has more than 32,000 restaurants in 117 countries, employs over 1.7 million employees around the globe, and reaches an estimated 60 million customers every day (McDonald's, 2011).

McDonald's Corporation is audited annually. Ernst & Young LLP is the company's independent auditor. Ernst & Young is responsible for performing an audit of the company's annual consolidated financial statements in accordance with generally accepted accounting principles (GAAP) and issuing a report on those statements (McDonald's, 2010). Ernst & Young also review the company's interim financial statements in accordance with Statement on Auditing Standards No. 100 (McDonald's, 2010). McDonald's Corporation franchises and operated McDonald's restaurants list the stock symbol as MCD on the New York Stock Exchange.

Financial Statements

The annual balance sheet for McDonald's Corporation shows the net cash ending balance for multiple periods. The values represent millions. According to About McDonald's website, the ending balance for 2009 was 1,796 (Microsoft, 2011). The ending balance for 2010 was 2,387 (Microsoft, 2011). The balance sheet on the About McDonald's website also lists the total current assets for the company. McDonald's Corporation's 2009 period ending total current asset lists as 3416.3 (Microsoft, 2011). The company's 2010 period ending total current asset records as 4368.5 (Microsoft, 2011). Assets are listed at the top followed by liabilities, and