Reference no: EM131777541
Problem - Deciphering Financial Statements (McDonald's Corporation)
McDonald's Corporation is in the business of --wait, we all know what McDonald's does. The company earnings per share information and an accompanying note relating to its computation of EPS follow:
|
McDonald's Consolidated Earnings per Share Years Ended December 31, (In millions, except per share data)
|
|
2007
|
2006
|
2005
|
|
Net income
|
$2,395.1
|
$3,544.2
|
$2,602.2
|
|
Net income per common share
|
$2.02
|
$2.87
|
$2.06
|
|
Net income per common share-diluted
|
$1.98
|
$2.83
|
$2.04
|
|
Dividends per common share
|
$1.50
|
$1.00
|
$0.67
|
PER COMMON SHARE INFORMATION
Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation calculated using the treasury stock method, of (in millions of shares): 2007-23.5; 2006-17.7; 2005-13.8. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were (in millions of shares): 2007-0.7; 2006-16.4; 2005-44.4.
Answer the following questions.
1. Compute the average number of shares outstanding used in McDonald's computation of net income per common share for 2007, 2006, and 2005. Do the computation for both basic and diluted EPS.
2. Compute McDonald's dividend payout ratio (based on basic EPS) for 2005 through 2007. Has the ratio increased or decreased by a significant amount over the 3-year period?
3. For each year in the 3-year period 2005-2007, compute the percentage of total stock options that were dilutive. Comment on why the percentage differs from year to year.
|
The resource-based model of above average returns
: The resource-based model of above average returns is grounded in the uniqueness of a firm’s internal resources and capabilities.
|
|
What is the difference between ethics and business ethics
: Give your own answer on what is the difference between ethics and business ethics.
|
|
What could taken now to reduce chances of tragedy occurring
: What could be taken now to reduce the chances of a similar tragedy occurring in the future? Which do you think is most likely to be effective, and why?
|
|
Compute current rate be on treasury securities
: One-year Treasury bills currently earn 5.95 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.20 percent.
|
|
Compute the average number of shares outstanding
: Compute the average number of shares outstanding used in McDonald's computation of net income per common share for 2007, 2006
|
|
Extract valuable minerals
: Eastinghome Inc. just agreed to pay $8,000 today, $10,000 in one year, and $15,000 in two years to a landowner to explore for but not extract valuable minerals.
|
|
Implementing cloud technologies in supply chain
: Discuss the issues encountered in implementing the cloud technologies in the supply chain.
|
|
Calculate the before-tax and after-tax component
: Calculate the before-tax and after-tax component costs of capital (i.e., debt, preferred equity, new common equity)
|
|
Operate a carpeting and home textile manufacturing business
: You operate a carpeting and home textile manufacturing business: Red Carpet Thready Co. Answer the following questions about your firm's operations.
|